In a recent mediation, we had to discuss whether the presence of insurers should be disclosed to the other party. I offered these views:
"As you know, my initial view was that your proposal would be inappropriate on the grounds that it would place me in an unacceptable position of knowing that insurers were present while the other side was proceeding on the basis that the information I was conveying and discussions I was having were only with those who were disclosed as being present in the insuredâ??s room. That assumption might materially influence their approach. I was concerned that, if the other party was subsequently to discover that other people were present and that the mediator was all along aware of that fact, it would detrimentally affect the mediator’s relationship with that party.
Given the wider implications, I undertook a survey of colleagues from around the world via the International Academy of Mediators …. I had several responses from North America, Australia, New Zealand and England. The almost universal view ….. is that it would be inappropriate for a mediator to agree to such a proposal. Expressions such as subterfuge, fraudulent, and deceit were used.
Several respondents pointed out that the availability of insurance and the presence of insurers could or would operate to lower the other party’s expectations. That is certainly my own experience as insurers are able take a robust view and a party’s exposure to costs and ability to fight a case is perceived completely differently. They are seen as able and willing to defend a claim. One of my colleagues commented trenchantly: "Anyone who thinks that insurance companies are a soft or softer touch for negotiating purposes just because they have access to a lot of money, hasn’t functioned in the real world of mediation or litigation for very long." That view is expressed in a jurisdiction where the use of mediation is perhaps more commonplace than so far in the UK but it emphasises the point that insurers can exercise control over the outcome in a way that a non-insured party may not.
One further concern expressed was that any agreement reached by parties in these circumstances could be reducible on the grounds that it had been induced in error or by fraud/deceit, if the true situation was subsequently discovered…."