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"The Cup Chronoveth Over" With Direct Pay "Prophylactic" Press Release?

by John Darer CLU ChFC MSSC CeFT RSP CLTC

Ken Paradis of Chronovo recently remarked that “Our industry has fiduciary responsibility for over $6 billion in premium annually. Trust is our duty as well as

It "Runneth Over"

our collective currency. We must all do everything possible to protect client, claimant and carrier funds", to push its financial prophylactic "Direct Pay". It's a bit of selective exploitation of a recent event and marketing overkill in the same vein as settlement planners pushing "Grillo waivers" for the last 25 years to induce the sale of more structured settlements. "Direct Pay" is certainly not "everything possible".

What Is The Standard Practice for Structured Settlement Premium Submissions?

The standard practice applicable and effective for the vast majority of cases, is for structured settlement premiums to be issued (1) in the form of a check from the defendant, TPA or insurer payable to the annuity issuer or the qualified assignment company, or (2) in the form of a wire or ACH payment directly to the annuity issuer or qualified assignee's lock box, pursuant to wire instructions provided.

Does the standard business practice work?  

A Layer of Marketing Hype That Would Not Have Solved the Gargan case

The direct pay process promoted by Paradis and Chronovo adds an extra layer of processing and marketing hype from what it appears, but it clearly WOULD NOT have solved the problem involving a self insured using a sinking fund out of its annual operating account. 

On June 17, 2020 I thoughtfully addressed the issue of Safe Guarding Funds in an Escrow Trust right after the Gargan case broke:

"There are several options available to ensure the safeguarding of funds in an escrow trust. First is utilizing an institutional trustee versus an individual acting as a trustee. An institutional trustee will have supervision, segregation of duties, financial controls, and insurance that an individual trustee will not have.

State trust law generally provides that a "Trust Protector" can be appointed to act as an independent third-party to supervising the institutional trustee of the escrow or trust. Additionally, a Trust Protector can be empowered to review and approve all trust distributions and other types of transactions.

There can be varying levels of duties and powers assigned to a Trust Protector to reflect the specific needs of the arrangement and level of supervision required. Additionally, the title may be modified to reflect better the particular circumstances (trust advisor, distribution protector, etc.)

It is common for an entity that has a pending liability to create an escrow trust as an informal sinking fund. However, caution should be exercised such that the escrow trust remains the asset of the funding entity to avoid potential economic benefit and constructive receipt doctrine complications for the ultimate beneficiary arising from a "formally funded" trust.

A formally funded account could create a “vested legal right” to funds and trigger the economic benefit and constructive receipt doctrines and thereby prevent the ability to obtain a qualified structured settlement. Ensuring that the escrow trust remains "informally funded" is generally easily accomplished by ensuring that the escrow trust assets remain subject to the claims of creditors of the funding entity while preventing the funding entity from utilizing the funds for other purposes.

Alternative to Escrow Trust

At least one major life insurance company will accept structured settlement annuity premium payments in installments".

Maybe I should have issued a press release?

 

Tasteless Insurance Claims Journal Names New York Victim in Gargan Report

by Structured Settlement Watchdog

The Insurance Claims Journal has today published an article by writer James Sams that named the victim hospital in the Joe Gargan embezzlement scheme, despite great steps that were taken by prosecutors to not name victims in its press release and in pleadings.

Insurance Claims Journal WTF?

Here is an excerpt of what the USDOJ press release said 

"In addition, Gargan embezzled money from a hospital located in New York that was part of a civil settlement with a minor child. The settlement called for $3,825,000 to be paid by the hospital to a trust to pay for the care and ongoing medical treatment of the child. The settlement agreement also provided that a portion of the $3,825,000 be paid to a structured settlement broker who would then purchase an annuity which would generate future income for the trust. The Pension Company was retained as the structured settlement broker. From October 2018 to March 2020, the hospital paid the Pension Company a total of $1,032,750 to fund the purchase of an annuity on behalf of the trust. Gargan embezzled all $1,032,750".

One wonders if he had the name of the minor or his trust, James Sams and Insurance Claims Journal would have the temerity to name them too.

Sams also is wide of the mark on who the victim of largest amount of the swindle was. The United States taxpayer. Simply reading the Sentencing memo would reveal that "Once the United States learned of Mr. Gargan’s embezzlement, it allocated new funds to purchase the agreed upon annuities for the victims. As a result, each of the settlement agreements listed in Count 1 have been fully satisfied (by the US. Government" Clearly neither James Sams, nor his editor, read from a source they cited, or chose to omit the critical detail.

But for an insurance trade publication to miss the biggest question of all, why Gargan elected to embezzle rather than file a $100,000 claim against a policy that likely had limits in the millions, is a real head scratcher.  They merely reported that "Gargan said he would have had to shut down his company if he filed a claim with his professional liability claim (sic)".

