2/E - Negotiation Flashcards
Negotiation
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
Liability vs Property Claims
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
Negotiation - The Preliminaries
Before negotiations begin, an adjuster must determine:
- Is there coverage?
a. peril is covered
b. policy is active, etc. - What is the insured’s liability? (liability claims only)
- What are the damages?
a. special damages
b. general damages
Remember: no negotiating punitive damages!
Preparing to Negotiate
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
Minor Details
Minor (but important) details:
Solving simple, trivial matters can get negotiations unstuck
Give and Take
- 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
Develop Trust
Trustful Claimant + Trustful Adjuster = Better Negotiations
First Impression
Create a good first impression
- Professional appearance
- Respectful attitude
- Neatly groomed
- Good hygiene
Attitude
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.
Comments
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.
Respect
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
Reputation
Develop a good reputation
- A trustworthy reputation makes negotiation easier
- An untrustworthy reputation will undermine negotiation
Negotiation Techniques
Some helpful negotiation techniques:
- Humor
- Questions
- Demonstration
- Pleasant Surprise
- Diversion
- Silence
- Have a Back-up Offer Ready
- Flexibility
Humor
Use humor properly
- Lighthearted humor can defuse tense negotiations
- Must be used appropriately
- Consider the feelings of all present
Questions
Ask the right questions
Questions helpful for negotiation:
- Detailed
- Thoughtful
- Sincere
Questions harmful to negotiation:
- Patronizing
- Trivial
- Argumentative
- Questioning claimant’s ethics or intentions
Demonstration
Demonstrate contradicting evidence This can include: - Video footage - Previous statements - Witness testimony - Contractor estimates
Pleasant Surprise
Conceding a point favorable to the claimant builds trust and goodwill
Diversion
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
Silence
Practice selective silence
- People often talk simply to fill the silence
- Discomfort may lead to inadvertent disclosures
Backup Offer
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
Flexibility
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”
Litigation Basics
Litigation
- Laws and courts favor settlement by negotiation, avoiding litigation
- Offers made during negotiations are not admissible in court
Property vs. Liability
Liability Claims vs. Property Claims
- Property: claimant is the policyholder
- Liability: claimant is a third party
Litigation or Not?
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?
