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 threestep 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.