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?
Discoverability
In court, the adjuster’s claim file is discoverable; it must be handed over.
Non-Discoverable:
- Attorney-Client Privilege: confidential information between the attorney and his client shared as part of the process of getting legal advice
- 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
Filing Tips
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
Safety Tips
Additional claim file safety tips
- Never joke in written communications-paper or electronic
- Be careful with photographs
- Document everything, including the date of all communications as they transpire
Criminal vs. Civil Trial
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
Claims in Civil Trials
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)
Burden of Proof
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)
Negligence in Civil Trials
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
Negligence in Civil Trials
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
