by Structured Settlement Watchdog®
In a free market system, price is determined by the unregulated interchange of supply and demand. In a most simplistic sense suppliers can set prices for the products or services that work for them and if consumers seeking those products or services find them attractive, there will be demand. A retail store sells apples for $10 a bushel and oranges at $8. Do people buy the apples or oranges? If price sensitive they might buy the oranges, but they might buy either or both for other reasons (e.g. have to make apple pie, squeeze orange juice or make a citrus salad).
In the structured settlement industry does the lowest price always get the business? It may increase demand, but a more highly rated insurance company may also get a lot of business, as others may be willing to pay more for the perception of added security or diversification.
Some, myself included, take umbrage at the discount rates that are charged by certain companies who purchase structured settlement payment rights which are then often compounded by add on fees. My post "What's Your Deep Discount Rate?" includes a mandatory New York State GOL 5-1703 disclosure from a JG Wentworth transaction that reveals an incredible 19.90% effective discount rate! The base rate in that transaction was deemed to be 5.4%! It is clear that I am not a fan of JG Wentworth (and its alter egos) predatory advertising practices. They are obviously getting those prices from impulse sellers. It's up to market forces to beat them. Perhaps judges approving such transactions should make it compulsory for the person to show evidence of shopping by including a minimum number of comparison quotes in the "qualified order" petition.
While some castigate the Allstate AFEN program, the fact is Allstate is not holding people back from free market supply and demand and if people shop, and many do, they may get a better deal. Allstate offers an alternative. If you don't like Allstate's alternative then don't sell your payment rights to them. Don't you think that if Allstate really wanted to be in the factoring business it would just drop its discount rate and blow everyone away?