by John Darer® CLU ChFC MSSC RSP CLTC
What is Post Settlement Underwriting?
Post settlement underwriting is a legitimate business practice** that has been alleged to have been abused by some structured settlement brokers representing casualty and liability insurers. The gist of the allegation is that AFTER a plaintiff has agreed to a specific benefit stream from a structured settlement, on occasion, certain "actors" in the structured settlement brokerage community will see if they can get a better rate for the Defendant or Insurer and go to a further step of allegedly concealing this from the unsuspecting plaintiff and plaintiff attorney, sometimes by allegedly barring the Plaintiff from retaining a broker of their own.
**one might consider post settlement underwriting "legitimate" where the case has settled, the global settlement funding amount has been determined, final terms of the structured settlement are being negotiated and additional medical information is submitted to see if a better price can be obtained on the structured annuity or annuities, with full disclosure to both sides. Whatever savings there is on the annuity price has no impact on the global settlement funding amount. Where a Medicare Set Aside is being considered, a better rated age could mean less is needed to fund the MSA, an attractive solution for both sides.
Why The Bad Aspect of Post Settlement Underwriting Is Virtually Impossible in New York
This alleged bad aspect of the practice of post settlement underwriting, is a virtual impossibility in states with structured settlement protection acts, like New York, Florida, Massachusetts and Minnesota, whose statutes mandate a disclosure of cost to be made by the Defendant or Defendant's legal representative at the time structured settlement is negotiated (See New York General Obligations Law §5-1702 and comparable statutes in the other states) . Were post settlement underwriting to take place in New York, wouldn't the Defendant and the Defendant's attorney have significant personal exposure for fraud?
New York General Obligations Law §5-1702 and How it as Intended to Add To the Integrity of Structured Settlement Transactions
Watch John Darer's podcast on New York General Obligations Law §5-1702 which discusses New York's Structured Settlement Protection Act as it applies to the establishment of structured settlements and the burden it places on the Defendant or Defendant's legal representative.
Undisclosed post settlement underwriting is career suicide for a structured settlement broker. The rogue broker who goes down this path will eventually be found out.
Attorneys for both plaintiff and defense can protect themselves and their clients by utilizing the services of a structured settlement expert.