A Florida appellate court has upheld a ruling by the state Office of Insurance Regulation to bar an insurer from including a mandatory arbitration clause in its life insurance contracts.

In its ruling, the First District Court of Appeal said state law provides policyholders with a civil recourse for disputes, and that “mandatory binding arbitration lacks the procedural and constitutional protections” that a civil action provides.

United Insurance Company of America had sought to include the provision in its policies, and appealed the issue to the courts after the OIR rejected the inclusion. While agreeing with United’s argument that “arbitration has long been recognized as a favored means of dispute resolution,” the court noted that state lawmakers had viewed the matter differently.

“The Florida legislature, however, has determined that the business of insurance with respect to the enforcement of the contract shall be in the courts,” the court said in a ruling written by Judge Edward Barfield. “Barring preemption, the legislature may determine when arbitration will not be used.”

United also argued that federal arbitration law should allow for the inclusion of the mandatory arbitration provision, but the court held that this particular matter was specifically related to the business of insurance, and that the federal law therefore did not apply.

Florida Insurance Commissioner Kevin McCarty welcomed the court’s decision.

“Policyholders have fewer rights and constitutional protections under the more restrictive arbitration process than they would have in a civil court proceeding,” he said. “I’m pleased that the court made it clear that Florida consumers should not be shut out of the traditional legal system to press their grievances against insurance companies.”