Insurer negotiation tactics
Certain insurance company negotiation tactics are extremely effective for the insurance industry. An experienced personal injury attorney will be aware of these tactics and prepared to deal with them successfully to maximize your personal injury settlement.
Below is an explanation of several common insurer negotiation tactics and some of the techniques that skilled personal injury attorneys use to respond to them.
The ridiculously low offer
Assume your personal injury attorney evaluates your case to be worth something in the $15,000 to $20,000 range. Your bottom line is $12,000 and you and your attorney’s goal is $15,000 or better. Your attorney sends a letter of demand for settlement in the amount of $27,500. The adjuster phones your attorney and states he has reviewed the demand and is prepared to make an offer of $3,000. There is little or no explanation for the low offer.
The above tactic can mean one of several things:
- Your demand was so unreasonably high that the adjuster came back with what he got in the demand, a ridiculous figure.
- The carrier is one of those conservative carriers who prefers to litigate rather than settle. See The settlement style of large and conservative insurers.
- The adjuster is feeling you and your personal injury attorney out, hoping that a low offer will shock you into reducing your demand substantially.
- The adjuster is trying to get you and your attorney to lower your expectations in the case.
- The adjuster has been given very little authority from his superiors or may be new to the business of negotiating.
There are several ways your personal injury attorney may attempt to deal with the so-called lowball offer, depending on the circumstances and your attorney’s prior experience with the adjuster.
- You and your attorney may reassess your demand and reduce it if appropriate.
- If the carrier is a conservative one that will not pay top dollar until trial or at least the courthouse steps, your attorney can file your lawsuit and prepare to litigate.
- Your attorney can ask the adjuster if he or she has room to move up. If the answer is yes, your attorney can make a demand in the medium range and see where the adjuster goes with the next offer. If the adjuster jumps considerably closer to your bottom line, your attorney can work with him or her to get the settlement to a comfortable and acceptable range.
- Your attorney can inquire as to why the figure is so low. If the adjuster responds with any useful information, your attorney can attempt to work towards settlement. If not, your attorney can ask to negotiate with the adjuster’s supervisor or claims manager. If the request is refused, the next step is to file suit and prepare to take the case to trial.
Every adjuster has to get some authority from someone. Many adjusters, especially claims managers and supervisors, have an excellent idea of what a case is worth even before they receive a demand letter from your attorney. Some adjusters repeatedly claim the need to get authority as a delaying tactic. In this case, your personal injury attorney should consider filing suit. Furthermore, if the adjuster constantly raises the need for authority as an obstacle to settlement, your injury lawyer can make similar excuses for not being able to accept the offer. Your attorney can tell the adjuster that you haven’t authorized such a low settlement and give the adjuster a taste of his own medicine.
Refusal to respond
The adjuster may have refused to respond to your personal injury attorney’s letter of demand, even though your attorney has waited thirty days and sent a polite follow-up letter. Before deciding what to do, it is appropriate to consider the possible reasons for the adjuster’s failure to respond:
- The adjuster is legitimately too busy handling too many files and just hasn’t had the time to get back to your attorney.
- The letter of demand, as well as other documents sent during the claim period, has been lost for several reasons including the possibility of a wrong claim number.
- The adjuster is purposely stalling to preclude a fair and early settlement.
- The failure to respond is because your demand was too high and the silence on the part of the carrier is their way of saying that negotiation is fruitless.
- The insurance carrier never intended to settle for a reasonable amount in the first place.
There are several ways for your injury attorney to deal with the failure to respond:
- Your attorney can call the adjuster personally and ask why you have not yet received a response. If the adjuster says he will get back to your attorney, your attorney can follow with a polite reminder letter, and if the adjuster does not respond within two weeks, the next step is to file suit.
- Your attorney can request an appointment to see the adjuster in person and demand an offer at the conference.
- Your attorney can file suit immediately, send a copy of the complaint to the adjuster and claims supervisor and wait for a response.
The carrot tactic
One of the more frustrating and unfair techniques used by claims adjusters is stalling with the “carrot tactic.” After more than 30 or 60 days, the adjuster still has not made a settlement offer. The adjuster typically responds that the claim is “still in committee” or “being evaluated at the home office,” or “has to be retrieved from the supervisor’s desk.” The purpose is to stall with the “carrot” of an early settlement, hoping that your attorney will continue to wait, sometimes over a period of several months.
