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November 10, 2009

Structured Settlement Payment Servicing From The Factoring Insider Perspective

by John Darer® CLU ChFC MSSC RSP CLTC

Andrew Cravenho of the Settlement Quotes, LLC, a structured settlement factoring intermediary, shares his thoughts on structured settlement payment servicing in his post dated November 9, 2009.

Cravenho said:

"The process of servicing payments for structured settlement recipients after completing a structured settlement factoring transaction is not a new practice and is a common occurrence in the industry".

"The issue is caused when an annuitant decides to sell only a portion of their payment. Rather than selling an entire payment, they decide to keep a portion of that payment and dice the payment in half or as they see fit. Most insurance companies will accommodate this process and send the appropriate portions to both parties, the tort victim and the investor. The problem arises when a structured settlement factoring company does a transaction with an annuitant who decides that they want to dice payments and the issuer is 1 of the 3 companies who will not dice the payments".  WHO ARE THESE INSURANCE COMPANIES?.

Cravenho sees the following problems on structured settlement payment servicing:

  • Certain structured settlement factoring companies were using this scenario as an excuse to service annuities that did not need to be serviced
  • The annuitant no longer owns the rights to their future payments
  • If the annuitant was ever in a situation where they needed to sell more payments, the structured settlement factoring company who completed their last transaction is the only company that is able to complete any  future transactions for that individual. Cravenho says this raises the potential for price gouging

Cravenho suggests the following possible solutions on structured settlement payment servicing:

  1. The first solution would be to have the insurance companies who currently won’t dice payments, start dicing payments. This would eliminate any and all need for any structured settlement factoring company to service payments.
  2. Companies who may need to service payments should use a third party bonded, insured, and licensed company to handle their servicing.

Watch John Darer's Legal Broadcast Network video podcasts on Structured Settlement Payment Servicing

Six months ago I wrote this email Download John Darer email re servicing question to NSSTA Executives 5-15-2009 to NSSTA executives and structured settlement market leaders and outlined the issues.

While I did receive an email acknowledgment of the receipt of the aforementioned email from an NSSTA executive the day it was sent , there has been no further NSSTA response to this author or to the general NSSTA membership.

Posted at 04:14 PM in National Structured Settlement Trade Association, NSSTA, Servicing of Structured Settlements, Structured Settlement Factoring, Structured Settlement Information, Structured Settlement Servicing, Structured Settlement Transfers, Structured Settlements 4Real® Blog |

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