LEGAL & DISPUTE RESOLUTION
Arbitration definition
Arbitration is an alternative dispute resolution process in which an independent arbitrator decides the outcome of an insurance or legal dispute.
In practice, this means a form of alternative dispute resolution in which both parties agree an independent and impartial arbitrator. The arbitrator decides the outcome of the dispute; this decision is called an award. Should the parties involved dispute this award, they may seek. This gives insurers, brokers, reinsurers and risk managers a shared way to discuss the concept when reviewing policies, claims, regulation or market data.
This term is especially useful in insurance market analysis, policy wording and risk transfer decisions. It helps users interpret insurance terminology consistently across markets, policies and risk data. It also helps users compare how insurance is structured, regulated, priced or claimed across different markets.
Arbitration is closely related to alternative dispute resolution, award, umpire and litigation. Linking these concepts together helps build a clearer glossary structure and gives readers a stronger understanding of how individual insurance terms connect within wider international insurance practice.
At a glance
- Used in
- Insurance market analysis, policy wording and risk transfer decisions.
- Purpose
- Helps users interpret insurance terminology consistently across markets, policies and risk data.
- Important because
- Clear definitions support better comparison of insurance products, market practices and regulatory requirements across jurisdictions.
- Related terms
- alternative dispute resolution, award, umpire and litigation.
Example of arbitration in insurance
Two parties dispute whether a policy should respond to a claim. They appoint an arbitrator, who reviews the evidence and issues a decision on the dispute.