Finally, there were a number of lawsuits by former Pension Company brokers over hundreds of thousands in unpaid commissions that Gargan didn't pay. For example Kennedy Scion Joe Gargan Defending Lawsuit Alleging That He Screwed Broker Out of $200,000 Commissions   July 5, 2020.  I have personally spoken with two other former Pension Company brokers in the last 48 hours, about severely delayed or unpaid commissions going back 5 years.

 

Judge Slams Joe Gargan with 70 Month Prison Sentence for Embezzlement Scheme

by Structured Settlement Watchdog

Disgraced former structured settlement broker Joe Gargan's Covid-19 Hail Mary pass of excuses in relation to his criminal acts,  has resulted in a figurative sack of potatoes. Pretty soon he may be peeling them. Gargan is going to prison and must report by January 4, 2021. Even the Kennedy legacy couldn't save him. 

Sentence Imposed:
70 months with 3 year supervised release term

Monetary penalties:
$100.00 Assessment on each of Counts 1 & 2 = $200; $ 0 Fine
$9,117,165.00 Restitution Ordered pursuant to the Restitution Order entered and filed in
open court.

Consent Order of Forfeiture entered and filed in open court. Download Consent Order of Forfeiture Gargan

Conditions of Supervised Release:
1) If restitution is not paid in full by the time the defendant is released from custody, any
remaining balance shall be paid in equal monthly payments of $500, to commence within 60
days of release, until paid in full.
2) The defendant shall apply all monies received from income tax refunds, lottery winnings,
inheritances, judgments, and any anticipated or unexpected financial gains, to the outstanding
court-ordered financial obligation, or in a lesser amount to be determined by the court, upon the
recommendation of the probation officer.
3) The defendant shall not incur new credit charges or open additional lines of credit without the
approval of the probation officer.
4) The defendant shall provide the probation officer access to any requested financial
information.
5) The defendant shall participate in a program approved by the United States Probation Office
for mental health treatment. The cost of this program is to be paid by the defendant as directed
by the probation officer.

Download Criminal Judgment Against Joe Gargan 9-23-2020

Read About Rossie D. Alston, the judge who sentenced Gargan

 

 

 

The Joe Gargan Structured Settlement Scam | A Highly Unusual Set of Circumstances

by John Darer CLU ChFC MSSC CeFT RSP CLTC

The guilty plea of Joe Gargan, CEO of The Pension Company, to embezzlement of $8 million intended for the purchase of annuities to fund minor's settlements would give anyone who has done business with The Pension Company from 2014-2020 reason to be concerned.  Gargan's despicable crime also cost the taxpayers to pay all over again, and more, because the annuities had to be funded all over again at a higher cost due to interest rate shifts. But it was a unique set of circumstances that brought it about and they are highly unusual.

Why traditional procedures to establish a structured settlement make such a theft impossible.

1. Traditional procedures to establish structured settlements involve a check payable to the qualified assignment company not to the structured settlement broker.
2. The structured settlement broker overnights the check to the lock box of the assignment company (or the lock box of the annuity issuer if the case is unassigned and the annuity is to be owned by the defendant or defendant's insurer).
3. Within 24-72 hours of premium receipt the life insurer issues confirmation of payment. The defendant, the insurance company and the plaintiff's lawyer should receive:

• Copies of all structured settlement funding checks  (Plaintiff's Attorney)
  
• Confirmation of payment from each of the annuity issuers.
• The Defendant's insurer or Defendant (if self insured) should also have the canceled check or wire confirmation.

Why Was There a Need For An Escrow in The First Place?

The peculiarity of the Gargan case is that The Pension Company, Inc. was entrusted with settlement monies to buy annuities on behalf of a hospital in Westchester County New York. Where hospitals have insurance but have exhausted their aggregate limits, or one oi its layers of insurance involves an insolvent insurer, or they are unable to get liability insurance (or adequate liability insurance) and the plaintiffs desire a structured settlement the hospital must pay settlement out of their operating account and it can take some time to fund a structure.  A search on PACER shows a Bankruptcy case in the Eastern District of New York shows a matter in which The Pension Company Inc is listed as Escrow Agent for the Interfaith Medical Center Liquidating Trust.

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Side Bar     What is an Aggregate Limit?

The declarations page of your liability insurance policy will show the limits of liability for various different types of losses covered under the policy. Limits are generally stated on a per claim (or per occurrence)/aggregate basis. For example if you have $1,000,000/$3,000,000 limits it generally means $1,000,000 per claim and $3,000, 000 in aggregate for multiple claims in the policy term.  So if a hospital has multiple claims with a policy year, or a single claim that exhausts its limits limits, it could be forced to pay for, a make up the difference from its operating account.

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Safeguarding of Funds in An Escrow Trust

There are several options available to ensure the safeguarding of funds in an escrow trust. First is utilizing an institutional trustee versus an individual acting as a trustee. An institutional trustee will have supervision, segregation of duties, financial controls, and insurance that an individual trustee will not have.

