Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary

Conflation Station | Settlement Planners Go Out on a Limb to Mischaracterize

by Structured Settlement Watchdog

On January 4, 2021 Independent Life Insurance Company ("Independent Life") announced in a press release that it entered into a reinsurance agreement with Hannover Life Reassurance Company of America ("Hannover Re US"), rated A+ by A.M. Best. In accordance with this agreement, effective October 1, 2020 Hannover Re US will reinsure a percentage of Independent Life's in-force business and new business. Independent Life remains 100% responsible for the benefit payments to the structured settlement payees and will continue to administer these payments.  Hannover Re US will reimburse Independent Life for the reinsured portion of these payments.

Despite the clear and undeniable message in the January 4, 2021 Independent Life press release, it has come to the attention of the Structured Settlement Watchdog that at least two settlement planners have mischaracterized the nature of the reinsurance in solicitations to clients and submissions to judges in settlements requiring court approval, while pitching Independent's iStructure, the industry's first uncapped undex linked structured settlement annuity.  The common conflation is to imply or suggest that the A+ rating from A.M. Best earned by Hannover imputes to Independent and/or that the reinsurance is some sort of backstop. 

There is simply no excuse for any settlement planners to conflate the facts that are clearly laid out in the Independent Life press release. 

Other references

Independent Life's Reinsurance Agreement With Hannover Life Re (4structures.com)  April 22, 2021.

What's The Link Between SMA Hub and Settlement Professionals, Inc? | "Mumm's the Word"

by Structured Settlement Watchdog

Dylan Mumm was named as a co-Defendant last month in an Arizona lawsuit arising out of the sale of payment streams from an agent of NBA player Paul Millsap, now of the Brooklyn Nets, to a disabled man's trust. [Richard J. Hansen, a  single man, and Richard J. Hansen Trust, Plaintiffs v Steffey et al.  AZ. Pima County Case C20214202]   See my prior articles:

• Disabled 65 y/o Arizona Man Sues Settlement Planners, SMA Hub and Others in Secondary Market "Annuity" Shit Show September 10, 2021
• SMA Hub Purchase Order Referred to NBA as an Insurance Carrier  September 21, 2021

According to his LinkedIn profile (retrieved October 1, 2021)

• Dylan Mumm is VP of Business Development for SMA Hub from January 2016-Present, located in Denver, Colorado
• Dylan Mumm is a Financial Specialist with Settlement Professionals, Inc. from March 2012 to Present, located in Denver Colorado  Download (4) Dylan Mumm _ LinkedIn SMA Hub Settlement Professionals Inc retrieved 10-1-2021

According to Smart Asset Advisor Match Dylan Mumm is a financial advisor at Settlement Capital Advisors, a firm founded by Jack Meligan, a settlement planner from Lake Oswego Oregon who was the founding President of the Society of Settlement Planners LLC.  [ Retrieved October 1, 2021]

Dylan Whitmore Mumm  is the son of the late Michele Whitmore, a settlement planner formerly of Delta Settlements and Settlement Professionals, Inc. and former  director of the Society of Settlement Planners, who died November 4, 2020. 

[ Source: Pueblo Chieftan December 9, 2020 and Legacy.com]

Dylan Mumm is listed as a MEMBER of the Society of Settlement Planners as part of SMA Hub, with an SMA Hub email address.  Download Search the SSP Membership Directory - Society of Settlement Planners Dylan Mumm  Oh boy. Three members of the Society of Settlement Planners are Defendants in the Hansen Lawsuit. 

What membership standards is the Society of Settlement Planners upholding these days? Are there any standards,  or has it devolved into a seaside crab shack special of  "any fish you wish"?

How Is having a company, or a member associated with a company, whose acronym "SMA" represents a scam label for factored structured settlement payment rights, consistent with mission of the Society of the Settlement Planners?

Are there any standards or has it devolved into any fish you wish?

 

 

Settlement Planners and Structured Settlement Annuities | Agent, Broker or Planner?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Structured Settlement annuities are only placed by or in conjunction with licensed agents, brokers and consultants who hold active life insurance licenses (annuities, which are issued by life insurance companies, are grouped into this category for regulatory purposes) and are authorized by the insurers that issue the structured settlement annuities.

