Transcript Negotiations-Settle That Claim!

Negotiations- Settle that Claim!
Negotiations- Settle that Claim!
Rick Dannenmiller, Paul Davis Restoration
Mike Platts, Charles R. Tutwiler & Associates
Etienne Font, Claims Counsel, Inc.
Negotiation
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According to Webster's New Collegiate Dictionary,
“Negotiate” means “to confer with others so as to
arrive at the settlement of some matter.”
A negotiation is an interactive communication process
that may take place whenever we want something from
someone else or another person wants something from
us.
Negotiating is really getting what you want through the
use of information, time and power to influence the
other party.
Art of Negotiating
Negotiating is more of an Art rather than an exact science.
There are no fixed rules or formulas which can be applied
to every case. Each case presents some new challenge to
the ingenuity in salesmanship of the negotiators. The
technique that is successful in one case may not work at
all in another one.
A technique may be very effective when used by one
negotiator but completely ineffective when used by
another. Experienced negotiators will use those
techniques that work best in any given situation.
Types of Negotiators
Negotiations are complex and the styles and
methods of negotiation are varied. To simplify
the process Thomas Noble, Esq. in his paper
Improving Negotiation Skills: Rules for Master
Negotiators conjured up two types of
negotiators, the Master Negotiators, and the
Novice Negotiators.
We use these two types to zero in on what the
typical claims professional will encounter.
Master Negotiators
Master Negotiators- Professionals who
recognize that negotiations are fluid and to
succeed it is necessary to be flexible to the
process and to change tactics as
necessary. They understand the phases of
negotiations and can move the
negotiations in the direction of closure
when it best suits their position.
Novice Negotiators
Novice Negotiators- Individuals who
have not learned the skills of the master
negotiator. They tend to push their
position as opposed to selling their
position. They treat negotiations as a step
by step process and cannot adapt to the
changes that frequently arise in any
negotiation.
Negotiating Styles
Soft
Hard
Principled
friends
adversaries
problem solvers
goals: agreement
victory
wise outcome
make concessions
demand concessions
separate people from problem
be soft on people and problems
be hard on problem and people
be soft on people, hard on problems
trust others
distrust others
proceed independent of trust
change position easily
dig in
focus on interests not positions
make offers
make threats
explore interests
disclose bottom line
mislead
avoid having bottom line
accept one sided loss
demand one sided gain
invent options for mutual gain
search for acceptable answer
search for one answer you will
accept
develop multiple options
insist on agreement
insist on your position
insist on objective criteria
try to avoid contest of wills
try to win context of wills
try to reach result based on
standards
yield to pressure
apply pressure
yield to principle not pressure
Phases of Negotiations
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2.
3.
4.
Preparation
Information Exchange
Bargaining
Closure
Preparation Phase
•Information: Conduct a thorough investigation. Develop all facts.
Begin your preparation for negotiation by considering your own
underlying needs and interests.
•Analysis: Develop a sound scope of damage. Involve Experts
early to backup your scope.
•Rapport: Establish rapport with your opponent(s). You have to
determine if your opponent is going to cooperate or if you should
involve a third party, lawyer, mediator, appraiser to finalize claim.
•Type of negotiation: What type of negotiation do you expect.
Prepare the file for the type of negotiation you will be involved in.
•Budget: Every negotiation has its cost. Consider the costs of the
negotiation in the settlement process.
•Plan: Prepare a negotiation plan.
Information Exchange Phase
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This is a critical step in the negotiation
process. In order to succeed you have to
know what the other side knows. By agreeing
to exchange information with the other side
you enable your opponent to clearly
understand your position. Without
information exchange both sides can become
slaves to their position and movement to
closure is hindered.
Bargaining Phase
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Logistics: When, where and how will you negotiate.
Opening offers: What is the best offer you can justify?
Should you make it, or wait to let the other party go first?
Subsequent offers: How should you adjust your negotiating
plan when responding to unanticipated moves by your
opponent?
Tactics: What sort of tactics will you employ? What sort of
tactics is your opponent using on you?
Concessions: What concessions will you make? How will you
make them?
Resolution: What is the best way to resolve the problem? Is
there an elegant solution? Be on constant lookout for
compromise and creative solutions
Closure Phase
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Logistics: How and when will you close? At
mediation, appraisal or later on?
