If you're worried about the prospect of a lengthy sparring match with your insurance company over a claim, a mediation service offers a way to settle with little more than a few clicks of your mouse.

Resolute Systems Inc., an alternative dispute-resolution provider based in Milwaukee, Wis., joins the small but growing online dispute-resolution arena with SettleOnline.com. SettleOnline is part of an expanding trend in alternative dispute resolution, joining Cybersettle.com, based in New York City, and ClickNsettle.com, based in Great Neck, N.Y. Settling a case online can be faster than resolving a case either through a mediator or through the courts, which could take years.

SettleOnline allows both consumers and insurance companies to initiate the process by registering and proceeding through resolution "rounds'' of offers and demands. If the case doesn't settle online, SettleOnline will attempt to get opposing sides to negotiate in more conventional ways through its parent company, Resolute.

"I think it's going to be something that grows," says James Dutton, president of Resolute. "It's something that will take time for people to learn how to use."

The way SettleOnline works

SettleOnline accepts all types of insurance claims "where the parties are disputing an economic outcome." That includes auto, homeowners, health, property damage, commercial, and workers compensation insurance.

Personal injury cases arising out of auto accidents or "slip and fall" mishaps comprise most of the disputes at SettleOnline. Representatives for insurance companies initiate most of the cases, because they generally are more familiar with the site than consumers. Any person can initiate an online settlement, but some insurers might decline to participate. Dutton notes that attorneys for people suing their insurers are often harder to convince to participate than the insurance representatives.

One of the disputing parties (either the insurance company or you, the policyholder) initiates the process by registering. SettleOnline does not charge a filing fee, but the side filing the case must pay a $50 agreement fee if the other side decides to participate. Once logged on, the user must enter information about the case, including contact information about the opposing party, to move the case along. The other dispute-resolution sites charge registration fees, plus additional engagement fees.

Dutton says there are no hidden costs taking a bite out of any final settlement. The settlement fee amounts to $200 per party for cases settling for more than $10,000, and $75 for cases settling for $10,000 or less.

The process involves potentially five rounds of making offers or demands. During negotiation rounds, neither side sees the other's offer or demand. And because offers and demands are made online, neither side can engage in the posturing or bullying sometimes associated with face-to-face mediation.

Playing the numbers

Let's say you, the policyholder, or your lawyer, file a case with SettleOnline. After you've decided the amount you're willing to settle for, you enter three demands, all at once, in descending order (for example, $80,000, $60,000, and $40,000). Each of the three entries represents a round, and the insurer later will enter dollar amounts that will be compared against your demands. Your first number would be roughly the best settlement you hope for, while the last number would be the minimum settlement you would accept. The computer uses a formula to calculate the lowest possible settlement for the first two rounds (your demand, minus 8 1/3 percent). For your high number, $80,000, your minimum settlement would be $73,336 using the formula.

After you've entered the numbers, it's the insurer's turn. The company has up to 90 days from the time you filed the case to enter its offers, and the insurer can enter each of the offers at different times. Each offer is compared, in order, against the three demands you entered, with the insurer's last three offers compared against your third demand.

The case settles for your demand if the insurer, on any given round, enters an offer that exceeds your demand.

Here's an example of how the case could settle another way: If the insurer offers $70,000 during the first round, that number is compared against your first offer of $80,000. The case then would settle at $75,000 (SettleOnline calculates the average of your first demand and the insurer's offer. The settlement sticks because it exceeds the minimum amount for that round, $73,336). SettleOnline's program does not allow the case to settle for anything less than your third and lowest number.

Except for the way the minimum settlement is calculated, the process works similarly if the insurer initiates the case. If, as an example, the insurer enters $10,000 as an offer, the maximum settlement would be the offer plus 10 percent ($11,000). The insurer ultimately enters three offers, which are matched against the five demands you enter later.

Join the party

Resolute has not sought a patent for its system, unlike Cybersettle, which accepted its first claim in August 1998 as a strictly online venture and has a patent pending. James Burchetta, chairman and co-CEO of Cybersettle, expects to receive the patent within in the next few weeks. He suggests SettleOnline and other competitors could find themselves in a legal battle after the patent is issued.

Burchetta asserts that other online resolution sites have been copying Cybersettle. "In one sense, it's a form of flattery. In another sense, it disturbs us,'' he says. "We have a large budget and intend to defend our intellectual property. We consider SettleOnline, like ClickNsettle, to be in violation of our patent."

Dutton says SettleOnline will continue to offer its services, despite Cybersettle's pending patent, and acknowleges SettleOnline works much the same way as its competitors.

If the patent for Cybersettle is issued, Dutton believes he might have to modify SettleOnline. But Dutton does not think the basic idea of settling disputes online can be patented. "Saying they're going to be able to patent settling disputes over the Internet is like Amazon.com saying they could patent selling things over the Internet," Dutton says.

In distinguishing his site from the others, Dutton notes Resolute offers other settlement options for users if they've failed to reach an agreement online. Resolute, a 12-year-old company, has long been working with lawyers and mediators in conventional alternative dispute resolution.

"One of the things that differentiates us from [the competition] is the ease with which parties who don't settle online can access other forms of dispute resolution," Dutton says. For example, a Resolute Systems worker can mediate a case either by telephone or face-to-face with at least one of the parties if online negotiations fail.

"We have dozens of professionals on staff who do nothing other than convince people to participate in alternative dispute resolutions. So when we brought SettleOnline to the marketplace, most of these plaintiffs' attorneys already were familiar with us,'' Dutton says. "Probably the biggest advantage SettleOnline has over [the others] is our ability to get the plaintiff's attorney to participate."

Since it was launched in April 1999, Dutton says SettleOnline has helped resolve between 200 and 300 disputes, and roughly 300 to 400 cases are currently pending. On average, a little more than one-third of the cases end up settling online.

Industry clients include The Chubb Corp., Nationwide Mutual Insurance Co., and Zurich-American, according to Dutton. Policyholders and insurers can gain access to settlement data for their own past cases, but not other parties' cases. "We can customize reports for the clients who want to look at their cases," Dutton says. Consumers have no access to general average-settlement data that's not their own.