Effective Negotiation

By Ron Gines

We all know that working with adjusters is an essential activity in the disaster restoration business.    Effectively settling estimates and invoices with adjusters takes firm persistence and the right temperament. 

It’s important to be firm without being overly bombastic or rude.  Forming personal relationships with adjusters will lead to professional and reasoned discussions.  But it’s important to build constructive relationships without being weak or overly accommodating.

Effective negotiation is the key to striking the right balance in your approach.  Effective negotiation skills unlock greater success in your effort to get fairly paid for the warranted work you perform.

Here are 8 strategies you can incorporate to help you negotiate with confidence.

1. Listen first.  Listen carefully to the adjuster and try to understand his or her perspectives and constraints. Try to understand what they are apprehensive about before you start to negotiate in earnest. Understanding their constraints will help you identifythe best path to a mutually agreeable settlement.

2. Ask good questions. Listening is often proceeded by a good question. You often gain more by asking good questions than by stating your case. Ask questions to invite understanding, such as, “Can you share your perspectives or contraints you might have with negative air machines used as air filtration devices?”

3.    ABC…Always Be Closing.  Attempt to settle the estimate or invoice and move the process to the next step in every communication with the adjuster.  If you use communication that invites continued negotiation, revise your approach.  Never toss the ball into the adjuster’s court in a way that invites continued negotiation or unnecessary scrutiny. 

The following phrases are examples of communication to an adjuster that invites further scrutiny.  Avoid using these phrases and others like them:  “I’m not sure where to go from here. Let me know what you think.” Or, “Are there any other concerns you have with the invoice?” Or, “I don’t know how many hours you will approve for the AFD in the kitchen, so I won’t make any changes to that line-item until I hear back from you.” Or, “I made the changes you requested, is there anything else you need from me?” Or, “I made some changes to the invoice, but I’m not sure what you want to do with the dehu in the bathroom, so I left it the same as it was before.  Please let me know what you are thinking.”  

Better communication with the adjuster seeks to end negotiation and move the job to the next step.  Try using phrases and tactics such as, “In order to reach agreement and close this file I have made the fair changes reflected in my revised invoice.  Please let me know to whom payment will be issued and when.” Or, “Please find attached a revised invoice.  I trust you will find this to be a fair bill for the work performed.  Please issue payment directly to our company per the attached AOB.” Or, “Our final invoice is attached, and I am closing out this file.  Please let me know when payment is issued so I can note my file.”

4.    Settle the invoice with each revision.  Don’t get caught in the trap of agreeing to make changes to a few parts of the invoice before you know the impact of those changes on the status of the entire invoice.  Negotiate the entire invoice each time. Only agree to make changes if the adjuster will agree that no other changes will be required.   

For example, some adjusters will ask for reductions or eliminations of a few items in the first communication you receive from the adjuster.  In the spirit of reaching a quick agreement you might agree to make those changes.  Later, the adjuster contacts you again thanking you for the changes, then asks you to make further reductions or eliminations to other parts of the invoice!  Use tactics in communication such as, “In the interest of reaching an agreement, I can agree to make the requested change only on condition that no other changes will be required and the invoice is settled.  In that spirit, I have revised the invoice and fully expect you will agree this is a fair bill for the work performed. Please let me know when payment will be issued…etc.”

5.    Compromise when appropriate.  Be ready to make smart trades if necessary. Adjusters have their own constraints in the form of carrier policies and standards, as unfair as those standards and policies may sometimes seem.  Adjusters aren’t paid to simply rubber stamp every invoice and the likely won’t.  It’s not realistic to presume every invoice will be paid in full.  Some will, some won’t. Here are some things to keep in mind when you are trading back and forth with the adjuster:

• Avoid compromising on just a single line-item or term. Think about the entire invoice and package your trades whollistically.

• Make smaller and smaller concessions as negotiation progresses.  

• Always attempt to make joint concessions rather than unilaterally giving in to requests if compromise is warranted.  Good negotiation allows both sides to feel they walked away with a win. 

• When compromising, consider such phrases as, “I know you are busy.  In the interest of reaching a fair and fast agreement to get this one off our plates I am willing compromise.  I can agree to reduce the XX charge per your request if you will agree to leave the charge for YY.  I think you will agree that this is a fair way to settle the invoice given our mutual concerns.  These final changes are fair and should be more than acceptable to both of us. Please find attached the revised invoice with these changes.  Please let me know when payment will be issued and to whom…etc.“

6.    Don’t take the adjuster’s word for it.  Don’t allow adjusters to make statements of fact without evidence.  Ask to see the evidence or data which supports statements adjusters make that don’t align with your knowledge of the job.  For example, an adjuster may say something like, “A large dehu is not warranted in the kitchen.”  Why isn’t it warranted?  Did the adjuster do a PPD calculation?  Ask to see it. Did they consider the fact that the kitchen is open to the family room in their calculation?  Etc.  Or they may say, “This job should have been dry in 3 days.”  Why?  Ask them to describe the circumstances and parameters of this particular job that support their statement.  

Set an expectation that statements not supported by data or documentation will be disregarded in the settlement negotiation.   

7. Refer to industry standards. The most effective negotiators are knowledgeable and approach the work methodically, not emotionally.  Success requires preparation and deep knowledge of standards, regulations, and industry best practices. Wide disagreements can often be closed with an appeal to authoritative independent and unbiased standards. Ultimately the negotiation is about mutually agreeing on the definition of warranted work, and on reaching agreement that warranted work was performed.

A good definition of warranted work is the work performed at the job site that was done in accordance with,

1) The homeowner’s policy,

2) Correct use of the Xatimate (or makers of other line-item invoicing tools) line-item. Line-items on the invoice should reflect proper hours of work, cateogry and class of water, waste hauling method, remove/replace activity, and conformace with the Xactimate (or other) line-item note,

3) Relevant IICRC ANSI standards,

4) Relevant state and federal EPA, OSHA, other regulations.

Alignment on the definition of warranted work may not be possible with an adjuster without recognition that the Carrier’s standards and policies ultimately affect the outcome of the negotiation, even if those standards are in conflict with industry standards and regulations.

8.    Put a stake in the ground.  If the gap is simply too large between you and the adjuster, escalate as needed within the Carrier or to the Insured.

9.    Highlight what the adjuster will lose.  Depending on your situation you might consider tactics that utilize the power of loss aversion. We all have deadlines and pressures. Adjusters and third party adjusting houses have their own pressures and issues. People tend to want to avoid additional pressures and burdens and tend to want to get stuff off their plates. Try to emphasize what the adjuster will lose in added time, for example, by extending the negotiation. But in so doing, never make statements you don’t have the intent or capability to follow through with.

Escalating a review to a supervisor is one example of a loss aversion tactic. Escalating to the insured may be another depending on the situation. Escalations drag the process out, which might not be preferable for adjusters working through a big backlog of claims.  Examples include, “I will need to refer this matter to my supervisor, which will delay a response back to you. I don’t want to do that and slow this down for everybody. I think we are close enought to get this done without more delay.“  Or, “I’m not at liberty to reduce the invoice by that amount without supervisor approval.  I will ask my supervisor to review this claim. This will take time. I had hoped we could reach agreement this additional complication. ”

10.    Act in good faith.  Always deal honestly and openly. As much as it seems like a game sometimes, act in good faith to settle claims with full transparency and sincerity. Establishing a good reputation in the market will pay lasting dividends!