Claims work involves a lot of give and take — especially true when negotiating claims to settlement, whether in litigation or not. Even experienced adjusters make common negotiating mistakes such as those outlined below.
- Come prepared
Just like anything else with work, you must be prepared. Create a negotiation plan, listing your strengths and weaknesses, along with rebuttals to weak areas of your defense. Make sure the plan is up-to-date with current demands and defenses. If you get to a settlement meeting or mediation unprepared to settle the claim, you have wasted time. The point of mediation is to bring the parties together to resolve the claim — sooner rather than later. List potential obstacles and weak points of your case and think through IN ADVANCE how to overcome those obstacles.
- Trying to win at all costs is a mistake
This is a common mistake in claims. Rarely do you get a file you can fight all the way to the finish. You can have great defenses and a good aggressive stance, but you may have to give up a little in some area to actually settle the claim. Remember the goal is to hedge the risk. If the goal is to settle to avoid future costs, you will have to pay something, whether it is wage loss or medical bills. Do not slam the door shut by refusing to negotiate. You may end up looking bad in the eyes of the mediator and opposing counsel. You can expect to run into these people again, so keep a good reputation and do not ignore the natural give-and-take of claim negotiation.
- Be sure to frame properly options in negotiations
The use of certain words has a great impact on negotiations. For example, if you are arguing over wage loss, it is better to say: “If I give you $30,000 — that is $5,000 more than our current offer.” rather than saying, “I know you want $50,000 but $30,000 is the best I can offer at this time.” Giving certain offers a negative slant affects negotiations down the road and may lead plaintiff counsel to be less open to negotiate other aspects of the claim. Use the strengths of your case and the rationale behind your numbers in negotiation.
- Avoid overconfidence
Do not let your confidence level on the claim cloud your judgment. Sometimes it is best to get another opinion on your file about the exposure level. Adjusters have files for a long time, and over the course of time, they have an idea of what a claim is worth. Every now and then, there may be a tendency to become a tad too aggressive on a file. In mediation, overly aggressive methods can blow up in one’s face. Get another opinion of what the claim is worth to make sure you are not missing anything and going into negotiations with a skewed idea.
- Be able to think on your feet
Inexperienced adjusters may lack the ability to think quickly. Negotiating “live” in front of others often is a daunting experience. You must know the file in and out because claimant’s counsel looks for any signs of weakness and seeks to exploit them. Avoid weaknesses by being prepared and able to talk your way through the offer. If you are caught in a weak point, you must be able to think fast and make sense. The good news is thinking on your feet comes with experience.
- Do not create a false deadline
A skilled plaintiff attorney may call your bluff by ignoring it. If you say, “All I am offering is $20,000.” and on the day of mediation they call you for a last-chance effort to settle, and you suddenly offer $30,000, you lose credibility with that particular attorney. Plaintiff firms around the insurance world keep notes on both insurance companies and their adjusters. An adjuster with a reputation of taking a hard stance early on and then caving in as a litigation date draws near, has lost the case. Be honest, make your offer, be consistent, try not to bounce the numbers around, and stand your ground. In this way, you keep a good reputation for yourself and your employer.
- An early resolution does not always mean you overpaid
When plaintiff counsel accepts a negotiated settlement, some adjusters feel they paid too much for the claim. This happens when the plaintiff takes the offer early in the negotiating process, as opposed to later after a few months of going back and forth. Litigation and negotiation is often hard work, but not always. The acceptance of an offer does not mean the other side was willing to take much less. Inexperienced negotiators often feel this way since they view mediations as a battlefield. However, just because the other side gives in earlier than expected does not mean the claim was overpaid. (WCxKit)
In conclusion, learning how to negotiate a file during litigation is a complicated job and one that comes with experience. Get other opinions from senior adjusters at your company and know the content of your file inside and out. The more prepared you are, the better you will present, and the better the outcome.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: [email protected] or 860-553-6604.
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