Psychological Reactance: The Hidden Bias in Claims Negotiation

“Give him a few more dollars and get the file closed.”

I do not remember the exact words I used years ago, but I remember the feeling behind them.

I was dealing with a claimant attorney who had become one of those names you recognize before you even finish reading the letter of representation. He could be rude. He would laugh during conversations. On at least one occasion, he hung up on me.

The gist of his position was often the same: You know you are going to pay.

Eventually, I wanted him gone.

The claim was not worth turning into a prolonged battle. A little more money might resolve it, get the release signed and, I hoped, make sure I never had to deal with him again.

We settled. Then his name appeared on another claim. And another.

Apparently, my strategy had one flaw: He kept getting new clients.

Bad luck for me. But looking back, there was a more important lesson. Somewhere in those negotiations, I had stopped evaluating only the claim. How I felt about the person presenting it had entered the equation.

That may be one of the biggest negotiation blind spots in claims.

The danger is not that adjusters have emotions. We are human. The danger is failing to recognize when emotion starts masquerading as claims judgment.

The Urge to Win, and the Urge to Escape

Most claims professionals recognize the first version of this problem.

An attorney is aggressive. A contractor is confrontational. An insured accuses the carrier of deliberately underpaying. A claimant keeps escalating the same argument. Eventually, the internal dialogue changes.

“He’s not going to bully me.”

“I’m not giving her another dollar.”

“I’m done negotiating.”

That is the urge to win.

But there is an opposite reaction that may be just as consequential.

“Fine. Give them something and close it.”

“I just want this file off my desk.”

That is the urge to escape.

One reaction can make an adjuster more resistant than the facts justify. The other can make an adjuster more accommodating than the facts justify. Both have the same underlying problem: something other than liability, damages, coverage, evidence and exposure has begun influencing the decision.

The current claims environment makes this worth examining. The 2026 CLM Litigation Management Study found that 59.4% of carriers reported managing more litigated files than three years earlier, 68.1% reported an increase in attorney-represented claimants and 85.2% reported more policy-limit demands. Perhaps most striking, 96.8% of non-dismissed litigated cases were ultimately resolved through settlement.

If negotiation is where so many disputed claims end, understanding what can distort negotiation judgment matters.

When Pressure Creates Resistance

Psychology gives us language for some of what happens in these moments.

One concept is psychological reactance, the tendency to resist when we perceive that someone is threatening our freedom or trying to control our behavior.

Researchers conducting a meta-analysis in the January 2026 issue of Human Communication Research found that highly freedom-threatening language produced greater anger, more negative thoughts and greater psychological reactance than less threatening language.

Claims professionals do not need a psychology degree to recognize the practical version.

“You know you’re going to pay this.”

“You have no choice.”

“Pay the limits or we’ll see you in court.”

Sometimes those statements are legitimate advocacy. Sometimes they are designed to create pressure.

But the adjuster’s response can become psychological before it becomes analytical.

“No, you are not going to tell me what I have to do.”

That is where the blind spot begins. We may believe we are holding firm because the demand is unsupported when part of what we are actually defending is our autonomy.

The useful question is simple: Did the facts change, or did my feelings change?

When Skepticism Becomes Distrust

Claims handling requires skepticism. An adjuster who accepts every allegation, estimate, diagnosis or demand without scrutiny is not doing their job.

But skepticism and cynicism are not the same thing.

Skepticism asks for proof. Cynicism assumes the answer before the proof arrives.

That distinction matters in claims. Experience teaches us to recognize patterns, question inconsistencies and test what we are being told. But after enough inflated demands, questionable invoices, exaggerated presentations and contentious negotiations, healthy skepticism can gradually become something else.

A 2026 review in Current Opinion in Psychology examined what researchers call “under-trust” in negotiation. The authors found that negotiators can become overly pessimistic about the honesty of their counterparts. One explanation is that negotiators may assume the other side is driven primarily by self-interest while underestimating the moral considerations that can constrain dishonest behavior.

That has an obvious claims application.

Experience can begin whispering: “I know how these people operate.”

Experience is valuable. Pattern recognition is part of expertise. But a pattern is not proof that the next person fits it.

There is a related phenomenon researchers call reactive devaluation. In negotiation, a proposal can appear less attractive simply because it came from the adversary. Experimental negotiation research has demonstrated that who makes a proposal can influence how that proposal is valued.

Think about the claims implications.

Would the same medical argument seem more persuasive coming from a physician you regularly work with rather than one retained by the claimant?

Would an estimate seem more reasonable if it came from a contractor you trusted?

Would you react differently to the exact same settlement proposal if it came from an attorney you respected rather than one who had been antagonizing you for six months?

That does not mean the sources of information are irrelevant. Credibility matters. History matters. Evidence matters.

But so does recognizing when our opinion of the messenger begins affecting our assessment of the message.

Confirmation bias can compound the problem. Once we decide an attorney is unreasonable, a contractor inflates everything or a claimant exaggerates, we naturally become more receptive to information confirming that belief and less receptive to evidence contradicting it.

The abrasive attorney can still have a valid damages argument.

The difficult contractor can still identify something legitimately omitted from an estimate.

The angry insured can still raise a coverage issue worth reconsidering.

Difficult does not mean wrong.

A useful self-check is: If someone I liked and respected presented me with exactly the same information, would I evaluate it differently?

If the answer is “Yes,” then personality may have entered the valuation.

The Blind Spot Isn’t Limited to Difficult People

A recent experience outside of claims made me think about this from another angle.

A roofing company caused some minor damage while working at my home, including marks to siding that was already dirty. The existing condition became part of the discussion. The siding was not pristine, so the new marks did not stand out the way they might have on a spotless house.

That raised an interesting question. Would identical new damage seem more significant if everything around it had been perfect beforehand?

Claims professionals encounter versions of this constantly.

The roof was already old.

The vehicle already had scratches.

The building already had deferred maintenance.

The claimant already had a bad back.

A preexisting condition absolutely matters. It can affect causation, damages and the proper measure of loss. The goal is not to ignore it.

The danger is allowing “It was already imperfect” to quietly become “What happened now matters less.”

Consider the bodily injury claim involving someone with years of back problems. “The claimant already had a bad back” may be highly relevant evidence, but it does not answer the entire causation question.

What changed after the accident?

Were the symptoms more severe?

Was there new treatment?

New restrictions?

An aggravation?

Lost time that had not existed previously?

Claims rarely involve a blank slate. The danger is allowing what was already wrong to make us undervalue what changed.

That is where another concept from behavioral psychology becomes relevant: anchoring (a cognitive shortcut in which people rely too heavily on the first piece of information they get). A 2026 Management Science meta-analysis covering 50 years of anchoring research and more than 2,600 effect sizes concluded that anchoring remains a robust phenomenon in human judgment.

That does not mean considering a claimant’s prior injury or a property’s pre-loss condition constitutes anchoring. Those are relevant facts and often essential to the evaluation.

It does mean we should remain conscious of how powerfully an initial reference point can influence what comes next.

Holding the Line Is Not Bias

None of this means an adjuster should become more generous simply because psychological bias exists.

Sometimes the demand really is excessive.

Sometimes the attorney is applying pressure because the evidence is weak.

Sometimes the contractor’s estimate really is inflated.

Sometimes the prior medical history explains most of the claimed condition.

Sometimes the correct answer is no.