What is the function of arbitration in disputes related to insurance?

Arbitration serves a crucial role in resolving disputes related to insurance by providing a structured process through which claims can be evaluated and settlements determined. In this context, arbitration involves both parties presenting their case to an impartial third party, known as the arbitrator, who reviews the evidence and arguments presented by each side.

The process is designed to be less formal and quicker than traditional litigation, allowing for a resolution that is binding and enforceable. This is particularly valuable in the insurance industry, where disputes often arise over claims, coverage, or the interpretation of policy terms. By evaluating claims and reaching a settlement, arbitration can help prevent lengthy court battles and provide a more efficient means of resolving differences.

In contrast to other options, arbitration does not function as a legal judgment, since that pertains more to the decisions made by a court. While it may facilitate negotiation by bringing parties to the table, its primary mechanism is evaluation rather than negotiation. Additionally, creating insurance policies falls outside the scope of arbitration, as that pertains to the initial crafting and agreement of insurance terms rather than resolving existing disputes.