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Negotiations- Settle that Claim!

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  1. Negotiations- Settle that Claim!

  2. Negotiations- Settle that Claim! Rick Dannenmiller, Paul Davis Restoration Mike Platts, Charles R. Tutwiler & Associates Etienne Font, Claims Counsel, Inc.

  3. Negotiation • According to Webster's New Collegiate Dictionary, “Negotiate” means “to confer with others so as to arrive at the settlement of some matter.” • A negotiation is an interactive communication process that may take place whenever we want something from someone else or another person wants something from us. • Negotiating is really getting what you want through the use of information, time and power to influence the other party.

  4. Art of Negotiating Negotiating is more of an Art rather than an exact science. There are no fixed rules or formulas which can be applied to every case. Each case presents some new challenge to the ingenuity in salesmanship of the negotiators. The technique that is successful in one case may not work at all in another one. A technique may be very effective when used by one negotiator but completely ineffective when used by another. Experienced negotiators will use those techniques that work best in any given situation.

  5. Types of Negotiators Negotiations are complex and the styles and methods of negotiation are varied. To simplify the process Thomas Noble, Esq. in his paper Improving Negotiation Skills: Rules for Master Negotiators conjured up two types of negotiators, the Master Negotiators, and the Novice Negotiators. We use these two types to zero in on what the typical claims professional will encounter.

  6. Master Negotiators Master Negotiators- Professionals who recognize that negotiations are fluid and to succeed it is necessary to be flexible to the process and to change tactics as necessary. They understand the phases of negotiations and can move the negotiations in the direction of closure when it best suits their position.

  7. Novice Negotiators Novice Negotiators- Individuals who have not learned the skills of the master negotiator. They tend to push their position as opposed to selling their position. They treat negotiations as a step by step process and cannot adapt to the changes that frequently arise in any negotiation.

  8. Negotiating Styles

  9. Phases of Negotiations • Preparation • Information Exchange • Bargaining • Closure

  10. Preparation Phase • Information: Conduct a thorough investigation. Develop all facts. Begin your preparation for negotiation by considering your own underlying needs and interests. • Analysis: Develop a sound scope of damage. Involve Experts early to backup your scope. • Rapport: Establish rapport with your opponent(s). You have to determine if your opponent is going to cooperate or if you should involve a third party, lawyer, mediator, appraiser to finalize claim. • Type of negotiation: What type of negotiation do you expect. Prepare the file for the type of negotiation you will be involved in. • Budget: Every negotiation has its cost. Consider the costs of the negotiation in the settlement process. • Plan: Prepare a negotiation plan.

  11. Information Exchange Phase • This is a critical step in the negotiation process. In order to succeed you have to know what the other side knows. By agreeing to exchange information with the other side you enable your opponent to clearly understand your position. Without information exchange both sides can become slaves to their position and movement to closure is hindered.

  12. Bargaining Phase • Logistics: When, where and how will you negotiate. • Opening offers: What is the best offer you can justify? Should you make it, or wait to let the other party go first? • Subsequent offers: How should you adjust your negotiating plan when responding to unanticipated moves by your opponent? • Tactics: What sort of tactics will you employ? What sort of tactics is your opponent using on you? • Concessions: What concessions will you make? How will you make them? • Resolution: What is the best way to resolve the problem? Is there an elegant solution? Be on constant lookout for compromise and creative solutions

  13. Closure Phase • Logistics: How and when will you close? At mediation, appraisal or later on? • Documentation: Proof of Loss, Mediation agreement, Appraisal Award or policyholders release. • Emotional closure: It's one thing to end a dispute; it's another to leave it behind. Do not bring to the next negotiation feelings or emotions left from the previous negotiation. • Implementation: It's not over until it is over.

