October 15, 2025
An essential part of creating better outcomes
Effective negotiation skills are vital to help claims professionals resolve disagreements successfully, usually avoiding legal action. Skills like active listening, empathy, critical thinking and clear communication which are crucial for building the rapport necessary to negotiate effectively. Drawn from G. Richard Shell’s Bargaining for Advantage, research suggests that success at the negotiating table is not just dependent upon tactics, but on foundational knowledge, self-awareness and discipline.
Shell found that all negotiations follow recognizable paths: preparation, information exchange, explicit bargaining and commitment. The most successful negotiators report spending 40% of their time preparing for negotiations by anticipating objections, thinking about alternatives and looking for common ground. Claims preparation would include reviewing the facts of the incident, the strength of the liability position, nature of the injury, impact on life, reasonableness of treatment plans, among other things. It should also include anticipating points that might be made to build strong arguments, thereby retaining negotiating power.
The foundations of leverage
One of the foundations for effective negotiations identified by Shell is the concept of leverage: the advantage one has that lets them push for better terms in a negotiation. Leverage is dynamic and can shift from one side to another multiple times.
For instance, if a claims professional has clear surveillance video or credible witness statements and the other side has none, the claims professional has leverage which can be used in the negotiation. If the claimant has a respected expert that supports their position and the company does not, then the claimant has leverage. So where does leverage come from?
Your claims investigation is the greatest source of leverage you can develop. This is why we focus intently on completing a high-quality investigation as quickly as possible: to build leverage by uncovering critical information, then using it.
Time as leverage
Time can also be a fundamental part of leverage; whoever is on a ticking clock has less leverage. Since claims settlements have seasonality, the closer we get to the end of the calendar year, the more demand insurers receive from attorneys who want to please their clients by getting them money before the holidays.
For this reason, time is leverage for claims professionals. This is also why it is a best practice to approach settlements with diligence and not settle too quickly. However, claimant attorneys will often utilize time-limited demands with short, specific deadlines as a means to shift the leverage back into their court.
Types of leverage
Shell identifies three types of leverage: positive, negative and normative.
Positive leverage is needs-based. Every “I want” or “I need” in a negotiation is an opportunity to develop positive language. Exploring the wants and desires of the claimant through information exchange can reveal important facts that can give you positive leverage. For instance, if you hear “I need to replace my car,” then you can build positive leverage by providing the tools or resources to do so.
Negative leverage can also be referred to threat leverage. We see this most often with claimant attorneys threatening to file a lawsuit. Recognizing this as an attempt to gain leverage and then responding appropriately can counter that leverage.
Normative leverage in negotiations refers to shared norms, values or principles that can influence the other party’s decisions. It’s about appealing to what’s right, fair or reasonable. Referencing industry standards or precedents can be a way to develop normative leverage. “In similar instances of soft tissue injuries with comparable medical documentation and loss facts, settlements in this jurisdiction typically ranged between these dollar amounts. Offering anything outside this range would be inconsistent with industry norms.”
The perception of leverage and using it
It is important to note that leverage is perceptual in nature. It only works if the other side perceives that you have it.
An area for debate within the claims industry is whether or not to make the first offer or wait for a demand from the claimant. If you are confident in your assessment of the injury, and have developed sufficient leverage including anticipating negotiation points from the claimant, there is nothing that should prevent you from extending the first offer. The first offer sets the tone for the negotiation and establishes preemptive positioning.
Making the first offer
When developing a negotiation plan it is a best practice to establish a settlement range with planned negotiation points for each offer or demand. With each successive offer, the difference between the current offer and the previous offer should shrink in size as a means to signal closing in on a final settlement amount. When the difference between current offer and previous offer gets bigger, it sends conflicting messages and reduces incentive to settle.
Reciprocity and negotiation traps
Negotiation, by its nature, is a give-and-take process known as reciprocity. The rule of reciprocity is a fundamental principle in psychology that states people feel obligated to give back to others when they receive something from them. It could be a favor, a gift or act of kindness.
In claims negotiations, it most often occurs when one side concedes or extends another offer; the rule of reciprocity would say a counteroffer should be made. However, there are traps you can fall into.
If you have multiple interactions with a claimant attorney on different cases and the attorney reminds you they settled ‘lower than they wanted’ on an earlier claim and believe you ‘owe it to them’ to give them a higher amount on a current claim, this could be a reciprocity trap, or a way to manipulate you to increase an offer you otherwise would not have made. Reciprocity traps can occur in a number of different ways, but they all are designed to make the claims professional feel indebted to the other side. If you have ever felt pressure or felt compelled to extend consecutive offers without receiving a demand, may have fallen into a reciprocity trap.
The first step is to recognize the negotiation tactic and take action to counter it. A response might be to call on normative leverage by indicating the traditional give-and-take and the expectation that they make a demand before any additional consideration is taken. A best practice is to wait for a counter-demand or new information before making consecutive offers. Failure to follow this best practice can shift leverage and signal to the other side a lack of confidence in your position.
Establishing a negotiation plan
Negotiating is more than just giving numbers back and forth. It requires the development of leverage, preparation and skill, along with the ability to recognize negotiation tactics of others. Companies that invest in formal negotiation training for their claims professionals will attract and retain the skill sets necessary for effective resolution.
This training should be more than just a one-and-done training, it should be treated similarly to ethics training: completed on a recurring basis every two years. It should delve deep into the concepts of negotiating for advantage and keep professionals updated on current strategies, techniques and cognitive biases that often act as obstacles to effective negotiating.
Building negotiation skills is thriving
In today’s complex claims environment, negotiation is not just a transactional skill, it’s a core capability for claims professionals that directly impacts outcomes. By mastering the principles of leverage, preparation, reciprocity and tactical awareness, claims professionals can elevate their roles from simply reading off settlement numbers to expertly maneuvering around the other parties.
Ongoing investment in negotiation training ensures that professionals remain sharp, adaptive and equipped to navigate evolving challenges with confidence and integrity. Ultimately, effective negotiation is not just about settling claims; it’s about building trust, delivering value and driving resolution with purpose.