Note that even if someone markets themselves to you as a settlement planner, they are acting in the capacity as agent or broker when placing, or co-broking a structured settlement annuity.  In New York State, individuals or companies holding life broker licenses may also act as structured settlement consultants, but may not be appointed by the annuity issuer. Such brokers and consultants are generally paid a one-time commission or share of the commission, by the annuity issuer(s), or co-broker, for placing the structured settlement annuity or other funding asset.  Generally, state insurance law prohibits rebating of commissions.

What About all this noise about fiduciaries?

Simply being a fiduciary does not mean you can place structured settlement annuities.  Fiduciary is an ideological standard for many settlement planners. But the indelible fact remains that in order to place insurance products and receive a commission or fee, the same settlement planners must hold an active license and be authorized by the issuing life insurance company. Alternatively, at least in New York state, you can hold a life broker's license and not need an insurer appointment, if you place through an appointed agent.

Different business models abound, but in the end, it's the S.O.S. when it comes to placement of the structured settlement annuities!

 

Different business models, but same ole ... when it comes to placing structured settlement annuities or any form of insurance. When you place annuities you are acting as an agent, broker or in some cases a consultant

 

 

Is Comprehensive Settlement Planning "Casino Buffet" Needed When You Want a Slice of Pizza and a Cold Brew?

by John Darer CLU ChFC MSSC RSP CLTC

If you're in New York City looking for a slice of pizza and a cold brew do you need to go to the casino buffet?   Of course not.   Are you really going to wait on line for an hour and pay $40-$60 for all you can eat and thousands of choices, when you can find a pizza joint on just about every corner and pay $2 a slice for your guilty pleasure because (1) that is what you want;  (2) that is what you think will be satisfying;  (3) let's face it, New York makes some great pizza.

While I am a believer in comprehensive settlement planning, I also think that my colleagues in the settlement industry must be mindful of creating and pushing a figurative "casino buffet" when all someone wants or needs is a savory slice of New York goodness. Be mindful that when someone is in transition the overwhelm wire can be tripped easily.

Of course if you apply a "fiduciary standard" to every situation, in this metaphor do you have a duty to disclose all the side effects of eating a New York slice with a cold one (or a glass of merlot)?  Or how much profit the pizza shop owner makes after expenses and paying off the wise guys for protection?   Or how much the delivery guy makes.

There's a reason that Buffalo Wild Wings, Shake Shack (and places whose menu revolves around a simple core product)  do well when people are looking for what they are known to offer. They don't confuse/overwhelm you with choices that put you in a fog. It's a known quantity. Familiarity is comfort for some.   By comparison the Rio Carnival World Buffet located in Las Vegas takes almost 10 minutes to walk the length of the buffet station. According to the Guinness Book of World Records, the largest buffet consisted of 5,612 different dishes in an event organized by the Art of Living Foundation (India) at Sri Sri Dham, Ahmedabad, India, on  November 2, 2010.

Perhaps I'm oversimplifying, but I sense a high rah-rah factor for a one stop shop.  Walmart and Target are massively successful retailers but not for every one every day.  There is plenty of room for different business models, boutiques and nimble operations.

Sometimes you just want a slice and a glass of wine with your honey

 

Sometimes you just want a slice and cold brew with your bud

 

 

 

 

 

 

 

 

 

 

 

 

 

 

So many choices and this is just the dessert buffet!    Time for a "Decision Free Zone" at the Cosmopolitan in Las Vegas?

 

Gimmicks Are Gimmicks | An Important Financial Planning Adage

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

Hackers stole $437M worth of Bitcoins
The recent New York Post headline Hackers stole $437M worth of bitcoins in 'tinker toy' currency mess portrays something in some ways worse than a Ponzi scheme in sheer speed of its collapse. The story, is that Mt. Gox — formerly known as Magic: The Gathering Online Exchange — made 750,000 bitcoins worth $473 million disappear, the company said Friday. The former trading-card exchange declared bankruptcy.

As the New York Post's Jonathon M. Trugman points out  March 2, 2014, a bonafide currency has a homeland, and it is that country's specific approved form of money, with a seal and a traceable serial number, backed up by the gross domestic product, taxes and oversight.      

Trugman opines that "anyone referring to bitcoin as a currency is slimy or just plain stupid".    

