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July 26, 2009

If Structured Settlement Agency A Supplies Annuity Quote to B Who Supplies Quote To C, Who Works For D, Who Supplies To E, the attorney for end user F. Who is Responsible to Plaintiff F in this "Who's Who"?

by John Darer CLU ChFC CSSC RSP

An open question for comment from the structured settlement industry, including its appointed general agencies, appointed agencies, structured annuity issuing life companies, insurance regulators and legal commentators.

Assume
XYZ= an admitted Insurance Company that issues structured settlement annuities
A= the managing general agent that has an agency contract with XYZ and/or one or more of its principals who are appointed agents of XYZ
B= another insurance agent or agency that has relationship with A, but not directly with XYZ
C=financial planner with limited experience with structured settlements, no active insurance license in the state of solicitation or the domicile of the proposed qualified assignee, and no relationship with XYZ
D= Investment House, employer of C, with relationship to B
E= attorney for injured party
F=injured party

Further Assume

  • Neither B, C nor D are appointed agents of XYZ for structured settlement annuities.
  • As part of its contract XYZ pays financial compensation to its appointed agent A for placement of structured settlement annuity business.
  • A pays compensation to B for structured settlement annuity business B refers to A that is placed with XYZ, and other insurance companies.
  • B pays D compensation for structured settlement annuity business placed with XYZ (and other insurance companies) that D, or any of its employees (such as C) refers to B (that B then refers to A for placement).
  • C gives E a document that he/she refers to as "D's structured settlement quote" as part of his/her effort to solicit and get F to agree to a structured settlement annuity as part of his/her/their recovery.
  • The document labeled "D's structured settlement quote" is a standard "Quote in The Box" quote from Navisys quoting software issued to appointed agents by XYZ and the quote is emblazoned with the name of A.
  • A denies a relationship with C or D or an obligation to supervise them. A  merely provides a quote (with A's name on it) to B which then provides the same quote (with A's name on it) to C or D, who represent the quote (with A's name on it) as their own to E, per above.
  • F likes the quote (with A's name on it) and tells E that he would like to do business with C.

Questions

  1. Is everything kosher with this transaction? If not, why?
  2. Is A insulated from the actions of C or D in this "daisy chain" with respect to potential claims by E or F?
  3. Are there any best practices issues that can be learned from the above?

DISCLAIMER: This post is intended for educational purposes only. Any resemblance to real persons living or dead, or companies active or inactive (with the exception of the Navisys reference) is purely coincidental.


275px-Daisy_chain

 

Posted at 12:55 PM in Best Practices Structured Settlements, CT Structured Settlements, Daisy Chain Liability Issues?, Law of Agency, Navisys, Quote In The Box, Settlement Broker Malpractice Issues, Settlement Planner Business Practices, Settlement Planner Malpractice Issues, Structured Settlement Broker Business Practices, Structured Settlement Ethics Questions, Structured Settlement Software, Structured Settlement Watchdog®, Structured Settlements in Nassau County, NY, Structured Settlements New York, The Structured Settlement Daisy Chain | | Comments (2)

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Structured Settlement Best Practices Corner

  • New York Insurance Advertising law requires the full name of the Insurer to be listed along with the city and state of the principal office. Stating that you represent these fine companies using Insurance company logos without the preceding information are also illegal
  • When it comes to settlement documents it is the ultimate responsibility of the lawyers or claims adjusters who receive input concerning the structured settlement aspects of the documents to actually read the entire document, exercise independent thought and advise their clients properly
  • Be aware that financial advisors use of testimonials is prohibited or restricted
  • Most states require that Testimonials represent the CURRENT opinion of the person who made the testimonial. Be prepared to back it up.
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