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ARTICLE - March 2006

Turning Producers Into Superstars CD
by Emily Huling

CSR Profile
by The National Alliance Research Academy

High Probability Selling Book & CD Set
by Jacques Werth & Nicholas E. Ruben



Understanding How Personalities Affect Negotiations

The following article is based on Ms. Allison’s presentation at the ASCnet Conference, which was held in October in Nashville, Tenn.

RAISE YOUR HAND if you’ve been trained in the art of negotiation. It’s not a skill taught in school. You learn it in the real world. Have you ever bought a car? A house? If you’ve ever haggled over the price of anything, then you’ve negotiated. We do it all the time even though many of us haven’t been shown how.

Our jobs as insurance agents require that we negotiate, especially with underwriters.  Negotiate well, and we secure coverage for our clients and capital for our carriers. Negotiate poorly and you could lose time, money and customers. The art of negotiation is a critical skill, to be used not only with your underwriters, but on a regular basis with others. 

Before you broker any deal, identify and understand your negotiating personality and that of the person with whom you’ll negotiate. I call one the “director’s” type. Directors make amazing leaders because they’re go-getters and goal-oriented. In negotiations, a director’s chief concern is the bottom line. Directors’ steadfastness can be frustrating to someone trying to strike a compromise, since they are often slow to deviate from their original plans.

Next, there’s the “processor” type. Processors crave precision. They like order, logic, facts and statistics. They love details. In the workplace, a processor’s attention to detail can be an asset—a failsafe against potentially embarrassing and costly errors. In a negotiation, however, other personalities may regard this obsession with minutiae as a barrier to progress.

Another type consists of  “communicators.” They’re the peacekeepers. Communicators become emotionally invested in negotiations and strive to accommodate all parties involved. They’re honest, loyal and reliable, unless you cross them. Deceive a communicator during a negotiation, and you may never regain his or her trust.  Have a communicator on your team, and he or she may sacrifice your company’s objectives to appease the opposing side.

Finally, there are the interactors. They are the cheerleaders of the group. They spur on negotiations with their energy and optimism. “Don’t worry about the details. We can do that, no problem!,” they rave. Interactors are creative. During negotiations, they’ll invent solutions to seemingly insurmountable problems. But be- ware: An interactor’s bright idea may come as a surprise to fellow teammates, who didn’t know about or agree to the new terms.

In negotiations, as in life, some personalities mesh better than others. Every personality has an opposite personality, one with contrary traits. A person with your opposing personality is usually your complementary match in marriage, and your nemesis in negotiation. Communicators will belabor a negotiation until all parties are satisfied, while directors want negotiations to end as quickly as possible. Processors delight in the details, the very thing their opposite personality, the interactor, despises.
So what do you do when your boss is a director and you are a communicator, or when you are an interactor and your underwriter is a processor? Throw up your hands? Run away screaming? No! You adjust your negotiation style.

There are techniques for working with any personality. With directors, be succinct. Remember, they despise fluff. Interactors need structure. Give them deadlines and an agenda. If you are discussing a policy with an interactor underwriter, for example, create an agenda that lists the three or four areas of the policy that you’d like to examine. Discourage deviations from the plan. Do your homework when working with a processor. Most underwriters are processors. Get the facts and details on the risk or property from your client before meeting with a processor underwriter, and negotiation will go more smoothly. Most insurance agents, on the other hand, are communicators. We are concerned with taking care of people. When negotiating with a communicator, slow down, be patient and play fair. We like to take our time to make sure we’ve brokered the best deal for our clients, our carriers and ourselves.

Once you’ve established your negotiating personality and that of your negotiating partner, it’s time to identify who has the power in the negotiation and what type of power it is. This is an important step. We’re often intimidated by those we perceive to be more powerful than ourselves, and intimidation diminishes our ability to negotiate. By identifying who truly has the power in a negotiation, we discover that we usually have more of it than we thought.

A negotiator can wield four types of power: legitimate power, expertise power, information power or situation power. Legitimate power comes from a title or a position. When you, the agent, negotiate with an underwriter, who do you believe has the legitimate power, you or them? You do. Agents often mistakenly believe that the underwriter, by virtue of his or her title, is in charge of a policy negotiation. Underwriters have the power to reject a risk, yes, but remember, they want your business. The underwriter would rather make a sale than exercise this veto power.

“Knowledge is power,” the father of modern science, Francis Bacon, once said. And it is—information power. The underwriter may know more about a policy than the agent, but the agent knows more about the client and the risk. Don’t withhold information that could lead to a compromise, but don’t divulge so much information that you give your information power away. Do your research and share your findings judiciously to increase your influence over the negotiation. 

Closely related to information power is expertise power. Expertise power is largely a matter of perception. To have expertise power, it’s not so important that you know more than your negotiating adversary, but that you appear to know more. Experience provides expertise power, but so does confidence in your abilities. Be confident that you can negotiate a compromise and you probably will.
Situation power lies with the person who makes the decisions. Who has the most situation power depends on the circumstances. Believe it or not, in most insurance scenarios, the agent has the most situation power. You would think the power lies with the customer, who may decide not to purchase a policy, or worse, cancel an existing one. But wait. The customer is also your client—a client who defers to your opinion when it comes to insurance. So in reality, you, the agent, have the situation power.