Bitcoin Not a Starter Settlement Planning Solution for Injury Victims 

If you are receiving a settlement or already have the proceeds of your settlement beware of speculative and risky investments. A gimmick is a gimmick.  Instead start with a structured settlement, establish a core stream of income that is unaffected by the stock market, or the real estate market, before you start taking risks in the market, or starting a business, investing in someone else's business,  or taking on a lot of debt.

Settlement Broker Misrepresents "He Attended the University of Notre Dame"

by Structured Settlement Watchdog®

Does taking a 4 day professional designation course sponsored by your trade association count as attending the University of Notre Dame? Apparently a structured settlement industry veteran holds himself out in this manner even today February 11, 2014, in contravention to the facts about the designation long posted on NSSTA(dot)com, the website of the industry trade association.

The structured settlement broker's behavior is at best an embarassment to the industry,  at worst unethical , possibly violates NSSTA's bylaws and possibly violates state insurance advertising laws. It makes a mockery of those past and present who academically earned the right to attend University of Notre Dame through scholarships or pay its tuition.  It also demeans the value of the CSSC designation itself for those who accurately promote it because of their association with the errant colleague.

The National Structured Settlements Trade Association (NSSTA) expressly states on its website that the industry's professional designation program is the NSSTA CSSC program and "by hosting the NSSTA CSSC Program at Notre Dame, one of the most recognized institutions of higher learning in the world, participants have an opportunity to learn together and build lasting relationships that will last throughout their careers".   

I've long recommended that structured settlement advice be sought solely from those with proper financial credentials, however those with credentials should not be permitted to exaggerate and mislead consumers of their services about the credentials they have.  Because I care about the structured settlement industry and what it represents,  I began  in October 2007 with 4 Days in the Vicinity of Touchdown Jesus Does Not make You One of The Fighting Irish,  calling out people in my  industry who misrepresented the CSSC designation, including in 2009, certain NSSTA Board members. In 2009 It was observed that some industry participants were even making the ludicrous claim that the 4 day NSSTA CSSC course was part of an Executive MBA program. At the present time a large selection of members of the firm of the current NSSTA President state on the website of the firm, that  they have earned  the professional designation from The University of Notre Dame, or Notre Dame University (which is actually a Lebanese university that does not host the NSSTA CSSC program at all), with no mention of NSSTA.

At what point does it become necessary to start informing state insurance regulators? If this was the securities industry, or West Point,  the answer would be easy, you have a duty to inform.  Perhaps NSSTA could enforce its own guidelines and suspend the authority of those who have earned the designation if they do not promote it within the guidelines.

 

 

Society of Settlement Planners | Time for a Fresh Look?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

The Society of Settlement Planners enters its second decade with a return to its roots as a professional fraternity.   This welcome change has been underway for several years and in my opinion, it is good for the business.

One of the founding members of the organization, I resigned in September 2005, because I was not happy with the direction the organization was going.  Thereafter I was an outspoken critic of the SSP for many years.   In my opinion the things that the SSP did well, such as professional education, interactive learning and information sharing and the creation of a niche specific settlement professional designation, were over shadowed by the personae of certain members, the perception of the extent of factoring involvement in the organization and the perception of over utilization and promotion by its members of single claimant qualified settlement funds. Now, for the first time in 8 years I have accepted an invitation to speak at the Society of Settlement Planners educational conference in Las Vegas in May , on the subject of Long Term Care Insurance and Long Term Care planning, a subject that is important to me on both a personal and professional level.

In the run up to the 2013 SSP Conference, which will be taking place May 5-7 at the Vdara Hotel, I spent some time visiting with current SSP President Charly Schell to validate why that it may be time to take a fresh look at the Society of Settlement Planners.

John Darer:  Charly, thanks for taking my call and allowing me to ask you a few questions about the SSP in light of the upcoming educational meeting in May.  How do you see that the direction of the SSP has changed in the last few years?

Charly Schell   We both know that the SSP has taken a bit of a new direction over the last, roughly 3 years, changing our membership and mission statement and announced a more open membership platform. We are doing our best to bring in experts for our members to partner with, learn from or integrate into their overall product offerings, enlarging the scope of issue spotting and settlement planning in the minds of our members and meeting participants and highlighting the importance of building a team.  Planning is not a threat to structured settlements. This organization will always recognize the appropriate and suitable use of periodic payments or structured settlements but understand that a plan is just that ----  a plan  ------ and not the use or promotion of a single product.

