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Negotiating tactics help curb losses in subrogation

Ashton T. Kirsch

Simple but sometimes overlooked negotiating skills can help reduces losses for insurers and other payers that go to subrogation, a pair of subrogation experts said.

By adhering to strategies such as always making a settlement demand and building relationships with other claims professionals, insurers and third-party administrators can offset losses with contributions from other entities involved in workers compensation, auto and other liability claims, they said Wednesday during a session at the Risk & Insurance Management Society Inc.’s Riskworld conference in Atlanta.

Lawyers and other claims professionals should think like a plaintiffs attorney when they are involved in subrogation work, said Ashton T. Kirsch, a Hartford, Wisconsin-based shareholder at subrogation law firm Matthiesen, Wickert & Lehrer S.C.

“In plaintiffs work and subro work we're about building a narrative, creating a story,” he said. “We need to think creative creatively.”

Insurers should always send a demand to the other parties involved, even in cases where their own liability may seem clear, because there may be facts in the case that they are not aware of, Mr. Kirsch said.

In one case, for example, he represented an insurer for a truck that was damaged and the driver injured in a collision with a cow, and an investigation showed no negligence by the farmer. After a demand was sent to the farmer’s insurer, it admitted liability and said a break in a fence was fixed to prevent other animals escaping before the investigator arrived.

And when negotiating with adjusters, it’s important to build relationships with them rather than just talk about the facts of the case because one will likely be involved in other claims with the same adjuster, he said.

On the other hand, if somebody on the other side of a negotiation is gruff and abrupt, they may be using it as a tactic, Mr. Kirsch said.

“Don't take things personally and be very strategic in how you use emotions, and understand when you're being subjected to this,” he said.

Subrogation negotiators should also be wary of splitting the difference between settlement offers, said Joey Daryanani, a vice president at CSAA Insurance Group in Walnut Creek, California.

Unless a negotiator has an offer above the range where he or she thinks they should settle “you are leaving money on the table.”

In addition, subrogators should not be afraid to walk away from an initial offer and later try to negotiate a different amount, because the number of cases where the other side takes away the initial offer is tiny, Mr. Daryanani said.