Documentation: Proof of Loss, Mediation
agreement, Appraisal Award or policyholders
release.
Emotional closure: It's one thing to end a
dispute; it's another to leave it behind. Do not
bring to the next negotiation feelings or
emotions left from the previous negotiation.
Implementation: It's not over until it is over.
Elements of Negotiations
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Attitude
Communication Skills
Planning
Evaluation
Closure
Attitude
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Attitude is critical. Novice negotiators do not understand that
everything is negotiable all of the time. They give up too
easily. If you slam your briefcase and walk out of a
negotiation session, they do not understand that this is a
tactic; they interpret it as the end of the negotiation.
Many attributes go into making a skillful negotiator, including
such things as having a good memory, being 'quick verbally',
and handling stress well. But effectiveness is as much a
matter of attitude as it is of ability. The best negotiators
exhibit four key habits of thought that everyone, regardless
of their style or IQ, can adopt to improve their negotiation
results ...
* A willingness to prepare
* High expectations
* The patience to listen
* A commitment to personal integrity
Communications Skills
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Without lines of communication there can be no negotiation.
Therefore, this rule is essential. Lines of communication are the lifeblood of a negotiation. Master Negotiators understand this; novices do
not. Novice Negotiators often focus on static elements of the problem,
believe that they are "playing a winning hand", and throw down the
gauntlet, only to learn later that the dynamic elements of the situation
have changed, their leverage has withered, and they have burned
their bridges.
To ease the stress of negotiating and improve the chances for a
successful result, establish rapport with your opponent, and build on
that foundation. This is especially important in cases where the parties
will have a long-term relationship after closure.
The ability to see the situation as the other side sees it, as difficult as
it may be, is one of the most important skills a negotiator can possess.
... To accomplish this task you should be prepared to withhold
judgment for a while as you 'try on' their views.
Planning
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Initial offers define the parameters of the “negotiation zone.” The
negotiation zone is that range in which negotiators bargain. In every
negotiation the parties define the negotiation zone. You get to
decide where one end of the zone is located, and your opponent
decides the other end. Master Negotiators understand that where
leverage is relatively equal, there is always a tendency to meet in the
middle. Where the middle is ultimately located depends on where
they start. Therefore, they put a lot of time and energy to developing
and justifying their initial offers.
Master Negotiators make the highest (or lowest, as the case may be)
first offer they can justify, while being careful not to go beyond that
point.
Master Negotiators understand the law of contrast. At the end of the
day, after concessions are made, the other party will be satisfied
with the deal only after the other party has made concessions
Evaluation
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Novice Negotiators focus on facts, or dollar amounts, or legal
issues, or personalities. Master Negotiators understand that
every negotiation is a combination of these factors, as well as
others.
Master Negotiators see more than just opening offers,
counteroffers, and closing moves when they look at what
happens at the bargaining table. They see psychological and
strategic currents that are running just below the surface.
They notice where the parties stand in terms of the reciprocity
norm. They look for opportunities to use what psychologists
call the consistency principle to commit other parties to
standards and then hold them to their prior statements and
positions, and they know that the timing of a proposal is
always as important as its content.
Closure
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Master Negotiators know how to close. They consider every
element of closure: when, where, documentation, pending issues.
Novices either rush the end game or delay it interminably, with
equally bad results. Rushing the end game usually means closing
a file based on a poorly written estimate. Inevitably the file gets
reopened for supplements. Delaying the end game means failing
to "strike when the iron is hot"; if you wait long enough,
something will happen to prevent closure. Time kills deals. If
enough time has passed your opponent will decide litigation may
not be a bad option after all.
Don't fuss with minutiae. Let your counterpart take home some
trinkets, even where both the leverage and the logic are on your
side.
Negotiations at the Claim Level
Negotiating with the:
 Insured
 Public Adjuster
 Insured’s contractor or Vendor
 Examiner
Negotiating with the Insured
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A negotiator with the most logical, technical, perfect case,
can fail to reach a successful settlement if he has not won
the confidence of the Insured. In other words, sell yourself
by demonstrating qualities of sincerity, reliability, friendliness,
sympathy and integrity.