Quoting from the SSP membership application Schell went on to say:

"Membership is open to all individuals with a genuine interest in the settlement planning profession. Candidates for membership must attest to their substantial devotion of time, through professional employment or educational effort, to the field of settlement planning; practicing and continuously learning within the discipline and striving to ensure plans are consummated to a fiduciary standard. …………………..”

 John Darer: Have you seen results?

Charly Schell : We believe the repositioning and standard we promote, the Registered Settlement Planner (RSP),   is important as we reach out to the numerous “stakeholders in these complex transactions”, to quote one of the event’s speakers, Karen Meyers, and include them in the educational process and hopefully as members. We have a core of devoted settlement planners as a base for the organization and they help and coach me every day. We are now actively reaching out to all stakeholders, Defendants’ Structured Settlement Consultants, Trustees, Registered Reps, Mediators, Insurance wholesalers, Judges, Conservators and niche product providers to the settlement planning industry. The answer to growing is to include- not to exclude. Unfortunately, what we hear from some in the industry is that they must limit their participation due to factions inside NSSTA that see the SSP as competition or certain members being on the wrong side of in issue in the past and we do see measured growth specific to Structured settlement professionals as a result. I am a member of both NSSTA and SSP and last year when I took over as president, as part of addressing the membership, I challenged everyone to join and promote the very important mission of NSSTA and the work they do every day to preserve the structured settlement product offering and important tax codes.   

John Darer:  How Will an Attendee Benefit from Attending the SSP Education Meeting May 5-7 in Las Vegas?

Charly Schell:  The education of attorneys that represent the injured, about the vast array of complementary solutions is the key to dealing with the common objections in today’s economic landscape and ultimately gets the settlement planner access ” into the living room”, where key decisions are made. This education is the focus of the May 5-7 SSP educational meeting at the Vdara in Las Vegas.  In the new world of the Affordable Care Act, Smart Act, Dodd Frank, NAIC suitability standards and others, broadening your knowledge base and ability to further differentiate yourself from retail advisors, arguably makes the phone ring more, which means injured parties may be better represented and arguably more structures are put into place as part of a more holistic plan. I cannot speak to industry numbers but I know that in the family of Companies I am affiliated with we are seeing record growth in trust business, assets under management, life insurance, Long Term Care and more structures…. and I hear the same from our members. 

John Darer:  What would you want to highlight to those that have not looked at an SSP membership in some time?

Charly Schell: The SSP does not promote factoring and that is and has been a part of our bylaws for more than a decade! We are actively working to find ways to reduce the number of 5891 transactions that occur but we are not ignoring the fact that it is out there and therefore seek out experts to help us understand the issues.  The fact that Issues such as; how the planner got involved, through the plaintiff or the defendant is no longer a part of our focus and that support or lack thereof of for issues of the past, such as single claimant QSFs (468B), are not the focus of the SSP as an organization. Taking care of those injured to a fiduciary standard is and will continue to be at the core of what we as an organization develop and promote. 

In closing, I would like to say that I am optimistic about the positive information exchange that I anticipate will happen at this year's conference.  Read the meeting agenda for the 2013  SSP education conference. I look forward to seeing readers in Las Vegas!

 

Grey Matter in Insurance Regulation Puts Agents at a Disadvantage

by John Darer CLU ChFC MSSC RSP CLTC

Does the inability of agents to make, publish, disseminate, circulate or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement or statement which uses statutory insurance protections, place the agent or broker at a disadvantage to those that label derivative products "annuities" who do what agents and brokers cannot in their marketing efforts.

The following appears on the web page of Oregon's Somerset Wealth Strategies Inc,. entitled "Premium Secondary Market Annuities", as part of its disclosures:

"Secondary Market Income Annuities (SMIA): Factored Structured Settlements (FSS) & Lottery Winnings (LW) SMIA, FSS & LW are not deposits and are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. They may be partially or wholly guaranteed by State Guaranty Associations and Somerset WS makes no representations or warranties in this regard".

Here's what the insurance statute says in the state of Oregon, where Somerset Wealth Strategies maintains its primary office:

 

Advertising Prohibition Policy 734.890 "Association not to be used in sales or solicitation" No insurer or agent shall make, publish, disseminate, circulate or place before the public, or cause directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in any newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio station or television station, or in any other way, any advertisement, announcement or statement which uses the existence of the Oregon Life and Health Insurance Guaranty Association for the purpose of sales, solicitation or inducement to purchase any form of insurance covered by the Oregon Life and Health Insurance Guaranty Association Act. This Section shall not apply however to the Oregon Life and Health Insurance Guaranty Association or any other entity which does not sell or solicit insurance or to public service institutional advertisements by individual insurers.

