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Insurance Adjusting > 2/E - Negotiation > Flashcards

2/E - Negotiation Flashcards

1
Q

Negotiation

A

A process by which two opposing parties attempt to merge their respective interests in order to yield a balanced and beneficial outcome for both parties

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2
Q

Liability vs Property Claims

A

Liability claims:

  • Harder to assign dollar amounts
  • Factor in issues like mental duress and comparative negligence

Property damage claims:
Cost to repair or replace is simple and straightforward

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3
Q

Negotiation - The Preliminaries

A

Before negotiations begin, an adjuster must determine:

  1. Is there coverage?
    a. peril is covered
    b. policy is active, etc.
  2. What is the insured’s liability? (liability claims only)
  3. What are the damages?
    a. special damages
    b. general damages

Remember: no negotiating punitive damages!

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4
Q

Preparing to Negotiate

A

Prior to negotiations, the adjuster must:

  • Complete investigation
  • Complete estimate
  • Know the circumstances
  • Be clear about objectives
  • Understand possible obstacles
  • Know the maximum amount the insurer will pay
  • Have an idea of the minimum amount the claimant will accept
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5
Q

Minor Details

A

Minor (but important) details:

Solving simple, trivial matters can get negotiations unstuck

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6
Q

Give and Take

A
  • Approach negotiation with an open mind
  • Impossible to prevail on every point
  • Conceding some points increases likelihood of opposing party conceding points
  • Inflexibility prevents negotiation and causes frustration
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7
Q

Develop Trust

A

Trustful Claimant + Trustful Adjuster = Better Negotiations

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8
Q

First Impression

A

Create a good first impression

  • Professional appearance
  • Respectful attitude
  • Neatly groomed
  • Good hygiene
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9
Q

Attitude

A

Have a positive attitude

  • Humble and understanding
  • Willing to listen
  • Open to new facts
  • Take claimant’s perspective

An arrogant or “win-at-all-costs” attitude can torpedo negotiations.

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10
Q

Comments

A

Keep comments polite

  • Keep criticisms out of the discussion
  • Maintain professional speech, even if claimant is unprofessional
  • Don’t make claimant angry

Rude, sarcastic remarks, especially when they do not pertain to the claim itself, are a waste of time.

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11
Q

Respect

A

Show respect:

  • Look claimant in the eye
  • Shake hands warmly
  • Don’t interrupt or correct
  • Listen and seek to understand
  • Don’t assume you know what the claimant wants
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12
Q

Reputation

A

Develop a good reputation

  • A trustworthy reputation makes negotiation easier
  • An untrustworthy reputation will undermine negotiation
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13
Q

Negotiation Techniques

A

Some helpful negotiation techniques:

  1. Humor
  2. Questions
  3. Demonstration
  4. Pleasant Surprise
  5. Diversion
  6. Silence
  7. Have a Back-up Offer Ready
  8. Flexibility
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14
Q

Humor

A

Use humor properly

  • Lighthearted humor can defuse tense negotiations
  • Must be used appropriately
  • Consider the feelings of all present
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15
Q

Questions

A

Ask the right questions

Questions helpful for negotiation:

  • Detailed
  • Thoughtful
  • Sincere

Questions harmful to negotiation:

  • Patronizing
  • Trivial
  • Argumentative
  • Questioning claimant’s ethics or intentions
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16
Q

Demonstration

A 
Demonstrate contradicting evidence
This can include:
- Video footage
- Previous statements
- Witness testimony
- Contractor estimates
17
Q

Pleasant Surprise

A

Conceding a point favorable to the claimant builds trust and goodwill

18
Q

Diversion

A

Diversion: when negotiations are going nowhere

  • End the meeting or divert to another area of negotiations to defuse high emotions
  • Resume negotiations at an appropriate time
19
Q

Silence

A

Practice selective silence

  • People often talk simply to fill the silence
  • Discomfort may lead to inadvertent disclosures
20
Q

Backup Offer

A

Have a back-up offer ready

  • Gives the claimant the sense that they have options and choices
  • Helps the adjuster be flexible while staying within the insurer’s limits
21
Q

Flexibility

A

Be flexible:
Be willing to make minor changes within the insurer’s parameters
- Strengthens the adjuster’s position
- Shows the claimant that the adjuster is accommodating
- Adjuster should be very sure of the insurer’s “stop-marks”

22
Q

Litigation Basics

A

Litigation

  • Laws and courts favor settlement by negotiation, avoiding litigation
  • Offers made during negotiations are not admissible in court
23
Q

Property vs. Liability

A

Liability Claims vs. Property Claims

  • Property: claimant is the policyholder
  • Liability: claimant is a third party
24
Q

Litigation or Not?

A

Litigation is a last resort for the insurer:

  • Unpredictable
  • Potential prejudices against insurers

Should the insurer take the claim to court?
Ask two questions:
1. How much money must be surrendered?
2. How will this affect our reputation?

25
Q

Discoverability

A

In court, the adjuster’s claim file is discoverable; it must be handed over.

Non-Discoverable:

  1. Attorney-Client Privilege: confidential information between the attorney and his client shared as part of the process of getting legal advice
  2. Work Product: work prepared for the insurer in anticipation of imminent litigation, as long as the insurer would not have had the work done if it weren’t for the lawsuit
26
Q

Filing Tips

A

Proper filing guidelines
Claim file should be:
- Clear
- Organized

Claim file should have:

  • Detailed documentation of claimant’s testimony
  • Witness statements
  • Investigations

Claim file should NOT have:

  • Negative opinions about the claimant or insured
  • Racist or biased comments
27
Q

Safety Tips

A

Additional claim file safety tips

  1. Never joke in written communications-paper or electronic
  2. Be careful with photographs
  3. Document everything, including the date of all communications as they transpire
28
Q

Criminal vs. Civil Trial

A

Criminal Trial:
State (plaintiff) vs. Citizen (defendent)

Civil Trial
Citizen (plaintiff) vs. Citizen (defendent)

TV depictions:
Criminal trial: Law and Order
Civil trial: Judge Judy

29
Q

Claims in Civil Trials

A

Claim disputes are settled in civil trials:

  • Defendant is typically the insurer
  • Plaintiff is the claimant
  • Adjuster is typically a witness

If an adjuster does end up in criminal court it is usually as:
- Witness for either party
OR
- Defendant (if accused of a crime)

30
Q

Burden of Proof

A

Criminal vs. Civil Trial: Burden of Proof

Criminal trial burden of proof:

  • 12 out of 12 jurors
  • Guilt proved “beyond a reasonable doubt”

Civil trial burden of proof:

  • Wrongdoing proved by a “preponderance of the evidence”
  • Preponderance of evidence: more evidence supports the plaintiff’s case than contradicts it (51% or more evidence supports)
31
Q

Negligence in Civil Trials

A

Contributory vs. Comparative Negligence
Jury’s Responsibilities:
- Determine the level of liability of both parties
- Determine the amount of damages

Contributory Negligence:
Any negligence on the part of the plaintiff = no settlement

Comparative Negligence:
Settlement reduced by the percentage of the plaintiff’s negligence

32
Q

Negligence in Civil Trials

A

Contributory vs. Comparative Negligence
Jury’s Responsibilities:
- Determine the level of liability of both parties
- Determine the amount of damages

Contributory Negligence:
Any negligence on the part of the plaintiff = no settlement

Comparative Negligence:
Settlement reduced by the percentage of the plaintiff’s negligence

Insurance Adjusting (46 decks)

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