One option your personal injury attorney may elect to deal with this delaying tactic is to try to pin the adjuster down with the following question: “I am hoping that you are being honest with me when you say that the claim is being evaluated in committee. Could you please give me a specific date by which I will receive a response to my request for settlement?”
Another is to go ahead and file suit.
What will you take?
The “what’ll you take” response is one of the most common for insurance adjusters and defense attorneys. The adjuster or defense attorney will call your injury attorney after receiving your demand and in a friendly, nonadversarial manner, will indicate a desire to cut through the formalities of negotiation. He will acknowledge your demand and then ask what it will take to settle the claim. The goal is to get your attorney to reveal your bottom line or close to it.
A sincere response to this question rarely leads to a reasonable settlement. The purpose of the technique is to get your injury attorney to cut your demand substantially thereby reducing the probability of a high value settlement. In the “what will you take” situation, the adjuster attempts to get your attorney to move from the initial request for settlement to a “bottom line figure” thereby making you bid against yourself. But, the lower you go during negotiations, the lower the potential courthouse settlement will be.
The best way for an injury attorney to respond to this technique is by saying that you will certainly take what you demanded in your request for settlement or more if they are willing to offer it. The attorney can emphasize that the original letter of demand was serious and you are both looking for an offer before negotiating any lower.
“Preliminary evaluation” technique
The preliminary evaluation technique is similar to the “What will you take” technique, but has an interesting twist. Assume, for example, that a personal injury attorney has evaluated a case as being worth between $40,000 to $50,000. The defendant’s liability is clear and the primary issue is value. The attorney’s goal is to settle the case for as close to $50,000 as possible, and with good luck, even as high as $52,000 or $53,000.
In the demand letter, the attorney has requested settlement of $85,000. After stalling for several months, the adjuster responds as follows: “I have been working on the file and I am trying to work up a preliminary evaluation of the case before I take it to the claims committee (or claims supervisor.) There is no way that I can meet your figure of $85,000, and I have placed an initial evaluation on this case at between $45,000 and $55,000. How does that meet with your expectations?”
The adjuster has indicated a settlement well within the hoped for range, with a high point even greater than the attorney’s expectations and a mid point at close to the top of the ultimate goal. The attorney assumes that, even if the adjuster comes back with a mid-point of $50,000, she will have settled the case for close to an “A” settlement. If the attorney can talk the adjuster up to $55,000, she is $15,000 above the low point and $5,000 above the top of the range. Therefore, she responds with any one of several positive comments ranging from “That sounds pretty good to me” or “If you come back with $55,000, we sure will take it.”
Several days later she receives a telephone call from the adjuster who now wants to make a firm offer. The adjuster tells her that the case went to the claims committee and that the preliminary evaluation was shot down by the committee or the claims supervisor to $35,000. However, the adjuster continues, that with strenuous “arm pulling” he convinced the claims committee to increase their evaluation to a firm $40,000 final offer.
The result is that the attorney is struck with the low point of $40,000. When the adjuster threw the $45,000 to $55,000 curve ball, it sounded so good that she responded with a positive reaction. The adjuster then realized that since the attorney was so happy with that range, she would be willing to take lower and, therefore, came back with a settlement that was reduced by 25% or more. The very best that she will be able to do is to get the adjuster to move perhaps $1,000 or $2,000 which means that the case will settle near the lowest end of the range rather than the highest. The adjuster knows that the attorney will probably not go to trial over a difference of $3,000 to $5,000 and, therefore, she will be forced to settle for a “B” or “C” settlement rather than an “A” settlement.
The reason why this tactic is similar to the “what will you take” tactic is that the adjuster simply throws a non-binding range up the flagpole to see if the attorney will salute it. When she does, the flag gets lowered to half mast.
The best way for a personal injury attorney to deal with this tactic is to tell the adjuster she will respond only to a “real offer” that can be taken to the client, that is, a firm offer of settlement for a specific figure.
The use of local or national adjustment companies
Many insurance carriers use local or national adjustment companies to handle their claims. These independent agencies seldom have full settlement authority and most importantly, they are extremely conservative in their dealings.
If your personal injury attorney is confronted with an unreasonably low offer from the local or national adjustment company, your attorney can request to negotiate with the insurance carrier directly. If the request is refused, your attorney can then file suit and send a letter directly to the insurance carrier indicating willingness to negotiate with them directly.
The one and only offer technique
Another technique employed by adjusters is to call your injury attorney after receiving your letter of demand and state that they do not like to waste time negotiating back and forth. Therefore, they say, the offer will be their best and only offer.