All through the negotiations you must remember to exhibit a
sincerity of purpose, a pleasant manner, being frank and
helpful in answering questions, giving information and
relieving anxiety as well as a strong belief in the fairness of
your settlement offer.
Negotiating with the Public Adjuster
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Create the right climate for negotiations. A public adjuster is a
professional. If you approach them in that manner, they will reciprocate.
They represent the insured and stand in their shoes, so treat them as you
would treat the insured.
Remember “Fair” is a range. Many negotiations break down because one
person has a number in mind (his "bottom line"), and the other person
has a number in mind, and one or both parties adopts a negative attitude
about closing the gap.
Know the Public Adjusters in your area and build relationships with them.
You will see them often, you should know who you are up against.
Perhaps the best strategy to adopt while the other side lets off steam is
to listen quietly without responding to their attacks, and occasionally to
ask the speaker to continue until he has spoken his last word. In this
way, you offer little support to the inflammatory substance, give the
speaker every encouragement to speak himself out, and leave little or no
residue to fester
Negotiating with the Insured’s Contractor or Vendor
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Start the negotiations with your position verified and
backed up by similar experts.
Do not dismiss the contractor’s position outright since
the insured is relying on it and will not move unless
you are able to first move the contractor.
Understand your vendors position but verify. You will
be relying on it so make sure you understand it and
agree with it.
Do not entertain negotiations until you have reached a
point of similar leverage.
Arrive at the negotiations informed about construction
and code. Don’t let yourself be tripped up about local
constructions practices. Know them inside out.
Negotiating with the Examiner
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Confidence, Confidence, Confidence
These negotiations are difficult. The examiners are your
clients and an adjuster at times wants to please the
examiner without regard to their position.
You have to think of yourself as the expert on the claim.
After all you did the field investigation and have spent a
lot more time on the claim than the examiner. Sell your
position with confidence. Prove to the examiner that
you have kept their interests at hand when developing
your position. Backup your position with experts when
necessary and show the examiner that you will enter
negotiations prepared.
Negotiations -Mediation
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Negotiating with the insured in Mediation
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Negotiating with the mediator
Negotiations at Mediation with Insured
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Use the process as part of your negotiation
technique. You may wish to caucus immediately
or after a round of face to face negotiations.
Or you may wish to break caucus to conduct
face to face negotiations once it looks like a
settlement is imminent.
Some mediators have a minimum two hour fee.
Don’t dismiss the opportunity to make a last
chance offer right before the mediators time is
up. The other side knows that extra minute of
time is another hour of mediator fees. Master
Negotiators know this and use it to their
advantage.
Negotiations at Mediation with the Mediator
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Master Negotiators know when a mediator will facilitate
settlement and when a mediator is unnecessary. Master
Negotiators are usually master manipulators, and
mediation is no exception. Master Negotiators understand
that the mediator can help them sell their proposals.
They arm the mediator with persuasive arguments, or
material evidence in support of their proposals. They add
a dash of charm and encourage their insured’s to endear
himself or herself to the mediator.
Novices come to mediation and act combative with the
mediator or exclude the mediator from all relevant
discussions, relegating the mediator to the function of
courier.
Negotiations -Appraisal
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Negotiating with the other Appraiser
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Negotiating with the Umpire
Negotiations at Appraisal with the
other appraiser
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Master Negotiators know that first offers are almost artificially high. They
do not get upset over that; they simply respond appropriately.
The harder it is to come up with logic to support your position - the more
you have to back into reasons that leave you feeling uncomfortable - the
more concerned you should be that your counterpart will perceive your
position as overreaching. So, developing a rationale furnishes a useful
litmus test to determine whether the position you're taking is defensible.
The goal of an effective negotiator is to have expectations that are high
enough to present a real challenge but realistic enough to promote good
working relationships. ... If you are basically a cooperative person, raise
your expectations. Respectfully ask for more. Insist a bit.
The truly gifted negotiator, then, is one whose initial position is
exaggerated enough to allow for a series of concessions that will yield a
desirable final offer from the opponent, yet is not so outlandish as to be
seen as illegitimate from the start.
Negotiations at Appraisal with the Umpire
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Appraisal is not mediation. Master Negotiators know this and once
the umpire is retained start negotiating directly with the umpire.
