The Three Biggest Negotiation Mistakes Insurance Adjusters Make
- January 30, 2023
- Posted by: April Hilbert
- Category: Best Practices career planning Claims Management Insurance Adjuster negotiation
When you become an insurance claims adjuster and start negotiating claims, you may unwittingly fall for some pitfalls of poor negotiation strategies. There are three primary negotiation mistakes adjusters make:
- “High-Ball” Demands and “Low-Ball” Offers
- “One-Time” Offers
- Asking for a Demand
While commonly used throughout the industry, these tactics are ineffective and, with very rare exception, should not be used. To sum it up, all three of these tactics undermine the negotiator’s credibility.
High-Ball Demands/Low-Ball Offers
The low-ball offer is the exact opposite of an outrageously high demand that has no basis in reality
Think about it: How does anyone typically react to such offers or demands? They simply dismiss them as ridiculous and rarely respond. You will get the same reaction by making an unreasonable (not to be confused with “aggressive”) offer.
Your opponent will dismiss your offer as a serious effort to initiate meaningful negotiations. In order to begin meaningful and effective negotiations, it is critical that your opponent:
1. Knows you mean business
2. Believes you know your case and its value.
A high-ball, low-ball attempt at beginning negotiations is a complete waste of time, produces no benefit, and can only increase your exposure and costs.
The “One-Time” Offer
Unless you have developed a significant amount of credibility with your opponent, never try this one. Anyone who is an experienced negotiator knows that one’s first offer is rarely ever the last.
Another thing… don’t try this with unrepresented claimants! Not only does such a tactic border on unfair claims practice, but they will simply go to an attorney, and you know you’ll ultimately offer more.
While seeking assistance of counsel may sometimes reduce the amount that a claimant actually walks away with, representation drives the price of claims up. As much as we would like to think it isn’t so, it’s a fact of life.
Asking for a Demand
This is a myth so well entrenched in our industry that to overcome it requires separate and significant treatment.
The insurance adjuster’s biggest negotiation mistake is “Asking for a Demand”, and it is by far the worst tactic of all! This is a tactic you should never use, no matter which side of the table you’re on!
This is one of the toughest challenges that adjusters face in today’s claims environment, as it is the most utilized tactic employed by defense attorneys.
Unfortunately, most of today’s adjuster “training” comes from watching these attorneys, and this is a shame, because it’s also an area where even members of the Bar are weak.
Why is this such a popular, if ineffective, tactic?
Some people, particularly defense attorneys, defend their choice of this tactic with the comment: “We want to see where our opponent is, or what our opponent is thinking so that we don’t come in too high.”
Such a statement is completely without merit.
With very rare exception, no plaintiff’s attorney worth his salt will ever come in too low. It is part of their nature, and it’s what they are taught — to “shoot high” when making a demand. To think otherwise is naïve.
Let’s look at what happens when you ask for a demand:
- An adjuster lets the claimant or plaintiff’s attorney “set the stage” or the parameters for the negotiation process.
- The adjuster gives up control over the negotiation process (a sign of weakness).
- You’re basically asking your opponent to tell you where his “satisfaction point” is, which you know they’ll never do.
- The adjuster is showing that he/she doesn’t know the value of the case.
- True or not, the adjuster is showing “laziness” or “lack of knowledge” on their part.
If you want to learn more about how to avoid these pitfalls and other necessary skills for successful claims negotiations, sign up for AE21’s Strategic Claims Negotiations Course. This thorough and in-depth course covers the art of claims negotiation, with an emphasis on challenges faced by adjusters. AE21’s Strategic Claims Negotiations Course enhances an adjuster’s skills in claims negotiation. It is a detailed foray into concepts and principles that have proven successful time after time for decades. It will provide the tools with which to approach new claims disposition challenges. You’ll gain this foundation for claims negotiation while working your way through our user-friendly and engaging online course. If you are ready to get ahead as a negotiator and fulfill your CE requirements, enroll today!
You can enroll in Strategic Claims Negotiations at our eLearning platform HERE. If you already have an account with us, simply log in and select the course from the course catalog. If you do not already have an account, begin by creating an account and selecting your licensing state. You will then have access to our full course catalog for your state of licensure. For more assistance with creating an account and purchasing courses, please watch THIS VIDEO.