Section 2- Preparing For Negotiation

Question 1

What is the foundation on which a successful negotiation is based?

Answer 1

Good preparation.

Question 2

What information must you know about an insurance policy before proceeding with a negotiation?

Answer 2

You cannot enter into a negotiation without being clear about the type of policy issued, and the precise scope of the cover.

Question 3

What key information will the policy schedule contain?

Answer 3

• names of the insured entities
• situations where cover applies
• amount of a XS for deductible
• list of expenses that are excluded from the business interruption cover

Question 4

What should you do if you are uncertain about how the policy might apply to the circumstances of the loss?

Answer 4

• read technical commentaries on the cover
• obtain legal advice
• pre negotiation meetings with the insurer and other advisors to ensure the scope of cover is agreed

Question 5

What information should you obtain in order to ensure that you are suitably prepared for any negotiation?

Answer 5

• insurance policy information
• your delegated authority
• relevant legislation and codes
• who the key parties are
• the matter under negotiation

Question 6

What are the main settlement options for a typical property damage claim?

Answer 6

• repair
• replace
• cash settlement
• decline/withdraw claim

Question 7

What are the 4x major obstacles that Fisher and Ury (1981) refer to that may inhibit the invention of an abundance of options for settlement?

Answer 7

• Premature judgement
• searching for the single answer
• the assumption of a ‘fixed pie’
• thinking that ‘solving the problem is their problem’

Question 8

How do you determine the economic viability of a settlement option?

Answer 8

Carry out a cost/benefit analysis?

Question 9

What information is used to carry out a cost/benefit analysis?

Answer 9

In its basic form, cost/benefit analysis is carried out using only financial costs and financial benefits.

Question 10

List some of the types of documents that could provide assistance during the negotiation of a claim?

Answer 10

• the insurance policy
• policy schedule- including risk survey
• Police or Fire Brigade reports
• specialist/expert reports
• witness statements
• claim notes
• correspondence between the parties
• legislation, codes or regulations that may apply
• photographs