Before the offer is made, an experienced personal injury attorney may respond by stating that if the offer is going to be the equivalent of the demand figure, then the prompt settlement is appreciated. Otherwise, the attorney may remind the adjuster that settlement of personal injury claims requires a give and take process and that a first and only offer technique is not negotiating in good faith. Also, the attorney may tell the adjuster that the client would not be amenable to a first and only settlement offer and ask him to make an offer that gives him some room to move.
The bounce back double lowball
Some insurance carriers have a technique that is similar to the ridiculously low offer. Call it the “bounce back double lowball.” Assume the personal injury attorney makes a demand of $25,000 in a case he hopes to settle for approximately $15,000 or perhaps a little less. The first offer is $6,000. The attorney reduces the demand from $25,000 down to $19,000 hoping for a reasonable response. The carrier responds with a $500 increase to $6,500—hence the term “bounce back double lowball.”
In most cases, the way to deal with this tactic is to file suit. The message from the carrier is obvious that there are no intentions to settle the case at this time. The claims manager has already established a take-it-or-leave-it attitude and expects the attorney to either accept or litigate.
The request for more documentation
Another adjuster delaying tactic is to constantly request more documentation. A response is never offered on the demand, just requests for more documentation. If the personal injury attorney has already supplied medical bills, medical reports, lost wage information, and the carrier continues to ask for more detailed documentation, the attorney can demand an offer before sending additional materials or ask what the offer would be when the information is received. If the adjuster refuses, the attorney can respond that the information requested can be obtained during the discovery process after suit is filed.
The request for medical records for the five-year to ten-year period prior to claim
It has been a very common practice for most insurance carriers, especially the major conservative carriers, to request medical records for either the five or ten-year period prior to the claim. Needless to say, obtaining all of your medical records for the five or ten-year period prior to your claim is costly, time-consuming, and will obviously delay settlement.
There are several things that a personal injury attorney can do to deal with the five or ten-year medical record request.
- If you have no substantial medical history and no prior injuries to the area that is the subject of your claim, your injury attorney should let the insurance carrier know this fact and invite the insurer to obtain the records for the five or ten-year period prior to the incident. If you do not have a substantial medical history, the records will be inexpensive, it will not take much time to obtain them, and the insurance carrier will be convinced that your claim is legitimate.
- If you have had any prior injuries to the same area of the body, your injury lawyer can let the carrier know at the outset, and either get the records or request that the carrier obtain prior records so that they can be sure they have all pertinent information before addressing your claim. Alerting the carrier to a pre-existing condition enhances your credibility. This is especially so if there have been no problems whatsoever to that area of the body for several years.
- Your injury attorney can issue your demand or request for settlement, then wait for the request from the insurance carrier. Some insurance carriers can be convinced by the medical records regarding your claim that the injury is legitimate; that there have been no pre-existing injuries; and that the request for settlement is reasonable. In these cases, insurance carriers will not ask for the five to ten-year record, and your settlement can be fairly prompt.
Using client statements obtained before representation
One of the most used and abused tactics of insurance carriers is to take your statement before you are represented by an attorney and to write it up in a way that is extremely prejudicial to your case. The adjuster asks questions and then paraphrases the answers in the adjuster’s own words and handwriting. The injured person is then asked to review the entire statement, and if it is “essentially correct” the adjuster requests that the injured party sign the statement. There is usually language such as the following: “I have read the above statement, and it is true and correct to the best of my knowledge and belief.” The insurance company then uses the statement in settlement negotiations and later in negotiation against you.
Here is an example. A husband and wife were riding a tandem bike in a rural camping area. A pickup truck took a tight turn on a corner at an intersection and struck them, forcing them and their bike into a ditch. Both the wife and the husband received moderate to serious injuries with medical bills of several thousand dollars.
Within one week after the incident, an adjuster for the truck driver went to the couple’s home to obtain statements from each of them. They were still recovering from the incident and the insurance adjuster did not make it crystal clear which party she actually represented in the case. More importantly, the insurance adjuster did not inform the couple that the statements could be used against them later in the claim.
During his deposition, the husband stated that he was about two or three feet from the side of the road. The defense lawyer pulled out the signed statement and pointed to a sentence that read: “I am not exactly sure how far we were from the side of the road before the collision occurred.” The husband replied that he remembered telling the adjuster that he believed he was approximately two or three feet from the side of the road. When the adjuster asked if he was exactly sure, he replied that he was not exactly sure. The adjuster simply wrote down that the husband was not sure how close he was to the side of the road before the impact.
