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 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
Liability dispute example
If Jacob rear-ends Mary, how do you, as the adjuster, assign an exact value to her claimed mental duress? And did she play a role in her own damages? If so, to what extent? On the other hand, if Josh wrecks his own car, your job is much more simple: estimate the cost for the body work.
Before negotiations begin, an adjuster must determine:
1. Is there coverage? ○ peril is covered ○ policy is active, etc. 2. What is the insured’s liability? (liability claims only) 3. What are the damages? ○ special damages ○ general damages Remember: no negotiating punitive damages!
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 (but important) details
Solving simple, trivial matters can get negotiations unstuck
Minor (but important) details example
The insured may want something as simple as an apology for a clerical error or other misunderstanding. If an adjuster can pinpoint and rectify minor issues with the claimant right off the bat, the negotiations process may quickly take care of itself and lead to a satisfactory outcome for both parties.
Give and Take in Negotiation
● 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
Trustful Claimant + Trustful Adjuster =
Better Negotiations
Create a good first impression
● Professional appearance
● Respectful attitude
● Neatly groomed
● Good hygiene
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.
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.
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
Develop a good reputation
● A trustworthy reputation makes negotiation easier
● An untrustworthy reputation will undermine negotiation
Some helpful negotiation techniques:
- Humor
- Questions
- Demonstration
- Pleasant Surprise
- Diversion
- Silence
- Have a Back-up Offer Ready
- Flexibility
Use humor properly
● Lighthearted humor can defuse tense negotiations
● Must be used appropriately
● Consider the feelings of all present
Questions helpful for negotiation:
● Detailed
● Thoughtful
● Sincere
Questions harmful to negotiation:
● Patronizing
● Trivial
● Argumentative
● Questioning claimant’s ethics or intentions
Demonstrate contradicting evidence; which can include:
● Video footage
● Previous statements
● Witness testimony
● Contractor estimates
Pleasant Surprise
Conceding a point favorable to the claimant builds trust and goodwill.
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
Practice selective silence
● People often talk simply to fill the silence
● Discomfort may lead to inadvertent disclosures
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
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”
Negotiation techniques:
● Humor ● Questions ● Demonstration ● Pleasant Surprise ● Diversion ● Silence ● Back-up Offer ● Flexibility
Litigation
● Laws and courts favor settlement by negotiation, avoiding litigation
● Offers made during negotiations are not admissible in court
Liability Claims vs. Property Claims
● Property: claimant is the policyholder
● Liability: claimant is a third party
Litigation is a last resort for the insurer:
● Unpredictable
● Potential prejudices against insurers
Should the insurer take the claim to court?
Ask two questions:
- How much money must be surrendered?
2. How will this affect our reputation?
Should the insurer take the claim to court? Example
Successful negotiation becomes much more difficult if an insurer becomes known as a “push over,” rarely taking a case to trial regardless of the circumstance. Lawyers opposing the insurer may believe they can ask for whatever they want, knowing that historically the insurer is apt to pay rather than risk trial.
In court, the adjuster’s claim file is _______; it must be handed over.
discoverable
Non-Discoverable: 2 Types
- Attorney-Client Privilege:
2. Work Product
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
Proper filing tips 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
Proper filing tips guidelines example
Suppose you are investigating a fire claim. You find that there are several inconsistencies between the physical evidence and the claimant’s statement. Instead of writing in your file “I believe the claimant is a lying fraud, which is common among people in her income bracket,” you might instead write, “My investigation revealed several apparent inconsistencies between the physical evidence and the claimant’s statements. They are as follows: … .” The first comment may compromise the insurer’s ability to defend itself if the claim goes to court; the second will not.
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
Additional claim file safety tips
example
Here is what a record of communications in a claims file might look like:
■ “8/23/18 – Called claimant and left a message.”
■ “8/26/18 – Sent interim report to claims manager Joe Smith.”
■ “8/27/18 – Inspected loss with insured and insured’s contractor. Took recorded
statement.”
Criminal Trial:
State (plaintiff) vs. Citizen (defendant)
Civil Trial:
Citizen (plaintiff) vs. Citizen (defendant)
TV depictions:
Criminal trial: Law and Order Civil trial: Judge Judy
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)
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)
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
Criminal trial:
● State accuses defendant of violating the law
● 12 out of 12 jurors must agree
● Proof beyond a reasonable doubt
Civil trial:
● Citizen accuses another citizen of wrongdoing
● Proof by a preponderance of the evidence
If plaintiff was at all negligent in the loss:
● Contributory Negligence: no settlement (only allowed in some states)
● Comparative Negligence: partial settlement
