If Mediation Resolves Cases, Why Aren’t More Insurance Companies Mediating?

by Stephen R. Barry

Mediation has established itself as one of the most reliable tools for resolving disputes. It provides insurers with a means to reduce litigation risk, minimize exposure, and achieve closure in claims that might otherwise continue for years. Yet despite these advantages, insurers are not mediating as often as they could. A significant factor in this hesitation is cost.

The Rising Costs of Mediation

The cost of mediation has increased dramatically over the past decade, raising concerns for insurers who are tasked with managing litigation budgets across large volumes of cases.

• Hourly rates have surged. Surveys conducted by the American Bar Association show that the average mediator hourly rate has increased more than 30% over the past decade, with many experienced mediators charging between $400–$600 per hour today.

• Daily fees are significant. According to the American Arbitration Association, a full-day mediation now typically costs between $4,000 and $7,500, exclusive of expenses, with some large-market mediators charging substantially more.

• Added costs accumulate. Preparation fees, administrative charges, travel, and overtime billing often push the total cost of a single mediation well beyond initial estimates, as illustrated by JAMS’ published fee schedules.

For insurers managing multiple claims, these costs quickly multiply. What was once viewed as a cost-saving alternative to trial is, in some cases, approaching parity with traditional litigation expenses. As a result, mediation is often reserved for only the most significant or high-exposure matters.

The Consequence of Limited Mediation

When mediation is deferred or avoided due to cost concerns, insurers may miss opportunities to resolve cases earlier and more efficiently. The result can be prolonged litigation, higher defense costs, and increased reserves—all outcomes that mediation is intended to mitigate.

The paradox is clear: mediation continues to be one of the most effective dispute resolution mechanisms available, yet the very cost of accessing it has become a barrier to its broader use.

A More Predictable Path Forward

Cost should not be the obstacle that prevents insurers from realizing the benefits of mediation. Predictability and transparency in mediation fees offer a way forward. By eliminating uncertainty in billing, insurers can more confidently evaluate whether mediation is appropriate, not just for large cases but also for matters where early resolution may save substantial expense in the long run.

At Barry Rome Mediation, we recognize the importance of cost certainty. That is why we offer flat-fee mediation options designed to make the process more accessible and predictable for insurers, while still providing the benefit of more than three decades of trial and litigation experience. Traditional hourly options remain available for those who prefer them, but our goal is simple: to ensure that cost is not the reason cases remain unresolved.

Conclusion

Mediation works. It reduces risk, accelerates closure, and brings efficiency to claims handling. While the costs of traditional mediation have escalated, insurers now have alternatives that restore predictability and value to the process.

For more information, visit www.brmediators.com or call (504) 525-1101.