Novice Negotiators continue to complain about the other appraiser
and why their position is wrong. Master Negotiators understand
that complaining does not convince anyone your position is right.
You have to defend your position and convince the Umpire you are
right.
But …Your goal is only as effective as your commitment to it. ... you
should make sure it is justified and supported by solid arguments.
You are not going to prevail on all issues that arise in a negotiation,
so save yourself for the significant ones. Let your counterpart take
home a few trophies, too, especially on issues that aren't that
important to you.
Remember you gain credence for your inflexibility on a few choice
issues by your willingness to give ground on the rest.
A Final Approach
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In the book “Getting to Yes: Negotiating agreement without giving
in, by Roger Fisher and William Ury,” Fisher and Ury discuss methods
of negotiating. They argue that their model of "principled
negotiation" is superior to the traditional method of "positional
bargaining" in which the parties take positions and then make
concessions to reach agreements.
The method of principled negotiation developed by the Harvard
Negotiation Project is to decide issues on their merits rather than
through the haggling process focused on what each side says it will
do and won't do. It suggests that you look for mutual gains
wherever possible, and that where your interests conflict, you should
insist that the result be based on some fair standards independent of
the will of either side. The method of principled negotiation is hard
on the merits, soft on the people.
A Final Approach-continued
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Fisher and Ury summarize their method of principled
negotiation as follows:
 People: Separate the people from the problem.
 Interests: Focus on interests, not positions.
 Options: Generate a variety of possibilities before
deciding what to do.
 Criteria: Insist that the result be based on some
objective standard.
They correctly point out that “The more extreme the opening
positions and the smaller the concessions, the more time and
effort it will take to discover whether or not agreement is
possible.”
Conclusion
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Be unconditionally constructive. Approach a negotiation with this-- ‘I accept
you as an equal negotiating partner; I respect your right to differ; I will be
receptive.' Some criticize this approach as being too soft. But negotiating by
these principles is a sign of strength.
All of us engage in many negotiations during a week but that doesn't mean
we become better at it. To become better we need to become aware of the
structure and dynamics of negotiation and we need to think systematically,
objectively, and critically about our own negotiations. After engaging in a
negotiation, reflect on what happened and figure out what you did
effectively and what you need to do better.
There is no one "best" style; each of us has to find a style that is
comfortable for us. Yet, everyone can negotiate successfully; everyone can
reach agreements where all sides feel at least some of their needs have
been satisfied. This involves a lot of alertness, active listening, good
communication skills, great flexibility, good preparation, and above all it
involves a sharing of responsibility for solving the problem, not a view that
this is "their" problem.
Q&A
QUESTIONS?
Works Consulted
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Improving Negotiation Skills: Rules for Master Negotiators, Thomas Noble, Law Offices of
Thomas Noble, P.C., 2001.
Nierenberg, Gerard, Fundamentals of Negotiation James Ware and Louis B. Barnes, "Managing
Interpersonal Conflict," HBR, 1978.
Fisher, Roger and William Ury, Getting to Yes
Lax, D. A. and J. K. Sebenius, The Manager as Negotiator, (New York: Free Press, 1986).
Negotiations and Resolving Conflicts: An Overview, prepared by Professor E. Wertheim, College
of Business Administration, Northeastern University
Bargaining for Advantage: Negotiation Strategies for Reasonable People, by G. Richard Shell.
Deal Power: 6 Foolproof Steps to Making Deals of Any Size by Marc Diener.
Getting Past No: Negotiating Your Way From Confrontation to Cooperation, by William Ury.
Getting to Yes: Negotiating Agreement Without Giving In, by Roger Fisher and William Ury.
Influence: The Psychology of Persuasion, by Robert B. Cialdini (Rev. Ed., 1993).
Legal Negotiation in a Nutshell, by Larry L. Teply.
Secrets of Power Negotiating: Inside Secrets from a Master Negotiator, by Roger Dawson.
Smart Negotiating: How to Make Good Deals in the Real World, by James C. Freund.
The Negotiation Tool Kit by Roger J. Volkema.
The Power of Negotiating: Strategies for Success by Mike R. Stark.
The Tao of Negotiation by Joel Edelman and Mary Beth Crain.
The Total Negotiator by Stephen M. Pollan and Mark Levine.