Similar prohibitions appear in many states. 

On November 22, 2010, in response to our request, the Office of General Counsel of the New York Insurance Department issued an opinion, concerning a reference to statutory protection in a slide show associated with a LinkedIn profile, that addressed, among other things, the use of a disclaimer. http://www.dfs.ny.gov/insurance/ogco2010/rg101107.htm

A number of marketers of structured settlement payment rights aggressively use the term "annuity" to describe "structured settlement payment rights" which, for the average reader, implies a regulated insurance product sold by licensed agents or brokers. 

Where is it appropriate to draw the line on secondary market advertising of statutory protection, with or without disclaimers, before it becomes a moral hazard*?  If, as is the case with New York General Obligations law, that the New York Structured Settlement Protection Act applies to the placement of a structured settlement annuity contract  (see NY GOL Section 5-1702), OR the transfer of structured settlement payment rights  (see NY GOL 5-1703), why does the sale of a product whose proponents label it an annuity, bears some characteristics of an annuity (but has wiggle room not to be), and which advertising appears intended to capitalize on cognitive dissonance, not have to come under the same rules?

During my investigation into why ELNY victim's entire financial futures were entrusted to such a company in a sea of red flags, one particular annuitant wrote " these were backed up and backed up"  [ see my post On Executive Life of New York | Touching on a Touchy Subject].Clearly there was a misunderstanding of the nature of the back up that was fostered by someone that advised them, be it a judge, a lawyer or an insurance agent, who encouraged the acceptance by stating that there was back up.

Is a lack of clarity in regulation with respect to "secondary market annuities" creating a potential moral hazard?

*such prohibitions on advertising are intended to protect against the moral hazard that results when someone dismisses risk in favor of a real, or imaginary, financial safety net.

 

 

Alternative Structured Settlement Business Models

by John Darer® CLU ChFC MSSC RSP CLTC

"Is it necessary for one or the other business model to prevail or could each side benefit by recognizing the role of the other?" says Charlie Schell, a principal of Forge Consulting out of Hartwell, GA and incoming President of the Society of Settlement Planners in response to Patrick Hindert's recent missive "Alternative Business Models".

Hindert, an officer of TSSG, which is owned by Forge Consulting, opines that "the future of structured settlements depends upon which of two alternative business models ultimately prevails - the traditional (defense-controlled) claim management model  or the emerging (claimant centric) settlement planning model". Hindert has continued down this diplopic path of Claims Management Model vs Settlement Planning Model since he "bathed" in the "magical waters" of the "DiGanges River" in the first decade of The Millennium
 

Schell's poignant response recognizes that there is far more to the limited scope of Hindert's frame. Even as someone who believes in settlement planning, who is a Registered Settlement Planner and Certified Structured Settlement Consultant, I submit that there are more than two ways to operate successfully in the structured settlement business going forward. There are opportunities in multiple business models if one has the vision to see them. Why fight over the same wooden nickel?

Hindert criticizes of insurance companies for "proactive case identification and negotiation participation by defendants designed to sell structured settlements". Hindert's statement demonstrates a shocking naivete for someone of with 30 years in the industry. Judging by his previous and ongoing commentary Hindert appears to operate in a narrow personal injury big case context and fails to recognize significant growth opportunities not available to the "radical left". I don't think that claims departments identify cases to sell structured settlement annuities. I think the ones that are proactive recognize that structured settlements, and/or the resources provided by structured settlement experts (and settlement planning experts), are a tool that helps to settle cases. Moreover, as hard as it may be for some zealots to believe, some defendants and insurers even participate in structured settlements because it's the right thing to do.

Hindert's comeback would surely be the Spencer case v Hartford and Macomber v Travelers, but in my opinion the industry has learned and moved on. Why break more wind on those cases?

I continue to question Hindert's motivations as he criticizes "de minimus regulation of sales conduct" while NEVER appearing to advocate similar standards for the secondary market.

