Defendants, plaintiffs, mediators and insurers are increasingly sophisticated and attuned to the need of addressing insurance coverage disputes in mediation. The financial downturn has also placed greater pressure on companies to maximize insurance contributions to resolve lawsuits. The insurance implications of insolvency and bankruptcy add a new layer of complexity to the task. Careful and early attention to insurance coverage disputes is necessary to a successful mediation outcome.
Insurance money often drives settlements. Even when other assets exist, both plaintiff and defendant may assume that the case will be settled, if at all, within the policy's limits.
If insurance is critical to settlement, and the carrier is objecting to funding, coverage counsel for the insurer and the insured may take center stage in the mediation to broker a deal. Indeed, one major trend in mediations is simply the growing sophistication of mediators in the role of insurance. Many mediators, if insurance is involved, will educate themselves about the insurance disputes even before turning to the underlying liability issues. One of the first questions to parties arranging a mediation will be: Is insurance involved? Do you have coverage counsel? Will the carrier be attending with its coverage counsel?