Despite the fact that the husband always had a reasonable explanation about the language in the statement, it was clear that the statement and the inconsistencies between it and the deposition testimony would be used at trial against the couple.
How injury attorneys deal with client statements obtained by insurance carrier
Here are some steps a personal injury attorney can follow to deal with prejudicial statements obtained by the insurance carrier.
- Be certain that the statement is accurate. First and foremost, your attorney must review the statement carefully with you to determine its accuracy. If it is a transcribed statement, your attorney must note the points that are not accurate and determine if any statements have been deleted. If so, your attorney must note the inaccuracies and save them for the right moment. Your attorney will document what you actually said. If the statement is paraphrased, your attorney will note every case in which the adjuster changed the wording of the statement to suit his or her purposes.
- Outline the problems with the statement. Every statement obtained by an insurance adjuster will have some problems or inconsistencies. Some of these include:
- a. The statement was obtained before your injuries were fully documented.
b. The adjuster failed to advise you that the statement would be taken in the interest of the insurance carrier and could, and would be used against you in later proceedings. (This is the “Miranda” concept that so many people are familiar with. The client was never told that he or she could consult with a lawyer before the statement was obtained.)
c. The statement was not transcribed word for word. Instead, the adjuster paraphrased certain responses and wrote them in terms that were advantageous to the carrier.
d. If the statement was transcribed, it was not taken by a neutral party such as a court reporter.
e. Certain portions of the transcribed statement were either deleted, misunderstood, or were transcribed improperly.
f. The transcribed statement was not taken under oath.
g. You and your attorney were not given a similar opportunity to obtain statements from the defendant.
- Attack the quality, integrity, and effectiveness of the statement. Your personal injury attorney may argue to the adjuster that the statement is worthless because it can never be used against you at trial. Your attorney can tell the adjuster that he or she will ask the judge to exclude the statement. Your attorney can point out to the adjuster any references that would harm the insurance carrier if the statement were used at trial. Finally, your attorney can outline the reasons why the contents of the statement are inaccurate as the adjuster will never admit or concede that the statement or the circumstances surrounding the statement are unfair.
- Address the weaknesses of the statement. Your injury attorney can focus on factors such as the time of the statement relative to the development of your symptoms, or the lack of known witnesses when you gave the statement. For example, the fact that you said, “I really don’t know who was at fault” may be worthless if eyewitnesses confirmed the insured’s liability.
- During depositions or interrogatories, your attorney can raise objections to questions about the statement. If your attorney is certain that your statement was obtained by the carrier’s fraud, your attorney may have reasonable grounds to instruct you not to answer any questions about the statement until a judge orders you to do so. If you signed the statement and it is accurate, you will usually have to answer questions about it, but a court may ultimately rule that the statement and your answers are inadmissible. Your attorney should object on the grounds that you were not represented, never informed that the statement could be used against you, and it was not taken under oath by a neutral party. Then your attorney can seek a ruling from the court that may keep the evidence out or permit your attorney to cross examine the person who took the statement and the person who transcribed it.
- If your case proceeds to trial, your attorney can make a motion, called a motion in limine, asking the judge to exclude the statement on various grounds including the problems mentioned above. If the judge determines that the statement is admissible, your attorney can request to cross examine the insurance adjuster who took the statement.
Independent medical examinations
In the past few years, the use of independent medical examinations (IME’s) has increased substantially, especially in soft tissue cases involving neck, back, or other injuries. IME’s are not really “independent” medical examinations. They are more properly called “defense” medical examinations or insurance exams because they are requested, used, and influenced by the defense or insurance carrier. Unfortunately, at trial both defense attorneys and judges routinely refer to these examinations as “ independent” medical evaluations, implying that they are objective, neutral, and unbiased when, in fact, they are exactly the opposite.
If your case goes to trial, your attorney may make a motion in limine requesting that the court and defense counsel be precluded from referring to the defense medical exam as “independent,” and be required to call them “defense medical examinations” or simply “medical examinations.”
Steps your personal injury attorney can take to minimize the impact of independent medical examinations.
1. Lower your demand to prevent the examination. The insurance carrier will usually request an independent medical examination before or during settlement negotiations, or after suit has been filed. Insurance carriers seldom request independent medical examinations early on in the case. A carrier will request a medical examination when there is any doubt in the carrier’s mind about the nature and extent of your injuries. The carrier will also request an independent medical examination if your attorney has submitted a demand that is far beyond their evaluation. If your attorney has issued a demand that is several times your actual goal, reducing the demand to a more reasonable figure may be a good idea to avoid an independent medical examination.
