Ms. Smith said a study the company did found for every dollar a company spends on inter-company arbitration, the return on investment in 2001 was $20.80, up from $19.69 in 2000.

Cost items reviewed in the study included the salary of the claims handler, file preparation time and copying and mailing costs.

"By choosing arbitration over litigation as the means of resolving property and casualty claims, insurers are saving significant expense dollars as well as time and gaining a competitive edge over those who elect to litigate," she said.

Ms. Smith said disputes leading to arbitration typically arise when insurance or self-insured companies believe their insureds are not at fault or if they disagree as to the percentage of liability or the amount of damages. More than 80 percent of inter-company arbitration disputes involve auto collisions, according to Ms. Smith.

Use of the Internet and e-mail, she said, further speeds the arbitration process. AF said it now offers an E-Speed Filing Program providing electronic filing for small-dollar auto liability and damage disputes. The filing fee for the program recently was reduced to $45 from $100, the company said.

But, many insurers and self-insureds still are not taking full advantage of the savings provided by arbitration, according to Ms. Smith.

For example, she said many are taking too long to initiate the arbitration process. The average number of days from date of loss to date of arbitration filing is 335 days for AF's programs. AF found the most efficient insurers have cut that time down to 240 days, while others take as long as 919 days.

AF counts a membership of more than 3,000 insurers and self-insureds nationwide.