Innovative Conflict Resolution

Continuing from here, this post will provide some helpful tips on how to get the best from an insurance claims mediation.  For a very basic introduction to mediation, you can review What Does Mediation Look Like?

One of the distinguishing characteristics of an Insurance Claim mediation is that it is a classic David vs. Goliath scenario.  More than likely, the insurance company is a large possibly Fortune 500 company and you are not. And, there is the simple truth that the insurance company holds the money that you want.  One of the wonderful benefits of a mediation is that it has an equalizing factor; the mediator has promised to treat the parties as equals (to the best of his ability).

In a mediation, you have a couple of other things in your favor as well.  For one thing, in most situations the fact that you have come this far implies that your claim is – at least to some extent – valid.   Another factor in your favor is that the fact that an insurance company is participating in a mediation usually means that they are willing to pay you money; going to a mediation with no intention of compromising is not negotiating in good faith.

Which brings me to Tip #1:

Tip #1: Be prepared to compromise.  Mediations are not a forum for proving you are right.  Mediation is, under any model, a forum for compromising. Even in a problem-solving approach to mediation, the parties must be prepared to give something in order to resolve the claim. (This does not mean that the parties must settle, only that they should be willing to compromise something beyond where they are.)

If you are determined to fight for what you believe you are owed, don’t waste time mediating, just file a lawsuit and fight your way through the system (or as an alternative, request arbitration).   However, litigation is an often dark and treacherous road, fraught with risk; don’t start down that road without first counting the cost.  However, if you believe that settlement is what is best (within reason, of course), then decide prior to the mediation to have an open mind and be prepared to compromise – perhaps significantly.  (Don’t worry, the insurance company is making that assessment, too.)

Tip #2:  Know your bottom line. Make an accurate (to the best of your ability) assessment of your claim and your position, and have a fixed point in your mind (or better yet, write it down) where – given that no new information changes your evaluation – you know you will stop negotiating.  This is often called having a “drop dead” number.  The Claims Person will more than likely have one as well – and may need to go to a manager to go past that number.  As I’ll mention below, if you know what the best alternative to settlement (such as filing a lawsuit) is, you’ll have an easier time knowing what your true “bottom line” is.

Tip #3: Ask the mediator to verify that the adjuster has “full settlement authority.” The adjuster will typically represent that they do indeed have complete authority to resolve the claim (usually up to the policy limits).  However, much of the time they only have the authority which their manager feels is appropriate to resolve the claim.  If the adjuster will need to call someone else to make any decisions, you have the right to know that (and the mediator will want to know, too).

Tip #4: Trust the mediator. Give the mediator a chance; that is what you are paying him for. You may not understand what he is doing, but he more than likely has a plan that is designed to facilitate a resolution. If it appears as though the mediation is at a standstill, tell your concerns to the mediator, who may need to try a different approach. In some ways, a mediator is like your physician; if you’re not being honest with him, he can only do so much.

Tip #5: Don’t put complete trust in the mediator. Yes, I know what I just said.  But, mediators are only human.  You know your claim better than anyone else, and you should always trust your own instincts. At the end of the day, the decision to settle or not settle is always yours.

Tip #6: Many mediators will hate this tip, but here it goes – Don’t reveal your “bottom line” to the mediator too early. Some mediators will instantly go to the bottom line numbers, and push you to go further than you intended.  However, if the mediation has reached a plateau, it may be time to reveal your “drop dead” number. Chances are, the mediator will also sense when it’s “fish or cut bait” time, and ask you for it.

Tip #7: Don’t take it personally if the mediator challenges your position. While you may at times feel like the mediator is taking the insurance company’s side in his conversations with you, the chances are that he is taking your side when he talks to the insurance company.  Playing “Devil’s advocate” with each side, while it can be somewhat frustrating and even disheartening, does help to “test” each side’s position.

Tip #8: Listen. Talk and make sure the mediator understands your position, but don’t forget to listen. Make sure you hear and understand the position of the insurance company.  You may hear something that changes your position, or it may reinforce your position. Even if the claim doesn’t settle that day, you may gain some important information.

Tip #9: Be Flexible. Sometimes the mediator will try a rather unorthodox-sounding approach to settlement; here is where you need to trust the mediator a bit.  For example, one of the more unusual, but effective, mediator “tricks” is the double-blind offer, sometimes called the “mediator’s pick.”  When the parties are too far apart and settlement seems hopeless, sometimes the mediator will pick a number that he thinks the claim should settle for.  This number will be a stretch for both parties, and they will have a day or so to think about it.  If both say “yes,” then the claim is settled. However, if one person says “no,” it doesn’t.  It is surprising how often this will work.

Tip #10: Always keep the alternatives to settlement in mind. What is the alternative to settlement?  Realistically, it is that you give up your claim, or you file a lawsuit and proceed to trial. However, also realize that very few cases actually go to trial. The process is often stressful and expensive, and you will probably end back up in another mediation down the road.  As I’ve said before, litigation may be the best option for you; just be aware of the risks and your options.  Again knowing your best alternative to settlement will be of great help in making settlement decisions.

Tip #11: Don’t be pressured. If you need time to consider an offer, don’t feel pressured to accept it then and there.  Chances are the insurance company will give you at least 24 hours to think about it.  The mediator can be of assistance here, and will probably agree to continue in his or her role as mediator.  If the mediation is making progress but you’re running out of time, chances are you can schedule a continuation of the mediation.

Tip #12: Don’t stress if it doesn’t settle. Claims don’t settle for a number of reasons; sometimes the differences are irreconcilable and you really need an arbitrator or jury to make the decision.  Other times, one or both parties may realize they need additional information.  In the latter case, make sure you leave with a plan for going forward, including scheduling a follow up mediation if that is in order.

If I had to pick the most important tips from the above list, I’d have to say numbers 1 and 2 are probably key in any negotiation, as are 8 and 9.

If you are having difficulty settling your claim, whether it is due to a communication issue, or a difference of opinion, a mediation is a wise investment. Certainly it costs some money – the cost is typically split equally between the parties to ensure the mediator stays neutral – but it is far cheaper than litigation.  If you choose to mediate, be prepared to spend at least 3-4 hours, and be patient with the process.