Coverage disputes must maintain ‘mutual respect’ to preserve commercial relationships

Can insurers and policyholders resolve claim disputes without damaging their relationships?

This question was at the heart of a session held on 5 June 2025 at Gatehouse Chambers, during London Insurance Disputes Week (LIDW) 2025, entitled ’Resolving insurance coverage disputes without damaging commercial relationships: Impossible dream or practical reality?’

At this event, a panel of legal and insurance market figures from the UK, Asia-Pacific, the US and Scandinavia examined how insurers can balance achieving settlement outcomes with preserving long-term client relationships.

The session highlighted that the majority of coverage disputes are settled early – often through negotiation or mediation – well before reaching court.

“Most disputes are resolved before ever going to court or arbitration,” David Pliener KC, barrister and joint head of chamber at Gatehouse Chambers, said.

He explained that overly aggressive posturing can derail early resolution, however.

“If we make a very lowball offer but know the realistic settlement is far from that, we lose credibility,” he said, noting that such tactics can escalate distrust and make resolution harder.

Instead, he encouraged the pursuit of practical, early stage solutions.

Mediation becomes the preferred tool

The panel noted that mediation – a dispute resolution process typically involving a neutral third party – was gaining ground as the most effective and sensitive form of alternative dispute resolution.

Clarence Ting, global claims leader at Aon Singapore, added that cultural and linguistic considerations also influenced dispute resolution preferences.

“Not many policyholders are comfortable with arbitration litigation – we’re starting to recommend mediation as an additional form,” he said.

Timing and preparation are key for this approach to be successful, however. The panel stressed the importance of ensuring insurers had all the relevant facts before mediation and that policyholder expectations were managed correctly.

Preserving long-term business relationships also emerged as a central theme from the session.

“There is a day after the dispute – damaging the commercial relationship damages the business also,” said Morten Christensen, managing partner at Fenchurch Law Scandinavia.

He added that policyholders with long-standing relationships often received better outcomes and warned that excessive aggression during disputes could leave claimants needing to rebuild trust from scratch.

People and empathy matter

While legal frameworks guide claim dispute proceedings, the human element remains essential to reaching productive outcomes.

Tracy Alan Saxe, partner at Saxe Doernberger and Vita, noted: “If people don’t feel like you’re hearing them, they don’t want to listen to you – mutual respect is crucial.”

Ting added: “Everyone we meet is a human being with a heart, a mind, good intelligence.”

This emphasis on empathy and mutual understanding can move parties beyond entrenched positions and towards creative settlements.

The panel also reflected on the risk of poorly advised disputes. Christensen said lawyers had a duty to de-escalate client frustration.

Deploying appropriate experts – including engineers, forensic accountants and specialist lawyers – was another essential tool to build credible positions and support early resolution.

Ting shared a case example involving a $60m (£44m) mining claim that was resolved via open and honest face-to-face negotiation rather than prolonged litigation.

While the panellists acknowledged that financial outcomes remain the primary concern for many of their clients, they agreed that preserving commercial relationships was beneficial and achievable.

Christensen concluded: “Do our clients care about the commercial relationships, or do they just want their money? The short answer is yes, they want their money – but it has so much more to do with just getting your money. There is a day after the dispute.”

For UK insurers and brokers, the LIDW 2025 session reinforced that early engagement can drive better outcomes in insurance dispute resolution.