by John Darer CLU ChFC MSSC CeFT RSP CLTC
New Jersey, Washington and Ohio are the latest US states to adopt the 2017 revisions to the Life & Health Guaranty Association Model Act (#520). This is great for vulnerable targeted class of structured settlement annuitants in that it reduces incentives for a vulnerable class of investors to invest in factored structured settlement payment rights in New Jersey, Ohio and Washington state. It's terrible news for the vulnerable class of investors in structured settlement payment rights.
Structured settlement investors (people who invest in other people's structured settlement payment rights) are often sold investments scam labeled secondary market annuities. However investing in other people's structured settlements is not the same as investing in legitimate annuities,most notably the fact that, in adopted states, there is now an exclusion for structured settlement payments to which a payee, or beneficiary if the payee is deceased, has transferred their structured settlement payment rights in a structured settlement factoring transaction. The "buzz kill" for people who are already invested in other people's structured settlement payment rights is that the exclusion is applied retroactively and they have no protection in the event of insolvency of the underlying annuity issuer or bankruptcy of the qualified assignment company.
Shouldn't any individual or company that is offering other people's structured settlement payment rights to investors include this as part of the disclaimers to any investor. It seems to me that any indivdual or company that has sold investors other people's structured settlement payment rights in the past, should update its investors about the new developments.
37 states in all have adopted the 2017 Life & Health Guaranty Association revisions, with the retro insolvency exclusion detrimental to investors, leaving a bakers dozen of states to go. According to a March 2022 publication by the NAIC with a few states added in the interim, these presently include AK, AR, AZ, CT, DE, FL, IA, ID, IL, IN, KY, LA, MD, ME, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NV, OH, OK, PA, SC, SD, TN, TX, UT, VA, WA, WV, and WY.
Invest wisely. The friendly faces could be your financial adviser or settlement planner. Their E&O insurance likely contains an exclusion for insolvencies.