ADR options | UK Insurance Wiki

Category: Claims handling · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed 2026-06-11

Alternative dispute resolution (ADR) options are the structured non-court methods of resolving insurance disputes — mediation, arbitration, expert determination, adjudication, FOS and ombudsman schemes — each with distinct procedures, costs and outcomes.

Definition

The English civil dispute landscape has substantial ADR infrastructure. Insurers and policyholders have a wide range of ADR options available, each suited to particular disputes. The court system actively encourages ADR through the CPR, the overriding objective and the costs sanctions for unreasonable refusal of ADR (Halsey, PGF II, Churchill v Merthyr Tydfil).

For insurance specifically, ADR options include the FOS for consumer and small-business complaints, ARIAS arbitration for commercial and reinsurance disputes, mediation for most commercial claims, expert determination for technical disputes, and adjudication for construction-related claims.

Legal / Regulatory basis

The framework is layered:

• Civil Procedure Rules: CPR 1.1 (overriding objective including ADR encouragement), CPR 1.4 (court’s case management duty to encourage ADR), and the body of case law on costs sanctions for unreasonable refusal.
• Arbitration Act 1996 for arbitral proceedings.
• Housing Grants, Construction and Regeneration Act 1996 for construction adjudication.
• FSMA Part XVI for FOS jurisdiction.
• ARIAS UK Arbitration Rules for insurance/reinsurance arbitration.
• CEDR Mediation Rules and equivalent provider rules.

Case law:

• Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576.
• PGF II SA v OMFS Co [2013] EWCA Civ 1288.
• Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416 — confirmed courts can compel ADR.
• Lomax v Lomax [2019] EWCA Civ 1467 — courts can order early neutral evaluation without consent.

How it works in practice

The choice of ADR depends on the dispute:

• Consumer or small-business complaint about claims handling: FOS (statutory free service).
• Commercial insurance coverage dispute (insured v insurer): mediation; commercial court litigation; or arbitration if the policy includes an arbitration clause.
• Reinsurance dispute: ARIAS arbitration is the default for London Market business.
• Construction-related insurance dispute: adjudication is available for parties to construction contracts (and the resulting decision is enforceable in court).
• Technical quantum dispute: expert determination by an agreed expert.
• Coverage interpretation dispute: declaratory proceedings in the Commercial Court; sometimes a preliminary issue determination.

Each option has trade-offs:

• FOS: free, fast (typically 6-18 months), informal, but limited to eligible complainants and capped monetary remedies; awards can be more generous than strict legal entitlement.
• Mediation: relatively cheap, fast, confidential, but only as effective as the parties’ willingness to settle.
• ARIAS arbitration: private, expert tribunal, finality (limited appeal rights), but costly.
• Adjudication: rapid (typically 28 days), interim binding, but limited scope.
• Court litigation: full procedural protections, appeal rights, public, but slow and expensive.

For insurance specifically, the FOS is the dominant consumer ADR; mediation is the dominant commercial ADR; ARIAS arbitration dominates reinsurance.

The cost of refusing ADR can be substantial. Halsey and successor cases allow the court to make adverse costs orders where a party has unreasonably refused ADR. Churchill extended this to compelled ADR in some circumstances.

Common variations

“Tiered” dispute resolution clauses — typically requiring negotiation, then mediation, then arbitration or litigation.

“Med-arb” — combining mediation and arbitration in sequence.

“Early neutral evaluation” — a non-binding evaluation by a neutral, often used to provide a reality check.

“Ombudsman schemes” — including FOS for financial services and other industry-specific schemes.

“Expert determination” — submission of a technical question to an agreed expert whose decision is binding.

Example

A commercial insurance coverage dispute over a £4m PI claim. The policyholder is dissatisfied with the insurer’s coverage decision (reservation of rights). The options:

• Mediation: scheduled for month 14 of the dispute, two-day mediation at CEDR. Cost approximately £80,000 (both sides combined). Settlement rate for commercial coverage disputes at mediation approximately 70-75%.
• ARIAS arbitration: the policy includes an arbitration clause; the dispute would be heard by a three-arbitrator ARIAS tribunal. Cost approximately £400,000 (both sides combined) over 12-18 months.
• Commercial Court litigation: full court process. Cost approximately £600,000+ (both sides combined) over 18-30 months.

The parties select mediation first. The mediation succeeds at the second day, with settlement at £2.4m and a Tomlin order. Costs each side bear their own. The mediation cost was £40,000 against an avoided arbitration cost of £200,000 and an avoided litigation cost of £300,000.

See also

• Mediation
• FOS jurisdiction over claims
• Joint settlement meeting
• Sealed offer
• Without prejudice negotiation

References

1. Civil Procedure Rules, Part 1 (overriding objective).
2. Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576.
3. PGF II SA v OMFS Co [2013] EWCA Civ 1288.
4. Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416.
5. Arbitration Act 1996.
6. ARIAS UK Arbitration Rules.
7. CEDR Model Mediation Procedure.

Last reviewed

By Matt Bartlett, Director, on 2026-06-11. Next review: 2026-12-11.

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This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.