2/E - Negotiation

Question 1

Negotiation

Answer 1

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

Question 2

Liability vs Property Claims

Answer 2

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

Question 3

Negotiation - The Preliminaries

Answer 3

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!

Question 4

Preparing to Negotiate

Answer 4

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

Question 5

Minor Details

Answer 5

Minor (but important) details:

Solving simple, trivial matters can get negotiations unstuck

Question 6

Give and Take

Answer 6

• 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

Question 7

Develop Trust

Answer 7

Trustful Claimant + Trustful Adjuster = Better Negotiations

Question 8

First Impression

Answer 8

Create a good first impression

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

Question 9

Attitude

Answer 9

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.

Question 10

Comments

Answer 10

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.

Question 11

Respect

Answer 11

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

Question 12

Reputation

Answer 12

Develop a good reputation

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

Question 13

Negotiation Techniques

Answer 13

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

Question 14

Humor

Answer 14

Use humor properly

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

Question 15

Questions

Answer 15

Ask the right questions

Questions helpful for negotiation:

• Detailed
• Thoughtful
• Sincere

Questions harmful to negotiation:

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

Question 16

Demonstration

Answer 16

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

Question 17

Pleasant Surprise

Answer 17

Conceding a point favorable to the claimant builds trust and goodwill

Question 18

Diversion

Answer 18

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

Question 19

Silence

Answer 19

Practice selective silence

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

Question 20

Backup Offer

Answer 20

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

Question 21

Flexibility

Answer 21

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”

Question 22

Litigation Basics

Answer 22

Litigation

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

Question 23

Property vs. Liability

Answer 23

Liability Claims vs. Property Claims

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

Question 24

Litigation or Not?

Answer 24

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?

Question 25

Discoverability

Answer 25

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

Question 26

Filing Tips

Answer 26

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

Question 27

Safety Tips

Answer 27

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

Question 28

Criminal vs. Civil Trial

Answer 28

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

Question 29

Claims in Civil Trials

Answer 29

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)

Question 30

Burden of Proof

Answer 30

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)

Question 31

Negligence in Civil Trials

Answer 31

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

Question 32

Negligence in Civil Trials

Answer 32

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