This is a summary of a presentation to an ISL "Gathering", which focussed upon the psychology of commutations rather than the mechanics.

The message was based upon three well-known quotes and five factors to consider when negotiating commutations:

Quotes

• "You don't get what you deserve, you get what you negotiate"
  
•  
• "Perception is more important than reality"
  
•  
• "Timing is everything"

Factors

• Establish the facts, but bear in mind how these are impacted by the perception of the parties, which can be very different.
•  
• Consider the Financial Status of the participants. Reality may be that they are in fact stronger or weaker than the formal records reflect.
•  
• Arm yourself with "bullets" - real or plastic - to negotiate with. These may derive from audit/inspection findings.
•  
• Timing is indeed everything.
  Financial and political considerations usually pinpoint a moment in time, when the best possible deal can be struck.
•  
• When negotiating, always remember cultural issues and approaches. Europe, North America, Asia, South America etc all have very different factors they consider and approaches they adopt.

Once again, in business, you do not get what you deserve, you get what you negotiate. Know the game. Play the game.

The above was delivered by Julian Ward, Managing Director of JTW Reinsurance Consultants and Publisher of JTW News ( www.jtw-re.com ).