  14. Elements of Negotiations • Attitude • Communication Skills • Planning • Evaluation • Closure

  15. Attitude • Attitude is critical. Novice negotiators do not understand that everything is negotiable all of the time. They give up too easily. If you slam your briefcase and walk out of a negotiation session, they do not understand that this is a tactic; they interpret it as the end of the negotiation. • Many attributes go into making a skillful negotiator, including such things as having a good memory, being 'quick verbally', and handling stress well. But effectiveness is as much a matter of attitude as it is of ability. The best negotiators exhibit four key habits of thought that everyone, regardless of their style or IQ, can adopt to improve their negotiation results ... * A willingness to prepare * High expectations * The patience to listen * A commitment to personal integrity

  16. Communications Skills • Without lines of communication there can be no negotiation. Therefore, this rule is essential. Lines of communication are the life-blood of a negotiation. Master Negotiators understand this; novices do not. Novice Negotiators often focus on static elements of the problem, believe that they are "playing a winning hand", and throw down the gauntlet, only to learn later that the dynamic elements of the situation have changed, their leverage has withered, and they have burned their bridges. • To ease the stress of negotiating and improve the chances for a successful result, establish rapport with your opponent, and build on that foundation. This is especially important in cases where the parties will have a long-term relationship after closure. • The ability to see the situation as the other side sees it, as difficult as it may be, is one of the most important skills a negotiator can possess. ... To accomplish this task you should be prepared to withhold judgment for a while as you 'try on' their views.

  17. Planning • Initial offers define the parameters of the “negotiation zone.” The negotiation zone is that range in which negotiators bargain. In every negotiation the parties define the negotiation zone. You get to decide where one end of the zone is located, and your opponent decides the other end. Master Negotiators understand that where leverage is relatively equal, there is always a tendency to meet in the middle. Where the middle is ultimately located depends on where they start. Therefore, they put a lot of time and energy to developing and justifying their initial offers. • Master Negotiators make the highest (or lowest, as the case may be) first offer they can justify, while being careful not to go beyond that point. • Master Negotiators understand the law of contrast. At the end of the day, after concessions are made, the other party will be satisfied with the deal only after the other party has made concessions

  18. Evaluation • Novice Negotiators focus on facts, or dollar amounts, or legal issues, or personalities. Master Negotiators understand that every negotiation is a combination of these factors, as well as others. • Master Negotiators see more than just opening offers, counteroffers, and closing moves when they look at what happens at the bargaining table. They see psychological and strategic currents that are running just below the surface. They notice where the parties stand in terms of the reciprocity norm. They look for opportunities to use what psychologists call the consistency principle to commit other parties to standards and then hold them to their prior statements and positions, and they know that the timing of a proposal is always as important as its content.

  19. Closure • Master Negotiators know how to close. They consider every element of closure: when, where, documentation, pending issues. Novices either rush the end game or delay it interminably, with equally bad results. Rushing the end game usually means closing a file based on a poorly written estimate. Inevitably the file gets reopened for supplements. Delaying the end game means failing to "strike when the iron is hot"; if you wait long enough, something will happen to prevent closure. Time kills deals. If enough time has passed your opponent will decide litigation may not be a bad option after all. • Don't fuss with minutiae. Let your counterpart take home some trinkets, even where both the leverage and the logic are on your side.

  20. Negotiations at the Claim Level Negotiating with the: • Insured • Public Adjuster • Insured’s contractor or Vendor • Examiner

  21. Negotiating with the Insured • A negotiator with the most logical, technical, perfect case, can fail to reach a successful settlement if he has not won the confidence of the Insured. In other words, sell yourself by demonstrating qualities of sincerity, reliability, friendliness, sympathy and integrity. • All through the negotiations you must remember to exhibit a sincerity of purpose, a pleasant manner, being frank and helpful in answering questions, giving information and relieving anxiety as well as a strong belief in the fairness of your settlement offer.

