by John Darer CLU ChFC CSSC RSP
In response to our open market letter concerning structured settlement servicing I received a response from Matt Bracy, General Counsel of Settlement Capital Corporation whose finger points squarely at the structured settlement annuity issuers, although he does not name names.
Before we get to Bracy, let's make it clear that structured settlement servicing ONLY affects those annuitants who chose to sell a part, however small, of their structured settlement payment rights.
Bracy states that the root cause of servicing is the unnamed structured settlement annuity issuers who do not want to split payments. This means that even if the tort victim does not want to sell all payments they must give up their abilty to deal directly with the annuity issuer and must instead deal with a third party. Moreover, it is unclear what happens if the servicer goes belly up.
Ergo, the resulting savings in administrative cost is allegedly at the expense of the tort victim who was sold on the qualities of the structured annuity issuer by the settlement planner or structured settlement broker. WHY?
The issue of structured settlement servicing is particularly disturbing because I have the sickening feeling from several conversations with some people whose competency I respect, that this critical issue may be lost on the majority of the structured settlement industry.
So I am going to continue pounding the table on this issue until it is solved. I ask any life insurance companies that are currently issuing structured settlement annuities to come out and let the industry know what their business practice is with respect to splitting annuity payments.
As an aside, the need for such practices would be mitigated if the structured annuity issuers handled commutation internally.