by Structured Settlement Watchdog®
Apparently some financial advisers and factors will say anything and do anything to capitalize on the structured settlement secondary market. It is time for some government entity to step in and set some rules.
The secondary market for In Force Annuity and In Force Structured Settlement Policies. Policies refers to the buying and selling of existing or 'in-force' policies" -lawyer William Skyrm CBC Settlement Funding Blog Conshohocken, PA November 2, 2010 and still posted February 10, 2011 at 1230pm EST.
"Simply put they are reassigned guaranteed cash flow annuity policies. They are paid by MetLife, Prudential, NY Life, Hartford and all other major insurance carriers" -written communication from a New Jersey company in February 2011 that was supplied to the structured settlement watchdog.
"The high yields are created by buying the original policies at a discount from the policyholder that seeks cash now" -written communication from a New Jersey company February 2011 supplied to the structured settlement watchdog.
"For example we recently placed an offering from Prudential Insurance Company paying 7%...and an offering from Allstate Life Insurance Company paying 7.25%..." -written communication from the same New Jersey company February 2011 supplied to the structured settlement watchdog. Not one of these so-called
(emphasis ours on what we believe to be a blatant misrepresentation)
- In my opinion, with his having served as former Associate General Counsel of J.G. Wentworth for 8 years and former resource board members of the National Association of Women Judges, William J. Skyrm should know full well that what he wrote on the blog was incorrect.
- A structured settlement transfer DOES NOT involve the buying and selling or transfer of in force structured settlement policies.
- Structured settlement payment rights ARE NOT an annuity policy. You are NOT buying or selling an annuity policy if you buy or sell an interest in structure settlement payment rights.
- A structured settlement annuitant DOES NOT OWN the structured settlement annuity policy and therefore the statement that "the high yields are created by buying the original policies from the policyholders that seeks cash now" is false.
- Inasmuch as I have a relationship with both Prudential and Allstate, neither of these companies "make offerings" of the manner suggested by the New Jersey company. Considering that the website of it suggests that it is appointed with one of these companies (Prudential), is the claiming that Pru is "offering" 7% in this manner a sensible course of action?
- The structured settlement watchdog has demonstrated how excessive fees eat into the amount that the desperate seller of structured settlements receives.
- So here's what the written communication from the New Jersey company dated in February 2011 states "The commissions range from 3.5% to 14% of the purchase price and currently no insurance license is required to sell these products".
- So not only do we appear to have an entity pushing products to consumers and other advisors through communications that demonstrate (1) a fundamental lack of knowledge of a structured settlement factoring transaction (2) a possible misrepresentation of the truth for suggesting that the named insurers and others are making "offerings" of these "products" that NJ company has mislabeled annuity policies (3) it may be paying or charging over the top commissions.
- If these were true annuity policies the policy forms and commission schedules would have to be filed with each state insurance department.
- Read my February 5, 2011 post "Protection From Creditors: Structured Annuities v Secondary Market Annuity Payment Rights"
Course of Action
- While the secondary market for structured settlement payment rights represents a valid financial planning option as an asset class for those investors who truly understand it and its transactional risks, both the primary and secondary structured settlement markets should have zero tolerance for those, whether through ignorance or intent, who misrepresent the transaction.
- While there is indeed no insurance license required at present, at least one agency has elevated standards and will only permit licensed insurance agents to access its facilities and provides Errors and Omissions Coverage. Others only sell to accredited investors.
- It is critical that names be exposed so that peer pressure ensues to continue to elevate the industry. Bring on the heat!
- Furthermore, life insurance companies can do their bit by coming down hard on those company appointees whose "extra-curricular activities" present the companies as doing something that they may not be doing in the structured settlement secondary market.