How to Navigate Claims Negotiations

By Denise Johnson | April 19, 2011

Whether working on a first or third party claim, an adjuster will undoubtedly run into a situation where resolution is stalled. Adjusters utilize negotiation techniques to resolve such claims and it is important for them to hone these skills throughout their career, as emphasized in a recent presentation at the 2011 Property Loss Research Bureau/Liability Insurance Research Bureau (PLRB/LIRB) Conference in Nashville.

Developing trust, knowing the details of the file, and good listening skills are fundamental to being a good negotiator, according to industry veterans. In addition, timing may be the most misunderstood part of the process.

During the session, titled “Negotiating Tools to Settle Any Case,” presenters Neil Santolucito, a senior claim representative with United Fire Group; Daniel LeRose, a commercial lines property manager at Liberty Mutual Agency Markets; and Peter J. Hood, an attorney at Neilsen, Zehe, Antas, P.C. offered adjusters a host of negotiation tools that can be utilized in a number of claim scenarios.

According to these experts, there are a number of key items that adjusters need to consider when dealing with a claims negotiation, including:

• Determining when to begin the process and how to develop the claim

• Considering all factors associated with the claim

• Managing the negotiation process

• Identifying and utilizing strategies to best aid the presentation

• Maintaining control of the process

Negotiation should be thought of as a process and claim files have three distinct phases within the process:

• Initial investigation and handling

• Maintenance

• Settlement


Santolucito, a seasoned claims handler with 28 years of experience, pointed out that the process of negotiation begins immediately upon receipt of a claim at the first notice of loss.

It’s vital for an adjuster to develop a positive relationship with the claimant before he or she retains an attorney, according to Santolucito. Developing trust is as easy as knowing the details of the claim and of the insured or claimant. It’s also dependent upon keeping commitments, such as phone appointments.

If an attorney has already been retained, rather than wait for a demand package before beginning an investigation and evaluation, the adjuster should make contact at the first notice of the loss. Santolucito recommends calling the attorney and sending a follow up letter requesting documentation and a face-to-face meeting with the claimant. This “establishes direction for negotiation prior to the settlement phase,” he said.


Adjusters should identify the immediate issues and the key documents needed to evaluate and resolve those issues. They should also forecast other issues that may arise. Santolucito notes that distinguishing between primary and secondary issues is important. Primary issues are the recognizable ones such as property damage and medical bills, while secondary issues including loss and sorrow have a more intrinsic value. Listening skills prove invaluable because secondary issues will become much more important than the primary issues during final negotiations.


Because the negotiation process continues through all phases of the claim, it is important for adjusters to understand the strengths and weakness of the file.

Adjusters should prepare well in advance of the negotiation by determining each party’s “aspiration” (best outcomes). The same principle applies to each party’s “reservation point” (minimum acceptable outcome). Next, adjusters should consider each party’s ATNA (alternatives to negotiation) and each party’s BATNA (best alternatives).

Santolucito also advises adjusters not to forget to address quasi-monetary issues such as annuities and structured settlements, subrogation apportionment agreements, immediate payment, wire transfer, and expensive litigation in their evaluations.

Being prepared also means researching the mediator, adverse party, and the adverse attorney ahead of time and especially prior to settlement discussions.

While there are multiple benefits of good preparation, the most obvious is the development of a carefully planned strategy that should, in turn, lead to the best results.


Adjusters can maintain control of negotiations by regularly reviewing a file and any changes.

The presenters at the PLRB seminar offered some strategies and techniques for maintaining control including:

• breaking the high-low trap,

• recognizing the pros and cons of brackets (break it by offering a theory of why the claim is valued the way it is),

• identifying whether to resolve large or small items first,

• admitting and addressing obvious weaknesses in each party’s case, and

• avoiding discussion of issues that must remain off the table.

Another tip provided by the presenters: adjusters should not avoid the big ticket items. It’s best to get them out of the way initially because this, can lead to quicker resolution of the less important items.

Finally, the presenters advised adjusters to remember that empathy carries weight in the negotiation process. They must recognize that it’s not always about the money; rather an apology, a letter of recommendation, or a confidentiality agreement may be what is needed for closure to occur.

If there is no settlement, the adjuster should determine if the parties can agree to anything, even if it’s just another attempt. Then, review what headway was made and where differences remain.

If settlement is accomplished, the adjuster should get the basics in writing and lay out any contingencies before leaving; knowing full well that subsequent issues, like payment terms, release language, and court costs can delay the actual settlement. Regardless of the outcome, good adjusters learn from the process and move on.

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