Fourteen insurance companies are signing up to a ground-breaking scheme to avoid costly litigation by opting for mediation.
The scheme, which is being launched at the London Underwriting Centre later this month, will require participating companies to sign a "statement of intent" requiring them to consider mediation before litigation.
The statement brands litigation as costly and praises mediation as a quicker and more effective method of resolving disputes.
Although not legally binding, it requires companies that resort to litigation to give a full explanation for their decision.
Among the companies on board are Royal Sun & Alliance and the Solicitors' Indemnity Fund (SIF), which last week won a Centre for Dispute Resolution award for its use of mediation.
SIF assistant claims manager Ian Bryant said: "It is a very, very simple document, which just states our views that litigation is a costly method of dealing with disputes and we endorse alternative forms of dispute resolution."
Accredited mediator Bruce Ralston, an insurance partner at Beachcroft Stanleys, backed the scheme.
But he accepted that some lawyers would resist mediation because it prevented a well-paid day out in court.
He said: "Our view is the quicker you can resolve a dispute, the more likely you will be instructed on other ones. If people see access to the law as easy, they will use it."
Clifford Chance consultant Tony Willis, another accredited mediator, said he would like to see the idea taken up outside the insurance industry.
The Master of the Rolls, Lord Woolf, has backed the scheme by agreeing to deliver the keynote speech at its launch.