Let’s recap: Who has the legitimate power? You do. Who has the information power? You do. Who has the situation power? You do. Who has the expertise power? You can claim that too.  Now let’s make this power work to your advantage.

With your reconnaissance and strategizing complete, you are ready to negotiate. Too often, we think of negotiating as a tennis match. The agent serves a proposal. The underwriter returns with a rejection. The agent volleys back with a new consideration. The underwriter bankhands another refusal. Back and forth, back and forth, until the underwriter fires off an overhead smash that the agent just can’t counter. Game. Set. Match. You lose.

Savvy players know, however, that a successful negotiation isn’t a tennis match, but rather a three-step process. Step one: Establish your conditions. Determine what you want out of the negotiation, as well as what your opponent wants. To do this you’ll need your secret weapons—“why” and “what else.”

Let’s say you have a client who wants to insure a cabin with a wood-burning stove. You present the risk to your underwriter, who responds, “No, our reinsurer won’t allow that.” Here’s when you brandish your first weapon and ask, “Why won’t your reinsurer allow that?” Your underwriter will answer. This is when you unsheathe your second weapon: “What else could we do with this policy for it to be acceptable to your reinsurer?”

By asking “Why?” and “What else?” you pave the way for step two: Gather information. Perhaps the reinsurer considers the stove a fire hazard, or maybe a carbon monoxide risk. Would carbon monoxide detectors mitigate the danger? What if you put a fire extinguisher in every room, or covered the kitchen in fire-resistant paint? You may have to return to the client or a wood-burning stove expert to learn more about the risk, but this minimal effort will maximize your chances of getting what you want. Instead of grasping at straws as you would have in the tennis-match scenario, you will be able to detect your argument’s weak spots in your opponent’s eyes, and gather information to strengthen these vulnerable areas.

Finally, you’ve arrived at the fun part. Step three: Hammering out your compromise. It’s time to make the deal. Most people believe that step three is the negotiation, but we know better. A successful negotiation, one that satisfies both parties and leads to more amicable business dealings, begins long before the two parties pin down the details and shake hands.

Step three, however, can be the most daunting—a point of no return. You either hit the numbers or lose your shirt in step three. To ease you through this sometimes frightening and stressful step, keep the following tips in mind. While they apply to negotiations in general, they easily can be customized to interactions with  underwriters or clients, as well as negotiation scenarios in your private life.

1) When crafting a compromise, don’t narrow the discussion down to just one issue. Hinging the negotiation on one issue is like being trapped in a burning high rise with a rickety fire escape: There’s only one way out, and you don’t want it. If you get stuck on the wood-burning stove issue, move on to another. Your chances of success increase with every option you have.

2) Don’t be the first to name a price. If you name a price first, you give away information power. Let your opponent name the price. This way, you are the one with the superior knowledge.

3) Know your bottom line. You can’t get what you want if you don’t know what it is. Having a limit gives you a negotiation goal. Staying true to your limit will keep you from paying too much or accepting too little. Once you know your fellow negotiator’s asking price, compare this to your bottom line. If the discrepancy is too great, go elsewhere. Never accept an offer below your bottom line.

4) Walk away from the first offer. Even the most naive negotiator knows not to reveal the best deal first.

By following this tip, I was able to buy a Mercedes Benz and a BMW on the same day. My husband and I had come to the used car dealership so he could ogle his dream-mobile, a 1972 Mercedes Benz like the one Richard Gere drove in “American Gigolo.” While he fawned, I discovered a BMW 735—with my name on it. My husband caught me eyeing the BMW and said, “We can’t afford two cars today. That’s $6,000 over our budget.” “Not in negotiation,” I told him.

As we sat down with the car salesman, I said, “We need $3,000 off the price of each car to make our budget.” He laughed. We left.

But my business card stayed behind. I’d cordially turned down the first offer and left my card, thereby keeping the negotiation open should the salesman change his mind.

My husband begged to go back. “Just look at the chrome on that baby!” he wailed. “Walk! Don’t even look back,” I replied.

We didn’t even make it to the highway before the car salesman called us. “You would take both cars today?,” he asked. “We’d go to the bank and get the financing in a couple of hours,” I said. Both my husband and I had our dream-mobiles.

Did I take a gamble? Sure. The car salesman could’ve turned me down, and I would have missed an opportunity. But new opportunities come along all the time. Wait for the one that meets your standards.

5) Never reveal deadlines. Salespeople can smell desperation—don’t confirm its presence! Appear relaxed and confident as you make your deal. If possible, do your bargaining well in advance of deadlines so you can be relaxed and confident as you make your deal. Without the worry of an impending due date clouding your mind, you’ll think more clearly and make wiser decisions.

6) Develop rapport. Smile. Chat. Tell a few jokes. In your quest for a contract, don’t forget that you are negotiating with a person. Your negotiation with this person could mean the beginning (or end) of a long and mutually beneficial business relationship.

Follow these negotiation strategies and tips I’ve given you, and you’ll not only make more money through your existing business relationships, but also cultivate lucrative new connections.


Elaine Allison is an international speaker and author of “The Velvet Hammer—PowHERful Leadership Lessons for Women Who Don't Golf.” At the age of 19, she was one of Canada's first female correctional officers in an all-male prison. Her Web site is www.