Claims Negotiations are Different

Ask any adjuster, and they’ll tell you they negotiate all the time. But do they really? Are they actually negotiating or merely presenting solutions to problems they haven’t fully explored?

In the negotiation seminars we conduct all over the country for adjusters, we present the story of a simple disagreement between two neighbors over the fate of the fruit from an orange tree on their property line. When the adjusters are asked to offer solutions to the dilemma, an average of 91 percent supply the wrong answers. How well would you do?

The exercise, originally developed by negotiation expert Phillip Sperber, poses the dilemma presented by the following video (taken directly from one of our PRISMS negotiation courses):

The average set of responses runs something like this:

• Approximately 61 percent suggest splitting the oranges, with each neighbor taking half;
• 13 percent would offer some oranges to the neighbor but would want to keep the majority;
• 7 percent suggest that each neighbor take only those oranges hanging on their side of the property line;
• 4 percent would offer to buy the oranges from the neighbor;
• 3 percent would offer to pick all the oranges, then split them with the neighbor;
• 2 percent suggest that each neighbor pick oranges in a different season; and
• 1 percent suggest picking the oranges at night, when the neighbor isn’t looking(!)

That adds up to 91 percent of the negotiation seminar attendees – the 91 percent with the wrong answers.

Only 9 percent of workshop participants suggest the proper course of action: meet with the neighbor, find out what his needs are and what he feels would be fair for both parties, then set criteria to resolve the dispute.

Identify needs
Participants discover that the neighbor actually wants the orange peels to make marmalade. If they used proper negotiation techniques, both neighbors would find that they could satisfy one hundred percent of their needs.

Most people who participate in this exercise make a simple but serious mistake; they immediately jump to conclusions without first exploring the needs of both parties.

Offering solutions or compromises without investigating both technical and emotional criteria is not good negotiating. In fact, it’s hardly a negotiation at all.

A rather frightening finding from this exercise is that few adjusters can even identify this situation as one that requires proper negotiation! Ninety-one percent offer immediate solutions that have no bearing on the actual problem. That’s just plainly and simply unproductive.

The Need for Skills – with a Claims Orientation
The insurance claims adjuster is the company’s front line, responsible for the image of the organization and the attitudes the public forms about the company. The adjuster literally delivers the insurance product promise. Unfortunately, when it comes time to collect, too many insureds and claimants see their promise turn into excuses, procedural hassles, and bureaucratic red tape.

Adjusters will claim (pardon the pun), and rightly so, that too many people have false expectations or don’t understand their policies. Fair enough. But whose job is it to investigate expectations, communicate policies and procedures, and confirm understanding?

What many adjusters fail to realize, as evidenced by the results of the exercise above, is that partnering and probing are integral and vital parts of the claim negotiation process; when conducted properly, this process helps promote direct settlement, close files faster, provide more realistic payments, and enhance the company’s image.

Sourcing a Negotiation Course for Claims
Companies need to be careful about which negotiation programs they bring in, however. Most negotiation programs fail claims operations because they’ve been designed for those with

explicit responsibility in more conventional transactional relationships – leaders, executives, and salespeople. Settling a claim means delivering a promise – that’s very different than bargaining for contract terms or making a sale. It often means dealing with people who are already predisposed to the emotions associated with loss.

Without a foundation of professional communication and relationship skills (including influence and persuasion), the adjuster‘s use of conventional negotiating techniques can be significantly less effective or, in some cases, can even exacerbate rather than diminish conflict.

Any formal training designated for the insurance adjuster should take the unique circumstances of their job into account. Adjusters must negotiate within the limits of policies and reserves, for example, and they must reach agreements with a variety of people. Claims adjusters have to handle people as deftly as they handle technical considerations.