AIC Negotiation & Settlement Techniques 3

Question 1

In mediation, the mediator's primary role is to:

Accepted Answer

Facilitate communication and help parties reach a voluntary agreement

Answer

Issue a binding decision based on the evidence presented

Answer

Represent the insurer's interests in settlement discussions

Answer

Determine legal liability and apportion fault

Question 2

Which type of Alternative Dispute Resolution (ADR) results in a binding decision made by a neutral third party, similar to a court judgment?

Accepted Answer

Arbitration

Answer

Mediation

Answer

Negotiation

Answer

Conciliation

Question 3

A 'high-low agreement' in claims negotiation means:

Accepted Answer

The parties agree in advance that the verdict will fall within a defined minimum and maximum range regardless of the jury's actual award

Answer

The adjuster sets a high reserve and low payment threshold

Answer

The plaintiff accepts the highest offer during mediation

Answer

The insurer pays the lowest allowable settlement under state law

Question 4

When an adjuster makes a concession during negotiation, best practice requires the adjuster to:

Accepted Answer

Request a reciprocal concession from the claimant before finalizing

Answer

Make the concession unconditional to show good faith

Answer

Avoid documenting the concession to preserve flexibility

Answer

Only make concessions during formal mediation sessions

Question 5

A 'Coblentz agreement' (also called a settlement demand letter) is most relevant in which situation?

Accepted Answer

When an insured breaches a condition of the policy and the insurer denies coverage, and the insured then settles directly with the plaintiff and assigns rights against the insurer

Answer

When a claimant requests a structured settlement in a workers compensation case

Answer

When multiple insurers share coverage for the same loss

Answer

When the insurer exercises subrogation rights against a third party

Question 6

Which of the following best describes the concept of 'authority' in claims settlement negotiations?

Accepted Answer

The financial limit up to which an adjuster can settle a claim without management approval

Answer

The legal power of the court to approve settlement terms

Answer

The claimant's right to accept or reject any offer

Answer

The insurer's right to subrogate against a negligent third party

Question 7

After a negotiated settlement is reached, the most important next step for the adjuster is to:

Accepted Answer

Obtain a signed release before issuing any settlement payment

Answer

Close the claim file immediately to free up reserves

Answer

Notify the state insurance department of the settlement

Answer

Reduce the claim reserve to zero pending payment