2. Select the independent medical doctor. This is the most crucial step in the independent medical examination process. If your attorney has not yet filed suit, your attorney has some control over the selection of the independent medical doctor and can negotiate the selection. Your attorney can ask the insurance carrier to provide several choices that your attorney can investigate. Most carriers will agree to give you several names. Your attorney may be familiar with doctors on the list and can choose the one with the best reputation for fairness. You attorney can also talk with other experienced personal injuries to find out their opinions of the doctors. Some physicians will try to be neutral and will provide fairly extensive exams.
If your attorney has already filed suit, your attorney will have very little say in the selection process, as most judges will let the defense attorney select the physician, especially if the physician has credentials such as board certification or teaching experience. Even if the doctor has a reputation as being a defense medical expert, judges will lean toward allowing the independent medical examination.
3. Prepare you for your independent medical examination. Many problems of independent medical examinations can be alleviated with good preparation. Here are some guidelines for how your personal injury attorney should prepare you for your examination.
- Your attorney should sit down with you to go over your medical history. You need a good understanding of the approximate dates of previous injuries, and the extent of previous injuries or illnesses that relate to your claim. If you leave out important information or are inaccurate about certain injuries, the defense attorney will attack your credibility. (“Doctor, the plaintiff never told you about the 1991 fall from her back porch? Would you have considered this important information?”)
- Your attorney will instruct you to be as accurate as possible regarding the history of the precipitating event that is the subject of the claim. Your history must be consistent with other portions of the record, including the police report, history given to emergency personnel, or the history provided to your own physician.
- If you have trouble remembering dates, places, times, or other events, your attorney can help you prepare a short memorandum to assist you during the independent medical examination. The memo can list the date and place of your accident, the names and addresses of the health care providers who treated you and the dates and descriptions of past injuries along with the names and addresses of treating providers.
- Your attorney should instruct you to be honest and cooperative with the physician. Your attorney may also ask you to write down important things that happened during the examination such as: the length of the examination; whether anyone else was present such as a nurse, assistant, or therapist; and any remarks made by the doctor.
- Your attorney should instruct you to dress appropriately and be on time. Your attorney may also discuss with you who should accompany you to the examination.
- f. If your injuries were caused by a motor vehicle collision, the impact of the collision was substantial, and a photograph is available, your attorney may ask you to bring the photo. But you should not guess at the speed or the vehicle unless you have a good understanding of how to estimate speed.
4. After the examination. If suit is pending, your injury attorney may want to meet with you immediately after the examination to discuss what happened while your memory is still fresh. If no suit is pending, your attorney or office representative should call you soon after the exam to find out what notes you took.
When the report comes in, your attorney should review it carefully comparing the important parts with medical information contained in your other medical records and reports. Your attorney will want to show you the report to get your impression of its accuracy. And if the report is incorrect with respect to an important detail such as a date or other objective criteria, your attorney can send a letter to the doctor that clarifies or succinctly outlines the nature of the inaccuracy.
If the report contains information that is inconsistent with your doctor’s findings, your injury attorney can schedule a conference with your doctor to ascertain whether the doctor stands firm on his or her opinion with respect to important issues. If your doctor changes the opinion based upon the independent medical examination, your and your attorney may need to reevaluate your settlement position. Your attorney needs to understand the reasons why your physician either stands behind or refutes the findings of the independent medical doctor.
Reduction or withdrawal of the offer
The last major technique that deserves mention is the unilateral reduction or complete withdrawal of the original offer from the adjuster. Assume a personal injury attorney has issued a demand of $25,000 in a case with a settlement ranue of between $10,000 and $15,000. The first offer from the adjuster is $6,000 and after the attorney reduces the demand, the carrier responds with a $5,000 offer, obviously less than the first offer or withdraws the offer of $6,000 completely.
The adjuster may give several reasons for the reduction including previous lack of authority, reevaluation of the case, or reassignment of an adjuster.
The technique of reducing or withdrawing the offer is intended to shock a personal injury attorney into begging for reinstatement of the offer with the indication of willingness to settle for something in the very low range. Dealing with such a technique can be very frustrating. In these cases, it is usually necessary for your attorney to file suit and request to speak with the claims supervisor or manager.