Final answer:
Arbitration is the method used when an insured and insurer cannot agree on a claim settlement in casualty insurance, where an arbitrator decides on the matter.
Step-by-step explanation:
When an insured and an insurer cannot agree on the settlement of a claim in casualty insurance, arbitration is a commonly used method to resolve the dispute. In the process of arbitration, both parties present their cases to an impartial third party, known as an arbitrator, who makes a binding decision on the settlement. It's important to note that other methods like appraisal, proof of loss, and restoration may also be relevant in the claims process, but arbitration specifically addresses disagreements that cannot be resolved without outside intervention.
Insurance companies must manage their operations to ensure that the average person's payments into insurance cover the average person's claims, the costs of running the company, and allow for the firm's profits. This financial equation is critical to maintaining the viability and stability of any insurance firm.