The broker seemed really keen to work with you. The fruit of your hard work; your customer focus, the thorough risk analysis you did, the mutual value you were able to create with the revised policy, the additional benefits you demonstrated. And still they were asking for more. More support, more commission, lower premium, the list seemed to be endless.
To secure the deal, you need effective insurance negotiation strategies that move beyond simply giving in to demands.
I see this happening all the time. The customer is constantly trying to get more. And we have the feeling we need to give it to them to keep the deal. We are doing our best to satisfy their demands. However, proper business negotiation is “the act or process of trading currencies in order to achieve a mutually acceptable agreement”. The golden rule is “If you… Then I. If you give me X, then I may consider giving you Y or never give without getting.
the Blueprint for value creation
Research at MarketWatch Centre for Negotiation found that negotiators can claim up to 42% more value in a deal by abandoning zero-sum games and creating a relationship based on trust and collaboration. Implementing professional insurance negotiation strategies requires thorough preparation.
1. Start with 4 principles in mind*
- People: Separate the people from the problem
- Interests: Focus on interests, not positions
- Options: Generate a variety of possibilities before deciding what to do
- Criteria: Insist that the result be based on some objective standards
*Getting to Yes – Negotiating agreement without giving in by Roger Fisher & William Ury
2: Follow the Blueprint 6 step planning & preparation process
I. Value the Deal
Describe and calculate the value of your proposition for you and for the other. A balanced deal may lead to a balanced negotiation. But if the deal is more beneficial for you, expect more powerplay on the other side..
II. Power balance
Which party has more power and why? Is it the size of their business, uniqueness of services. A large global broker (i.e. Marsh) has undoubtedly more power than a small village agent. Tactics and knowledge (7Cs) can help to rebalance power
III. Shopping list
The heart of the negotiation preparation, together with step IV Currencies. Shoppings are all those items you could possibly ask for, if it gets to a negotiation. The average delegate team in my workshops get to 30-40 items, ranging from financial “shoppings” such as premium, commission, deductibles, exclusions. But also non-financials such as customer data, risk selection, dedicated service teams. And define the items on your list that are essential for you (your “walk away”), and the things you hope for (your opening position).
IV. Currencies
The things you’d be willing to trade in order to get items on your shoppinglist, using the phrase: “If you…then I”. Always think the size of the prize, or what will you ask in return. Make trading currencies painful, let them work for their shoppings.
V. Cost-benefit
Prepare a list of currencies you may want to trade with and the shoppings you will ask in return. Add cost of the currencies and the value of the shoppings and it’ll show you the cost-benefit of your negotiation.
VI. Tactics
They are used to increase power during a negotiation and some are very useful to help moving the negotiation forward. Examples are “time-outs” to reduce tension, “summaries” to buy time and to make sure we are still at the same page. For a comprehensive list contact us and read the book “Never split the difference” by former FBI negotiator Chris Voss.
3. Follow a clear structure
3.Follow a clear structure during the negotiation conversation, starting with the Exploration of the others opening position and shopping list. Summarize to make sure you’ve captured them all (“Is there anything else that would stop you from reaching an agreement today?”) and move to the Trading phase using the If you…then I rule.
By consistently applying these insurance negotiation strategies, and remembering to “never give without getting”, you will see how you can get a return on your investment. Happy negotiations!"
Want to learn more? Discover how our insurance relationship management training helps technical teams bridge the gap between expertise and influential client impact.