Daniel W. Gerber, Chair of the Global Insurance Services practice at US law firm Goldberg Segalla said: “Since 9/11, there have been profound changes in the way the insurance and reinsurance markets do business, particularly in the fields of law and litigation.

“Prior to 9/11, it was not unusual for business to be done by way of a ‘gentleman’s agreement’ – an insurance or reinsurance deal sealed with a handshake with a few details sketched on a napkin. Partly as a result of some of the highly complex cases that followed the attacks, the market has moved decidedly towards contract certainty, with the terms and conditions of contracts spelled out in fine detail before any agreement is signed.”~

He said: “The US economy took a substantial knock after 9/11, and many businesses were also hit by expensive legal bills arising from lengthy and complex liability disputes. Concern over spiralling legal costs resulted increasingly in disputes being settled earlier to save the time and expense of going to arbitration.

“With some businesses simply unwilling to pay these costs, insurers and reinsurers started to closely examine the cost-benefit analysis of going to arbitration. Increasingly, and the legacy is still with us, parties are seeking an early resolution of disputes. Mediation is now more common, and so, often, is post-treaty modification. Where the norm had been that a treaty stipulated there were several named arbiters in a dispute, now in smaller disputes it is often possible to agree with the other side to have one umpire.

“The move towards lower legal fees, earlier settlement of disputes and a diminishing appetite for arbitration is posing a significant challenge for some of the larger law firms who have built their business on expensive hourly billing fees which provide little incentive for finding innovative ways to resolve disputes quickly.”