Negotiation & Settlement Techniques Flashcards

In structured settlements, periodic payments are most commonly funded through:

Answer: An annuity purchased from a life insurance company

Structured settlements are typically funded by an annuity purchased from a highly-rated life insurance company, guaranteeing future periodic payments to the claimant.

Which of the following is a primary advantage of a structured settlement over a lump-sum payment for a seriously injured claimant?

Answer: It provides guaranteed long-term income, protecting the claimant from mismanaging a large sum

Structured settlements provide tax-free periodic income, protecting claimants—especially those with diminished capacity—from rapidly depleting a large lump sum.

During negotiations, an adjuster notices the claimant's attorney is using silence after each offer. The most effective adjuster response is to:

Answer: Remain silent as well, avoiding concessions driven by discomfort

Silence is a deliberate negotiation tactic; the party who speaks first typically makes the next concession, so remaining silent preserves the adjuster's negotiating position.

A 'Mary Carter agreement' in a multi-defendant personal injury settlement refers to:

Answer: A settlement where one defendant secretly agrees to limit its liability in exchange for helping the plaintiff against co-defendants

A Mary Carter agreement is a secret arrangement where a settling defendant reduces its liability exposure by cooperating with the plaintiff against remaining defendants, which many states require to be disclosed.

When evaluating a bodily injury settlement demand, which factor most directly affects the 'verdict value' of a claim?

Answer: The jurisdiction's history of jury awards for similar injuries

Verdict value is heavily influenced by local jury trends; jurisdictions known for high awards (plaintiff-friendly venues) significantly elevate the potential exposure of a claim.

A claimant refuses a reasonable settlement offer and demands to go to trial. The adjuster should first:

Answer: Document the rejected offer in the claim file and evaluate trial exposure versus settlement cost

When a reasonable offer is rejected, the adjuster must document the rejection and conduct a cost-benefit analysis comparing litigation costs and potential verdict against the settlement value.

Under the 'good faith' claims handling obligation, an insurer that fails to promptly settle a claim within policy limits when liability is reasonably clear may face:

Answer: Extra-contractual damages including bad faith liability exceeding policy limits

Bad faith failure to settle a clear-liability claim within policy limits can expose the insurer to extra-contractual damages that may vastly exceed the policy's coverage limits.