by John Darer CLU ChFC CSSC RSP
In Bruce Akerly's paper "The Impact of An Annuity Servicer's Bankruptcy On The Rights Of The Annuitant and The Structured Settlement Purchaser" (Download Nasp-conf-seminar-paper-on servicing-bankruptcy-Bruce Akerly), Akerly addresses and expands on the issues raised in the following blog Structured Settlements 4Real posts (attached in Appendix B to the paper):
Bankruptcy of Structured Settlement Servicing Company October 10, 2009
and discussed in the 3 videos contained in the blog post immediately preceding this one.
In my opinion, those settlement planners who insist that a discussion of factoring is part of the settlement planning process have a duty to cover the servicing issue with the plaintiffs and the attorneys they are advising. How about having them try a copy of Bruce Akerly's paper on for size?
Are they more or less likely to consider a structured settlement? Are they more or likely to enter into a structured settlement factoring transaction? Just for "S"s and "G"s, compare the financial strength and size of Metropolitan Life with any factoring company or servicing company of your choosing.
For the decision makers at the three annuity issuing life insurance companies (referred to, but not named by Andrew Cravenho in this post). Is it time to consider a better solution? At the very least this author opines that the annuity issuers should provide full disclosure to their agents and brokers about whether not they will dice or split payments if the structured settlement is subsequently partially factored.
Poigant quotes from Bruce Akerly's paper (p21)-comments in parentheses
- "The only loss suffered would be short delay in receipt of payment occasioned by bankruptcy" (short is relative to someone who depends on the income)
- " An annuitant may require the assistance of counsel" (At what cost?)
- " Again all payments should either have been paid to the annuitant in the interim or will be held pending agreement of the parties and/or order and direction of the court". (how long is THAT going to take; and see comment to first quote)
Note: Underlines for emphasis