by John Darer® CLU ChFC MSSC RSP CLTC
Prudential structured settlements now requires the name of the Assignor on ALL structured settlement annuity lock ins
The move was precipitated by the number of plaintiff settlement planners pulling locked-in and pending cases from AIG annuity markets and placing them with alternative markets. While some of this is to be expected (for example in minor case where Courts have minimum ratings requirements of AM Best A+) a bad business practice has been observed that needed urgent action.
In their zeal to get the job done some of these plaintiff settlement planners are forgetting that, as of the time of publication, certain annuity issuers are not on the AIG claims annuity issuer approved list. Setting aside your personal feelings about approved lists, that approved list is currently comprised of New York Life Insurance Company (AM Best A++), Allstate Life Insurance Company (and its New York subsidiary, both A+), Hartford Life Insurance Company (A+), Pacific Life and Annuity (A++), in addition to the 2 AIG life insurance subsidiaries, American International Life Assurance Company of New York and American General Life Insurance Company (both A).
Apparently Prudential Structured Settlements has been receiving a number of lock in requests from certain careless, misinformed or ignorant plaintiff settlement planners and getting burned when the cases cannot be funded with Prudential due to AIG requirements.
A Structured Settlement Lock in is a Commitment
Before you accuse me of being harsh, please remember that a lock in is a mutual commitment by the broker and the insurer that a benefit package will be delivered for a certain price if the premium is delivered on the funding commitment date. The ability to lockin is not only a valuable privilege, it is an essential tool for any settlement planner or structured settlement broker.
Please consider that when a case is locked in, the life insurer, relying on the commitment of the settlement planner or structured settlement broker, must set aside assets to cover the obligation. If the funding does not later materialize and investment values go in the wrong direction the insurer must eat the loss. The errant settlement planners and/or structured settlement brokers need to be more considerate of Prudential and any other annuity market not on the casualty carrier's approved list.
Until further notice Prudential is requiring the name of the Assignor, to verify that it is not an AIG insurer and turning down lock in requests where an AIG casualty company is the Assignor.
The heavy promoters of QSFs in the group should also be reminded that Prudential does not accept assignments from single claimant 468B qualified settlement funds.
All structured settlement brokers and settlement planners have a duty to explain to their clients what a lock in means and to avoid making such commitments when they know they cannot be kept.