Hindert incredibly blasts what he calls the hostility towards the secondary structured settlement market when he himself wrote commentary on the performance of "Chairman MAU" and others criticizing that industry at a National Association of Settlement Purchasers annual meeting. He offers no current commentary on the structured settlement secondary market practices even though the Society of Settlement Planners has had a Director for the period 2010-2012 who simultaneously places structured settlements and has ties to factoring company Rescue Capital, a company which asks structured settlement annuitants "Why Wait?". What business model does THAT fall under?

It is worth highlighting that the advertising message of the latter is a practice appealing to immediate gratification and greed that was condemned as one of the "worst business business practices" by an industry panel (that included that now former SSP Director) as reported by Hindert at the November 2009 meeting of the National Association of Settlement Purchasers, which Hindert assisted in organizing. The secondary market is critical of itself although it is not critical enough.

Is there a company in the primary structured settlement market that operates a re-direct scheme that competes by diverting search traffic on a massive scale by appropriating the trademarks of others, as Sovereign Funding Group and its CEO David Springer have been alleged to have done in two law suits? 

Oops, I almost forgot about the Delta Settlements StructureBroker.com scheme of 2011, which involved the former SSP director Delta publishing an online "directory "  that providing tailored and sometimes utterly false descriptions of the business practices of its competitors framed by its logo and an offer of a second opinion. Not exactly the same but questionable nevertheless. Mea culpa.

 

The Structured Settlement Industry's Factoring Ethics Stress Points: An Informational Guide

by John Darer CLU ChFC MSSC RSP

The purpose of this post is to provide a guide to interested parties about the ethical stress points that arise at the intersection of the structured settlement primary, secondary and tertiary markets and serve as a foundation for a debate on ethics and the creation or enhancement of industry standards for transparency, for the greater good.

A. Undisclosed Referral Fees

Asking for and/or accepting a referral fee from a factoring company or factoring broker without disclosure to the seller, or the judge charged with approving a structured settlement factoring transaction. While some have opined that they are entitled to make a fee for the time they spend with an annuitant, there has been no defense addressing the size of fees charged by some at the expense of the annuitant, for simply making a referral (that involves little to no time), or the lack of disclosure.

B. Structured Settlement Brokers Initiating the Disclosure of Non Public Information about Annuitants' Structured Settlements to Entities or Individuals or Agents of Entities of Individuals or Entities Who Acquire Structured Settlement Payment Rights, in exchange for present cash, the promise of future payments, or other consideration, where any of the following apply:

(1) the disclosing party has obtained the disclosed information from a case that he/she, an employer or an agency that he/she or it owns, has been involved in the placement of the structured annuity.

(2) the victim of the disclosure has not given their prior consent to the disclosure.

(3) such disclosure is prohibited by the broker or agent's appointment with annuity issuers.

(4) such non public information may be subject to one or more state or federal privacy laws.

(5) such disclosure may be prohibited in the settlement agreement or, in the case of defense broker, where such disclosure is prohibited by contract

The Structured Settlement Watchdog John Darer has learned from representatives of factoring companies that they have been offered this information by structured settlement brokers in the 2011-2012 time frame

C. Accepting offers of cash or other consideration in exchange for providing non public information from entities or individuals who acquire structured settlement payment rights where any of the following apply:

(1) the disclosing party has obtained the disclosed information from a case that he/she, an employer or an agency that he/she or it owns, has been involved in the transaction resulting in the placement of the structured annuity from which the confidential information is derived.

(2) the victim of the disclosure has not given their prior consent to the disclosure.

(3) such disclosure is prohibited by the structured settlement broker or agent's appointment with structured annuity issuers.

(4) such non public information may be subject to one or more state or federal privacy laws.

(5) such disclosure may be prohibited in the settlement agreement or, in the case of defense broker, where such disclosure is prohibited by contract with the insurer it represents

D. Acquisition or Ownership of Structured Settlement General Agencies By Factoring Companies

A structured settlement general agency is an attractive target for a factoring company because it offers

(1) a pool of ready made prospects for solicitation.

(2) a way to dramatically slash marketing costs.

E. Acquisition or Ownership of Factoring Companies or Other Entities (Directly or Indirectly) By Individual Structured Settlement Brokers or Agencies.

