We all know that structured settlement servicing exists. Servicing arises where an annuitant sells a portion of the payments rights and through a contractual arrangement ("servicing agreement") the factoring company receives the entire structured settlement payment (not just the sold portion) and passes the difference onto the annuitant. Under such circumstances the annuity issuer may refuse to speak with the annuitant because of the servicing agreement and directs calls to the factoring company. Moreover there may be a delay in the receipt of such payments by the annuitant because the payments must first pass through the factoring company.
The question is WHY? Why are structured settlement servicing agreements done?
One of the allegations is that Life insurance companies WILL NOT split structured settlement payments. If this is true then it may be an incredibly poor PR move in need of correction. Who has experienced this and from which life insurance companies? Which current writers of structured settlement annuities are involved, if any?
The contrary allegation is that factoring companies do this to control the pipeline for the next factoring deal, cutting down on marketing expense and further to wall off competition.
Will someone speak up concerning the consequences to the annuitant in the event of bankruptcy or insolvency of the servicing factoring company where the factoring company in essence comtrols receipt of all of the annuitant's structured settlement payments? This question must be answered before its too late.
This author welcomes statements from both the structured settlement industry and the factoring industry.