CCP Settlement Negotiation Tactics 3

Question 1

In the context of claims settlement, what is 'structured settlement' most appropriate for?

Accepted Answer

Claims involving ongoing medical needs, minors, or large long-term damage awards

Answer

Structured settlements are best suited for cases with ongoing medical needs, future lost wages, or large awards where periodic payments serve the claimant's long-term interests.

Question 2

What is the primary purpose of a 'high-low agreement' in settlement negotiations?

Accepted Answer

To set minimum and maximum recovery limits regardless of verdict outcome

Answer

A high-low agreement caps the defendant's maximum exposure and guarantees the plaintiff a minimum recovery, eliminating the risk of extreme verdict outcomes.

Question 3

During mediation, the mediator proposes a 'mediator's proposal' after impasse. What does this mean?

Accepted Answer

The mediator suggests a specific settlement number that both parties accept or reject privately and simultaneously

Answer

A mediator's proposal involves the mediator suggesting a number that both parties accept or reject simultaneously in private, removing the stigma of being the first to compromise.

Question 4

Which of the following BEST describes the 'reservation price' in settlement negotiations?

Accepted Answer

The minimum or maximum amount a party will accept before walking away

Answer

The reservation price is the walk-away point—the least favorable settlement a party will accept before preferring to litigate.

Question 5

A claimant's attorney sends a time-limited policy limits demand. What is the CRITICAL first step for the claims professional?

Accepted Answer

Request an extension and inform the insured of potential exposure

Answer

The claims professional must evaluate the claim, document findings, and notify the insured of potential excess exposure before or concurrent with the response.

(CCP) Certified Claims Professional Practice Test

(CCP) Certified Claims Professional Practice Test

CCP Settlement Negotiation Tactics 3