As counter intuitive as it may seem, a structured settlement factoring company is an attractive target for a veteran structured settlement broker or general agent because it offers the opportunity to

(1) exploit a pool of ready made prospects for solicitation

(2) monetize life's work for a retiring agent

(3) possibly create an avenue to make up for declining revenues from the placement of structured settlement annuities, and/or the agent or general agent's excessive spending

(4) armed with information that decades of files represent, it can hire experts to create a data base of cash flows from each and every structured annuity that the structured settlement broker or agency has placed and continues to place.

(5) use the knowledge of who is receiving what and when to directly or indirectly approach those annuitants to see if they want to sell their payments, if the structured settlement broker or general agency is involved in the re-marketing  structured settlement cash flows to other potential plaintiff annuitants, trial lawyers or investors.

F. Remarketing of Structured Settlement Payments Rights Acquired in The Secondary Market

The use of directly originated or acquired structured settlement payment rights from existing structured settlements to fund the current and future financial needs of current and future plaintiffs. May be direct or via a trust. Not illegal. but there is no regulation or recognized standard of practice. The NSSTA Board of Directors has stated that this activity is inconsistent with its mission. There is a controversy concerning the marketing of these cash flows by promoters who may do one or more of the following:

(1) use the label of "annuity" to describe structured settlement payments rights put up for sale by the secondary market or tertiary market. Making the falsely insinuation that what is for sale is an regulated insurance product;

(2) state that these cash flows are directly or indirectly covered by statutory protections for insurance products, when such statement is false. The litmus test will be the March 15, 2012 ELNY liquidation proceeding, the run up to which has revealed strong indications that investors in such payments rights will be totally screwed on their benefit reductuons and will not qualify for statutory protection and enhancements offered to people who actually purchased or whose settlement was funded with an insurance product sold by a licensed insurance agent.

Commentary

• Washington D.C. National Structured Settlements Trade Association, the oldest and largest trade association promoting structured settlements, has recently informed its members of its unequivocal interpretation of its bylaws which firmly suggest that many such activities are inconsistent with its mission.
• Rule 4 of the Standards of Professional Conduct for Settlement Planners states (a) "A settlement planner shall not disclose, use to the client’s disadvantage, or use to the advantage of the planner or a third person, confidential information obtained in the course of or as the result of the planner’s provision of services to the client, unless: the client gives informed consent, the disclosure is required by the law, or the disclosure is impliedly authorized by the client; (b) A settlement planner shall act competently to prevent inadvertent or unauthorized disclosure of client information protected by paragraph (a), including providing for secure storage or destruction of such information during and subsequent to the provision of services to the client; and (c) A settlement planner shall make reasonable efforts to have in effect measures giving reasonable assurance that the planners’ employees will comply with the duty of confidentiality imposed upon the planner by this Rule.
• Structured annuity issuing life insurance companies, which must make mandatory representations of privacy to structured settlement annuitants on an annual basis, have something to think about. There have been several reports of structured settlement annuitants being contacted on sealed or otherwise non public cases by a factoring company which suggests that one or more of the above is occurring. These have been the subject of an ongoing multi-year investigation by the structured settlement watchdog, John Darer.
• All of these points require some thoughtful consideration and vigilance in my opinion to maintain the integrity of the structured settlement industry in the eyes of the public since such activity, to the extent it occurs, is likely to be covert in order protect appointments with life insurers/structured annuity issuers. Without annuity issuer appointments the agency is essentially impotent. The agents or brokers affiliated with an agency (or general agent associated with such activity) would be forced, by necessity,  to seek alternative sources for those appointments.
• How are conflicts of interest resolved? Where is the transparency? What should be transparent?
• Factoring of structured settlements is a legal business. It is a means (sometimes the only means) of providing liquidity to structured settlement annuitants that can be accomplished through a mandated court approval process. Unfortunately the business is ripe for exploitative behaviors due to the lack of regulations governing advertising and solicitation practices.

Definitions (for the purpose of this post)

Primary Market is the collection of structured settlement brokers , settlement planners, agents, brokers, agencies and life insurance companies . who participate in the placement of structured settlement annuities, and providers of structured settlement funded with United States Treasury obligations.

Secondary Market is the collection of factoring companies, factoring brokers and investors who acquire structured settlement payment rights from structured settlement annuitants via a court in compliance with IRC 5891 and state structured settlement protection acts.

Tertiary Market is the collection of brokers and companies who make a market in already acquired structured settlement payment rights.