Adjusters, Do Your Homework Before Negotiating the Claim

February 17, 2009

In sports, everyone wants to win on game day. The stark reality is that not everyone does. For every winner, there is a loser. Those who win in sports are the ones possessing not only the will to win, but the will to prepare.

As in sports, so it is in claim negotiations.

In claim negotiations, everyone wants to win during the give-and-take process. In reality, the ones who “win” are the ones who prepared for the negotiation.

Just what does it mean to prepare for claim negotiations? Let’s examine three major ingredients which, when mixed together, produce a recipe for negotiating success.

Preparation pays off in all negotiations. Before starting negotiations, have a clear idea fixed in your mind as to what you want to accomplish. Typically, this is settlement at some dollar threshold. Other aims — perhaps subsidiary — may also coexist with the goal of settlement. These other aims might include:

• retaining policyholder goodwill;
• retaining a claimant’s goodwill, keeping “control” of the claim;
• building credibility with a client and satisfaction that will lead to future assignments;
• obtaining confidentiality or non-disclosure for a sensitive settlement;
• maintaining a good working relationship with an attorney with whom you expect to be working on a recurring basis;
• projecting a fair image of insurance claim adjusters to the public;
• avoiding adverse publicity for your client, company or yourself; and
• demonstrating your worth to your employer by negotiating consensus in a very difficult situation.

Before beginning any negotiation session, be clear about your aims.

Fortune favors the prepared when it comes to success in insurance claim negotiation. Thus, take time to review the claim file before negotiating. Negotiation is not an on-the-fly activity. This is no time to wing it! You should know the claim file better:

• better than the policyholder, in a first-party claim;
• better than the public adjuster representing the insured;
• better than the claimant, in a third-party claim; and
• better than the claimant attorney representing the claimant.

If you don’t know the claim file as well as — and preferably better than — your negotiating adversary, you are inviting failure.

Thus, review in advance three key aspects of the claim file: coverage, liability and damages.


Are there any lingering coverage issues? Has coverage been confirmed? Are you operating under a reservation of rights? Have you obtained a non-waiver agreement from the insured? If so, be wary about proceeding further. If you start negotiating settlement when there are outstanding coverage issues, you may be creating waiver and estoppel problems.


In a third-party claim, what is the liability picture? Is this a claim which your insured clearly owes? Are there any defenses available to you, such as:

• contributory negligence (if you are in a state which clings to this standard);
• comparative negligence on the claimant’s part;
• no negligence on the insured’s part;
• claimant’s assumption of risk;
• informed consent in a medical malpractice case; and
• product abuse or misuse in a product liability case.

Another key area of preparation is damages.


Before starting negotiations, study the damages aspect of the case. Prepare some talking points before you begin the negotiation. Such points might include:

• medical expenses are way out of proportion to the injury;
• medical bills are built-up by physicians or practitioners (especially physical therapists and chiropractors) who are hand-picked by the claimant attorney;
• at least some of the medical expenses are due to conditions unrelated to the injury from this claim;
• at least some of the medical expenses are due to a pre-existing condition which would have needed treatment anyway;
• there is no medical support for disability from work, or at least not as long as the time-span being claimed;
• medical evidence — for example from an IME — suggests that the claimant was not as injured as he or she claims, or even suggests that there are “secondary gain” factors at work; and
• surveillance evidence indicates that the “disabled” claimant is working, or that she is physically capable of much more than she lets on.

(One school of thought on positive surveillance results that you should “save this evidence for trial.” The problem is that more than 99 percent of all cases never go to trial! In fact, letting claimant’s counsel know that you have some interesting photos or videotape on the claimant can have an inspirational effect on settlement or even lead to a claim’s dismissal. You might not even have to go to trial if you tell claimant’s counsel that you’re nominating the plaintiff for an Academy Award as Best Supporting Actor in an Insurance Claim.)

Do your homework before you negotiate! Review the file. Take notes. Highlight key portions of text. Clip or flag with colored stickers the key documents in the file. List your talking points to refer to during the discussion. Fortune favors the prepared. You must be more prepared and know the case better than the policyholder, if you are negotiating a first-party claim. If a lawyer represents the insured or the claimant, you should know the file better than the attorney. The attorney may know the law better (or think he or she does), but you should know the file and the facts better.

The more you prepare for the negotiating session, the better your odds of success. We define success as getting what you want which, in most claims, means settling within your scope of authority.

Maybe you thought your homework era was over once you graduated from high school, college or grad school. Sorry! Just because you are out of school doesn’t mean homework is over. The good news is that doing your homework on the claim file will help you attain an A+ performance and become an ace claim negotiator!

Quinley CPCU, ARM, AIC is a Washington D.C.-area claims trainer, consultant and expert. He has written more than 600 articles and 10 books on claims, risk and litigation management. Web site:

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