Arbitration Doesn't Always Mean Savings
Thirteen years ago, property and casualty carriers filed fewer than 500,000 arbitration cases annually. Today, that number has increased to 1.1 million or more cases in 2025. At first, this might seem like a positive development, since arbitration keeps claims out of litigation. However, arbitration also comes with costs—in the form of time, money, and operational friction.
It’s worth questioning whether a dramatic increase in arbitration cases reflects an efficient recovery process. Arbitration is designed to resolve disputes, but in situations where claims could be settled earlier through negotiation or better decision-making, it’s not the most cost-effective strategy. Increasing reliance on arbitration may be a sign of a deeper issue within the insurance industry.
The Hidden Driver is Fear
Much of the boom in arbitration usage by insurers can be traced to two underlying fears.
Fear of Mistakes
Over the past decade, the industry has experienced a gradual loss of institutional claims knowledge. As experienced professionals retire or transition out of claims roles, fewer adjusters have deep expertise in negotiating liability. When confidence declines, arbitration becomes the safest path. Rather than risking wrong calls or poorly executed negotiations, insurers are sending increasing numbers of cases to arbitration.
Ironically, some internal carrier processes make it harder to settle claims early. Structured workflows, approval layers, and rigid procedures can leave adjusters with limited flexibility. Once a claim reaches a certain point in the process, arbitration becomes the only available action. At that stage, the system isn’t encouraging resolution; it’s simply pushing the claim to the next procedural step.
Fear of Missing Out
Insurance carriers also suffer from FOMO: fear of missing out on recoverable damages. No one wants to accept a settlement where another carrier would have pushed for more. This fear creates a zero-sum environment, where everyone files arbitration to avoid missing out on any potential recovery. Unfortunately, the outcome is simply more arbitrations, driving higher costs and greater friction across the industry.
The Right Data Replaces Fear with Confidence
The good news is that much of this fear can be addressed through better data and better workflows. Historically, claims systems haven’t provided subrogation teams with the granular insights they need to make confident, informed settlement decisions. Without clear data, arbitration becomes the best way to mitigate risk.
When subrogation teams have access to the right information, they can process claims more efficiently and cost effectively. With clear data lighting the way, teams gain confidence in their decisions, resulting in
- Earlier claim settlements
- Fewer arbitration filings
- Faster recovery cycles
- Lower recovery costs
The benefits extend well beyond the subrogation department, reducing operational costs while supporting a better customer experience for policyholders.
That’s exactly what we provide at Gigaforce. Our Subroforce product suite includes tools that capture and analyze subrogation workflow data in ways traditional claims platforms never have. By combining automation with actionable insights, we empower carriers to make better decisions earlier in the recovery process. Subrogation professionals gain the tools they need to act swiftly and with confidence.
- Automation of routine work
- Deeper insight into claim decisions
- Clear, auditable recovery histories
- A competitive edge in negotiations
Arbitration will always play an important role in subrogation, but it’s hardly the definition of success. If you measure success by recoveries, cost savings, and customer satisfaction, we’re here to help.
See how much you could save with AI-powered subrogation insights with our ROI calculator.