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

A mediator is a neutral facilitator who helps disputing parties communicate and explore settlement options but has no authority to impose a decision.

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

Arbitration results in a binding award issued by an arbitrator or panel, which is enforceable like a court judgment and generally not subject to appeal.

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

A high-low agreement caps the insurer's exposure at an agreed maximum and guarantees the claimant a minimum recovery regardless of the jury verdict, reducing risk for both sides.

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

Requesting reciprocal concessions (conditional concession-trading) prevents one-sided movement and maintains negotiating leverage throughout the settlement process.

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

A Coblentz agreement arises when the insurer wrongfully denies coverage, the insured settles with the plaintiff and assigns bad-faith claims to the plaintiff, who can then sue the insurer.

AIC - Associate in Claims Practice Test

AIC - Associate in Claims Practice Test

AIC Negotiation & Settlement Techniques 3