Negotiation & Settlement Processes Flashcards
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Read the first 7 Negotiation & Settlement Processes flashcards as text
Which factor most directly influences an adjuster's negotiation authority level?
Answer: The estimated value of the claim relative to company thresholds
Claim authority levels are set by insurers based on claim value; adjusters must escalate approval for settlements exceeding their delegated authority.
What does 'BATNA' stand for and why is it important in claims negotiation?
Answer: Best Alternative To a Negotiated Agreement; it defines each party's walk-away point
Knowing your BATNA prevents you from accepting a worse deal than your best alternative, whether that is litigation, appraisal, or denial.
A claimant requests a structured settlement instead of a lump sum. Which entity typically funds the annuity in such arrangements?
Answer: A life insurance company
In structured settlements, the insurer assigns the periodic payment obligation to a life insurance company that purchases an annuity on the claimant's behalf.
What is 'comparative bad faith' in the context of settlement negotiations?
Answer: A defense argument that the claimant's own misconduct reduces bad faith damages
Comparative bad faith is raised by insurers as a defense, arguing the claimant's unreasonable conduct contributed to the failure to settle.
Under the principle of indemnity, what limits the amount a claimant can receive in a property settlement?
Answer: The claimant cannot receive more than their actual financial loss
The principle of indemnity ensures the claimant is restored to their pre-loss financial position but cannot profit from the insurance claim.
Which of the following is a key characteristic of interest-based negotiation compared to positional bargaining?
Answer: It seeks to understand underlying needs to find mutually beneficial solutions
Interest-based negotiation looks beyond stated positions to identify the parties' underlying interests, enabling creative solutions that satisfy both sides.
When a claimant threatens to report an adjuster to the state insurance department, how should the adjuster respond?
Answer: Remain professional, acknowledge the claimant's right to file a complaint, and continue fair evaluation
An adjuster should remain professional and not allow complaint threats to pressure them into an unjustified settlement; regulators expect fair evaluation regardless.