Abstract
Disputes are generally part of human interaction and are inevitable in both domestic and international relationships, including international economic activities among nations. Settlement of disputes, therefore, becomes imperative for peaceful living, coexistence, and overall development among human society, states, nations, and individuals. When arbitration clauses are inserted in most insurance contracts, it leads parties to avoid litigation, which ought to be the last resort in resolving disputes. As most claims require immediate settlement for quick restoration and reinstatement of values, maintenance of the business relationship, avoidance of business interruption, and failure prevention. The delay resulting from litigation may result in heavy claims settlements.
This study conducts a legal evaluation of arbitration as an alternative dispute resolution (ADR) mechanism for settling insurance claims in Nigeria. Given the limitations of litigation, including delays, high costs, and exposure of sensitive information, arbitration emerges as a preferred method for resolving insurance disputes. The inclusion of arbitration clauses in insurance contracts enables parties to avoid litigation, facilitating quicker settlement of claims and preservation of business relationships. This research examines the efficacy of arbitration in resolving insurance disputes in Nigeria, highlighting its benefits, challenges, and implications for the insurance industry. By exploring relevant laws, regulations, and case law, this study provides insights into the role of arbitration in promoting efficient and effective dispute resolution in the Nigerian insurance sector. The study evaluates and examines arbitration as an alternative dispute resolution mechanism in the settlement of insurance claims in Nigeria. This study, therefore, contributes to the understanding of arbitration as a dispute resolution mechanism in Nigeria’s insurance industry, providing insights for stakeholders and policymakers.
Keywords: Insurance, Claims, Contracts, Arbitration, Litigation, Court System.