Arbitration is an informal trial held before a neutral court official called an arbitrator. An arbitration hearing is an informal legal proceeding held before a neutral court official called an arbitrator.Insurance arbitration relies upon an arbitrator (the neutral third party) to make an appropriate decision based on the specifics of a claim or case. In the realm of insurance claims, insurance arbitration serves as an alternative to litigation for resolving disputes over claims. Arbitration is the process of using a third party to settle a dispute instead of taking the case to court. A collection of the most recent US international arbitration decisions is available here. 2. Arbitration and Mediation — insurance policy provision — not an agreement to arbitrate. What is Arbitration? Any person having a direct interest in the arbitration is entitled to attend hearings.