Wednesday, April 26, 2017

What Lies Beneath: The Cultural Iceberg Effect in Negotiation in Latin America

American anthropologist Edward Hall has compared culture to an iceberg. While a few aspects are visible above the surface, a larger portion lays hidden below, with deep-seated assumptions and social beliefs which comprise the driving force behind the visible manifestations. Professor Jayne Docherty suggests that some authors tackling the topic of negotiations focus almost entirely on the visible tip of the iceberg, presenting negotiations amongst people of different cultures as lists of “do’s and don’ts” -which proves not very helpful (Docherty, Jane,“Culture and Negotiation: Symmetrical Anthropology for Negotiations”, 87 Marq.L. Rev 2004). When involved in negotiations in the insurance field, awareness of certain cultural characteristics generally pertaining to Latin American countries can help you avoid decoding situations through your own social lens, thus improving your chances of effective communication.

Many of these general cultural characteristics can be explained using the categorization system adopted by Mr. Hall (Hall, Edward T., “Beyond Culture”), relating to the degree to which communication is influenced by social context: “low-context” vs. “high-context” cultures.

Generally, the United States is an example of a low-context culture, in which a greater level of specificity anticipates and tackles any forecasted problems. The parties negotiating have more control because they establish the rules freely. Participants exercise the liberty to define practically everything through verbal and written communication. Interactions tend to be direct, candid, specific in identifying problems, and generally open to disclosure and advocacy.

On the other hand, Latin American countries are generally seen as high-context cultures, where lack of specificity may result in a breakdown. Communications rely on pre-established social guidelines. Therefore, additional background information is needed to fully understand the messages being exchanged. Social rules complete or may even replace verbal statements. Communications are indirect and normally non-confrontational.

Three negotiating traits that are identified in the high-context cultures of the region are:
  • Relationships based on trust are highly valued, and thus doing business with friends or people with whom rapport has been established is preferred. If your Latin American counterpart proposes to postpone formal negotiations to go to dinner, this is typically not to cause delay but rather to develop the type of relationship that is favored in his or her cultural environment.
  • In general, do not expect blunt, negative answers. In many countries, a “No” must be inferred from a non-committal reply such as “Perhaps”, or the fact that the issue has been avoided or deferred to a later date. The intent is not to obstruct or delay negotiations but rather to avoid a confrontation that may threaten the parties’ relationship.
  • Time is managed differently. Locals may state that something will be accomplished “Now” when they actually mean “In the course of the day” or “Soon”. Reaching objectives can take longer than planned. Patience and persistence are not only required, but expected.
In high-context situations, negotiation is more than an art form, it is a highly choreographed dance. One must consider the form and context of the message, and even the tempo of the exchange. It is important to have the right mindset and team up with people who recognize these subtleties. Much like having a great dance partner.

Published by Daniel Baron

*Not licensed to practice law in Florida

Wednesday, April 12, 2017

Pre-Trial Proceedings Swirling in Latin America: Claim Resolution Facilitation or Additional Pre-Suit Condition

Pre-suit proceedings have become increasingly popular in Latin American jurisdictions. These proceedings economize on cost, time and resources making it a more attractive venue for resolving disputes. As a result, knowledge of these pre-filing mechanisms becomes important for insurers in the region as they may be invited to participate in a pre-suit initiative prior to the commencement of a formalized lawsuit. In some countries, pre-suit proceedings reserved for specific areas, such as insurance disputes, are operated by the insurance commissioner (which lays outside the realm of the judiciary) who will receive and process complaints. The level or authority to impose and enforce its decisions are dependent on the country.
For instance, in Argentina, the insurance regulatory authority Superintendencia de Seguros de la Nacion (National Insurance Superintendent) receives complaints from insureds and holds conciliatory hearings presided by the “Departamento de Orientacion y Asistencia al Asegurado” (Department of Orientation and Assistance to the Insured). In Ecuador, the insureds can involve the local regulator Superintendencia de Bancos (Superintendent of Banks) to examine a claim and render a determination as to whether the insurer is required to pay.
Again, the objective is to resolve the claim. While such an agency may apply sanctions if the insurer is non-compliant with local rules and regulations, the system is not intended to be an alternative to the insurer’s right to have its obligations determined by the judiciary. The insurer’s day in court is not waived.  For instance, in Ecuador, payment of the claim becomes a pre-requisite for insurers wishing to exercise their right to file a lawsuit contesting the agency decision. If the insurer defies the Superintendencia’s decision and refuses to pay the claim, the insurer can be forced into liquidation.
In other jurisdictions like Mexico, a specialized consumer protection bureau called the CONDUSEF (Spanish acronym which stands for the “National Commission for the Protection and Defense of Financial Services Users”) can be asked to intervene. In Chile, the local regulatory authority Superintendencia de Valores y Bancos (Superintendent of Securities and Banks) and the Servicio Nacional del Consumidor (National Consumer Service) will accept and process claims. In some instances, even the office of the “Defensor del Asegurado” (Insured Ombudsman), a private entity created by the initiative of local insurers, has become involved deciding claims of up to UF500 (amount expressed in Chilean “Unidades de Fomento” equivalent to approximately USD20,000). The decisions of the Defensor del Asegurado are binding upon insurers that are members of the Chilean Insurance Association.
In summary, insurers need to be aware of pre-suit proceedings in the jurisdictions where their insureds are located.  While some of these proceedings lack the gavel power of a judicial order, these administrative decisions may exceed the scope of traditional judicial parameters, such as the instance where a forced liquidation becomes the insurer’s fate. While these pre-suit proceedings are not a new concept, the increase in their use may create tidal waves of claims difficult to navigate.  Insurers would be wise to avoid getting caught in the undertow by consulting with knowledgeable counsel.
Published by Daniel Baron*

*Not licensed to practice law in Florida