  22. Negotiating with the Public Adjuster • Create the right climate for negotiations. A public adjuster is a professional. If you approach them in that manner, they will reciprocate. • They represent the insured and stand in their shoes, so treat them as you would treat the insured. • Remember “Fair” is a range. Many negotiations break down because one person has a number in mind (his "bottom line"), and the other person has a number in mind, and one or both parties adopts a negative attitude about closing the gap. • Know the Public Adjusters in your area and build relationships with them. You will see them often, you should know who you are up against. • Perhaps the best strategy to adopt while the other side lets off steam is to listen quietly without responding to their attacks, and occasionally to ask the speaker to continue until he has spoken his last word. In this way, you offer little support to the inflammatory substance, give the speaker every encouragement to speak himself out, and leave little or no residue to fester

  23. Negotiating with the Insured’s Contractor or Vendor • Start the negotiations with your position verified and backed up by similar experts. • Do not dismiss the contractor’s position outright since the insured is relying on it and will not move unless you are able to first move the contractor. • Understand your vendors position but verify. You will be relying on it so make sure you understand it and agree with it. • Do not entertain negotiations until you have reached a point of similar leverage. • Arrive at the negotiations informed about construction and code. Don’t let yourself be tripped up about local constructions practices. Know them inside out.

  24. Negotiating with the Examiner • Confidence, Confidence, Confidence • These negotiations are difficult. The examiners are your clients and an adjuster at times wants to please the examiner without regard to their position. • You have to think of yourself as the expert on the claim. After all you did the field investigation and have spent a lot more time on the claim than the examiner. Sell your position with confidence. Prove to the examiner that you have kept their interests at hand when developing your position. Backup your position with experts when necessary and show the examiner that you will enter negotiations prepared.

  25. Negotiations -Mediation • Negotiating with the insured in Mediation • Negotiating with the mediator

  26. Negotiations at Mediation with Insured • Use the process as part of your negotiation technique. You may wish to caucus immediately or after a round of face to face negotiations. Or you may wish to break caucus to conduct face to face negotiations once it looks like a settlement is imminent. • Some mediators have a minimum two hour fee. Don’t dismiss the opportunity to make a last chance offer right before the mediators time is up. The other side knows that extra minute of time is another hour of mediator fees. Master Negotiators know this and use it to their advantage.

  27. Negotiations at Mediation with the Mediator • Master Negotiators know when a mediator will facilitate settlement and when a mediator is unnecessary. Master Negotiators are usually master manipulators, and mediation is no exception. Master Negotiators understand that the mediator can help them sell their proposals. They arm the mediator with persuasive arguments, or material evidence in support of their proposals. They add a dash of charm and encourage their insured’s to endear himself or herself to the mediator. • Novices come to mediation and act combative with the mediator or exclude the mediator from all relevant discussions, relegating the mediator to the function of courier.

  28. Negotiations -Appraisal • Negotiating with the other Appraiser • Negotiating with the Umpire

  29. Negotiations at Appraisal with the other appraiser • Master Negotiators know that first offers are almost artificially high. They do not get upset over that; they simply respond appropriately. • The harder it is to come up with logic to support your position - the more you have to back into reasons that leave you feeling uncomfortable - the more concerned you should be that your counterpart will perceive your position as overreaching. So, developing a rationale furnishes a useful litmus test to determine whether the position you're taking is defensible. • The goal of an effective negotiator is to have expectations that are high enough to present a real challenge but realistic enough to promote good working relationships. ... If you are basically a cooperative person, raise your expectations. Respectfully ask for more. Insist a bit. • The truly gifted negotiator, then, is one whose initial position is exaggerated enough to allow for a series of concessions that will yield a desirable final offer from the opponent, yet is not so outlandish as to be seen as illegitimate from the start.

  30. Negotiations at Appraisal with the Umpire • Appraisal is not mediation. Master Negotiators know this and once the umpire is retained start negotiating directly with the umpire. • Novice Negotiators continue to complain about the other appraiser and why their position is wrong. Master Negotiators understand that complaining does not convince anyone your position is right. You have to defend your position and convince the Umpire you are right. • But …Your goal is only as effective as your commitment to it. ... you should make sure it is justified and supported by solid arguments. • You are not going to prevail on all issues that arise in a negotiation, so save yourself for the significant ones. Let your counterpart take home a few trophies, too, especially on issues that aren't that important to you. • Remember you gain credence for your inflexibility on a few choice issues by your willingness to give ground on the rest.

