What is the primary characteristic that distinguishes mediation from arbitration in claims adjustment?

The primary characteristic that distinguishes mediation from arbitration is centered around the focus and approach of each process. Mediation is fundamentally a collaborative effort where the parties involved work together with the assistance of a neutral third party, the mediator, to explore options and find common ground. The goal of mediation is to foster communication and understanding, allowing the parties to create their own resolution that is mutually agreeable.

In contrast, arbitration is more formal and resembles a court proceeding, where the arbitrator listens to both sides and ultimately makes a decision that is binding on both parties. This process is typically more adversarial, as it focuses on the resolution of the dispute through a definitive ruling.

The collaborative nature of mediation encourages parties to engage actively in the resolution process, which is distinct from the outcome-driven nature of arbitration. Understanding this difference is crucial for those involved in claims adjustment, as it influences how disputes are navigated and resolved.