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Personal Lines Claims

The Art of Strategic Negotiation

Elise Farnham | January 1, 2010

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Just a wild guess, but I would say that most claims adjusters enter this field without any thought that they might become part of a profession composed of the best sales people on earth. And yet, every day, that is exactly what claims adjusters are doing—selling!

They are "selling" their supervisors on their ability to investigate objectively and evaluate appropriately in order to obtain authority as necessary. They are "selling" to the claimants and insureds to convince them that the settlement offer or resolution amount is correct. They are "selling" their theory of liability to plaintiff attorneys to negotiate reasonable settlements. Yes, every day, claims adjusters are "selling" something to someone.

Effective Negotiation

As every good salesperson knows, closing the deal requires excellent negotiation skills. And so it is with the best claims professionals—they know how to negotiate effectively to resolve and close their cases. Simply stated, negotiating is the ability to influence events or people to a desired outcome. Becoming a skilled negotiator will give claims adjusters the power to influence and control the outcome of their cases. They will be more effective in resolving disputes.

Skilled adjusters understand the importance of strategic negotiations and begin the process from the first day that a claim is assigned to them. They understand that their primary responsibility in the claims handling process is to close the case. They begin thinking about case closure and laying out a strategy, from the initial contact. They have developed an excellent understanding of human nature and have a desire to conduct themselves throughout the process in a professional manner. They believe in the spirit of fair dealing.

The Negotiating Process

Examining the negotiating process from a sales perspective, we can break it down into four parts: (1) approach, (2) probe, (3) presentation, and (4) closure.


Negotiations and case resolution begin at the first contact. Creating trust is one of the desired outcomes of the first contact with the claimant. This is not easy to do, especially in light of the public's inherent mistrust of the claims process, in general, and claims adjusters in particular.

Claims representatives know that to create trust, they must always keep their promises. They must believe in, and practice, old fashioned virtues such as truthfulness, fairness, and common courtesies. During the discussions and ongoing contacts, they continue to clarify and manage expectations.

Successful claims professionals always return phone calls in a timely manner and are always responsive to questions. If they don't know the answer, they so advise the claimant with a promise to find the answer. They learn to say things like, "I don't know, but I will find out and get back to you" or "I don't understand, can you help me…."

While they acknowledge that people do not trust insurance companies, they are confident in their knowledge that people trust people. They work hard to show, and demand, respect.

It is a natural tendency of human nature to strive to be understood. Successful claims adjusters understand that this forces them to persuasion, not understanding. Working hard to understand the perspective of the claimant is a key strategic move for the successful negotiator.


Uncovering the needs of the claimant is every bit as important as uncovering all of the facts surrounding the occurrence. Claim representatives receive extensive training in developing investigative techniques in order to uncover all of the facts that will allow them to make an objective evaluation of coverage, liability, and damages. During that process, it is important for them to probe and to ask questions—not just about the accident facts, but about the things that may impact the perspective and actions of the claimant.

Understanding that the claimant is experiencing emotions—fear, anger, and resentment—will assist the adjuster in communicating more effectively. Knowing that the claimant may be receiving free advice or may even have an instinct to strike back, helps the claim representative control their own emotions and rise above their own defensive mechanisms when the adjuster or the profession are attacked.

Demonstrating a dedication to the purpose of closing a case, a successful negotiator will acknowledge the claimant's perspective and respond objectively and convincingly to the fears that are articulated.

Probing is more than just asking questions. It includes active listening. Active listening involves hearing those things that are not said, to get to the core of the issue. For instance, after being involved in an automobile accident, a claimant may say to the adjuster, "My goodness, that is the best car I have ever owned." This simple statement gives the claims representative an insight into the claimant. It may also indicate this claimant has an ego that needs to be assuaged, or this may be a claimant who will need to brag to his friends and colleagues about having the upper hand in the claims process. Active listening actually enhances communication and will provide helpful insights to the claims representative.


In this phase of the process, the claims representative will be providing an indication of the settlement value of the claim. It is important for the adjuster to inform the other party that the goal is to reach agreement. It should be clear to the claimant that the adjuster will not cave in, and that the adjuster will be strong. Focusing on facts and truth will force the parties to communicate objectively. It will also demonstrate that the adjuster is confident in his or her position.

If the claims representative has completed a solid investigation into the facts surrounding the incident, there will be no surprises to either party when comparative negligence issues are discussed, when damages are discussed, or when coverage issues are discussed. The other party should have gotten some indication as to the ultimate settlement value based on the questions the claims practitioner asked during the investigation process.

Effective presentation of any position requires knowledge of the facts. Whether investigating liability, coverage, or damages, communication with the other party should be based on facts. Excellent claims practitioners investigate the facts impartially and negotiate with partiality. Without a clear and objective understanding of the circumstances surrounding the claim, it is impossible to negotiate from a position of strength.

Negotiation Ground Rules

To make the process as described above effective, there are certain ground rules to remember.

  1. Strictly adhere to ethical conduct. Create trust, negotiate with integrity, be truthful and fair. Doing so will significantly influence the relationship that the adjuster is able to develop with the injured party, and will influence the outcome of the negotiating process.
  2. Investigate impartially. Negotiate with partiality.
  3. Be courteous and friendly. Courtesy to the injured party relays respect for them as a person and an understanding of their position. "Friendliness" does not imply that the adjuster will become the "buddy" of the injured party, but will be open and honest in the discussions.
  4. Follow specific instructions carefully. Most adjusters have a certain level of authority that they are able to utilize in the negotiation process. The full extent of that authority should be used, if necessary, in order to move the case toward resolution.
  5. Take command of conversations. This ground rule seems to overrule everything that has been said about listening; however, taking command of conversations means to focus the discussion in a positive way. The claimants are often emotional and certainly may be violated by the events surrounding the accident itself; being objective, calm, and focusing the conversation will move the discussion beyond emotions into the area that claim representative needs to conversation to go.
  6. Be prompt. If promises are made to return phone calls, to obtain information, to perform certain activities, these promises need to be kept. If a claims representative has promised certain information to the claimant and is unable to deliver on that promise, an interim phone call or email advising that the information is not yet available must be sent. This attention to promises will tell the claimant that the adjuster is still actively involved in the handling of loss, that the adjuster recognizes his or her obligation to keep promises, and that the case is still moving forward.
  7. Deserve and expect respect. Not only should the claim representative be ethical and honest and work with integrity, but those should be expected of the injured party as well. Respect is one of the attributes most often mentioned when people describe an ethical person. By relating to the injured person in an ethical manner, the claims adjuster will deserve their respect.
  8. Keep an open mind, and be alert to changes. Being objective is not easy to do. We come at each situation with our own memories and opinions as to the outcome based on prior knowledge or similar situations in which we have been involved previously. On the plus side, these memories help us to weight the activities and the events we encounter; on the negative side, they may cloud our judgment or make us somewhat less objective. To be alert to changes in the claimant's position or response requires objectivity and an open mind.

Following these ground rules will assist the claim representative in maintaining control of the claim and the negotiating process.


The art of strategic negotiating is a learned skill. Adjusters can practice skill building on their family or friends or even by going to garage sales and strategically approaching the negotiation process. Becoming a skilled negotiator will give the adjuster the power to influence and outcome of the cases they handle.

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