  31. A Final Approach • In the book “Getting to Yes: Negotiating agreement without giving in, by Roger Fisher and William Ury,” Fisher and Ury discuss methods of negotiating. They argue that their model of "principled negotiation" is superior to the traditional method of "positional bargaining" in which the parties take positions and then make concessions to reach agreements. • The method of principled negotiation developed by the Harvard Negotiation Project is to decide issues on their merits rather than through the haggling process focused on what each side says it will do and won't do. It suggests that you look for mutual gains wherever possible, and that where your interests conflict, you should insist that the result be based on some fair standards independent of the will of either side. The method of principled negotiation is hard on the merits, soft on the people.

  32. A Final Approach-continued • Fisher and Ury summarize their method of principled negotiation as follows: • People: Separate the people from the problem. • Interests: Focus on interests, not positions. • Options: Generate a variety of possibilities before deciding what to do. • Criteria: Insist that the result be based on some objective standard. • They correctly point out that “The more extreme the opening positions and the smaller the concessions, the more time and effort it will take to discover whether or not agreement is possible.”

  33. Conclusion • Be unconditionally constructive. Approach a negotiation with this-- ‘I accept you as an equal negotiating partner; I respect your right to differ; I will be receptive.' Some criticize this approach as being too soft. But negotiating by these principles is a sign of strength. • All of us engage in many negotiations during a week but that doesn't mean we become better at it. To become better we need to become aware of the structure and dynamics of negotiation and we need to think systematically, objectively, and critically about our own negotiations. After engaging in a negotiation, reflect on what happened and figure out what you did effectively and what you need to do better. • There is no one "best" style; each of us has to find a style that is comfortable for us. Yet, everyone can negotiate successfully; everyone can reach agreements where all sides feel at least some of their needs have been satisfied. This involves a lot of alertness, active listening, good communication skills, great flexibility, good preparation, and above all it involves a sharing of responsibility for solving the problem, not a view that this is "their" problem.

  34. Q&A QUESTIONS?

  35. Works Consulted • Improving Negotiation Skills: Rules for Master Negotiators,  Thomas Noble, Law Offices of Thomas Noble, P.C., 2001. • Nierenberg, Gerard, Fundamentals of Negotiation James Ware and Louis B. Barnes, "Managing Interpersonal Conflict," HBR, 1978. • Fisher, Roger and William Ury, Getting to Yes • Lax, D. A. and J. K. Sebenius, The Manager as Negotiator, (New York: Free Press, 1986). • Negotiations and Resolving Conflicts: An Overview, prepared by Professor E. Wertheim, College of Business Administration, Northeastern University • Bargaining for Advantage: Negotiation Strategies for Reasonable People, by G. Richard Shell. • Deal Power: 6 Foolproof Steps to Making Deals of Any Size by Marc Diener. • Getting Past No: Negotiating Your Way From Confrontation to Cooperation, by William Ury. • Getting to Yes: Negotiating Agreement Without Giving In, by Roger Fisher and William Ury. • Influence: The Psychology of Persuasion, by Robert B. Cialdini (Rev. Ed., 1993). • Legal Negotiation in a Nutshell, by Larry L. Teply. • Secrets of Power Negotiating: Inside Secrets from a Master Negotiator, by Roger Dawson. • Smart Negotiating: How to Make Good Deals in the Real World, by James C. Freund. • The Negotiation Tool Kit by Roger J. Volkema. • The Power of Negotiating: Strategies for Success by Mike R. Stark. • The Tao of Negotiation by Joel Edelman and Mary Beth Crain. • The Total Negotiator by Stephen M. Pollan and Mark Levine.