State trust law generally provides that a "Trust Protector" can be appointed to act as an independent third-party to supervising the institutional trustee of the escrow or trust. Additionally, a Trust Protector can be empowered to review and approve all trust distributions and other types of transactions.

There can be varying levels of duties and powers assigned to a Trust Protector to reflect the specific needs of the arrangement and level of supervision required. Additionally, the title may be modified to reflect better the particular circumstances (trust advisor, distribution protector, etc.)

It is common for an entity that has a pending liability to create an escrow trust as an informal sinking fund. However, caution should be exercised such that the escrow trust remains the asset of the funding entity to avoid potential economic benefit and constructive receipt doctrine complications for the ultimate beneficiary arising from a "formally funded" trust.

A formally funded account could create a “vested legal right” to funds and trigger the economic benefit and constructive receipt doctrines and thereby prevent the ability to obtain a qualified structured settlement. Ensuring that the escrow trust remains "informally funded" is generally easily accomplished by ensuring that the escrow trust assets remain subject to the claims of creditors of the funding entity while preventing the funding entity from utilizing the funds for other purposes.

Alternative to Escrow Trust

At least one major life insurance company will accept structured settlement annuity premium payments in installments.

Qualified Settlement Fund

A qualified settlement fund is another potential solution, but on a New York case, a QSF involving a single claimant does not afford a choice among any of the traditional structured settlement annuity issuers. The Westchester New York hospital case involved a single minor claimant. You will not be able to use annuities issued by New York Life, US Life Insurance Company in the City of New York, Metropolitan Tower Life, First Berkshire Hathaway Life Insurance Company, Pacific Life and Annuity Company or The Prudential Insurance Company of America as qualified funding assets out of such a qualified settlement fund.

Outside of New York, Independent Life Insurance Company's qualified assignment company has shown a willingness to accept qualified assignments on settlements that other insurance companies would consider single claimant cases.

This author believes that there is a risk in dealing with settlement planners pushing a menu of services within a one stop shop "kaleidoscope" of related and self administered qualified settlement funds, self administered qualified assignment companies, factoring origination, factored structured settlement payments streams as annuity investments for injured parties and attorneys which do not address (or do not adequately address) the conflicts of interest.

Fidelity Bond

Requiring the escrow agent to have a Fidelity Bond with suitable limits is another viable solution. Such bonds are not expensive and are a cost of doing business.

United States Government cases

There are many layers of approval that are required when it comes to the approval of a claim and requisitioning of funds that are unlike dealing with insurers.

This author understands that the United States has been analyzing its processes and controls and is taking, and has taken steps to improve processes and controls since the discovery of Gargan's admitted crimes.

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Side Bar

Gargan had been on the DOJ list of Annuity Brokers since at least 2004, presumably was assigned work and presumably performed his work satisfactorily for quite some time (until he perpetrated his crimes).

____________________________________________________________________________________________________________________________

Plaintiff Broker Question

Some have suggested on list serves and in Facebook groups that Joe Gargan's crimes might have been prevented if there was a plaintiff broker on the case, however upon information and belief there was a representative from a well known firm on the Westchester case involved on behalf of the plaintiff. While there are many good reasons for a plaintiff lawyer to work with a settlement planner, it didn't prevent crooked Joseph E. Gargan from wiring hundreds of thousands of dollars from The Pension Company escrow account into his own personal account in April 2020, with the knowledge that the Feds had been on his tail for over a year.

 

 

 

 

 

 

Colorado House Bill 1420 Effort to End PREMIUM TAX Exemption for Structured Settlements THWARTED

by John Darer CLU ChFC MSSC CeFT RSP CLTC

A Colorado Springs Gazette editorial reported June 11, 2020 that Colorado House Bill 1420 introduced June 8, 2020 "would eliminate tax exemptions for "deposit fund annuities, structured settlements and lottery payouts". The bill was passed out of committee Tuesday with the session ending this week. But what appeared as a bullet point is misleading because the bill only refers to premium taxes paid by insurance companies.

Section 11 repeals the statutes that provide an insurance premium tax rate reduction for insurance companies maintaining a home office or a regional home office in the state. Section 11 also clarifies that, for purposes of the insurance premium tax, an "annuity plan" or an "annuity consideration" does not include a deposit-type contract that does not incorporate mortality or morbidity risks, such as a guaranteed investment or interest certificate, a supplementary contract without life contingencies,an annuity certain, a premium fund or other deposit fund, a dividend accumulation, a coupon accumulation, a lottery payout, or a structured settlement.  Read the actual text of House Bill 1420

What is Premium Tax?

Premium tax is a tax that insurers often have to pay on the premiums that they receive from their policyholders. The tax varies from state to state.  Structured settlement annuities are not purchased by individuals. Structured settlement annuities are generally purchased by assignment companies.

Damages for personal injury have been tax exempt for more than 100 years on a federal level. The Revenue Act of 1918 is the origin of the exclusion for personal injury damages presently encapsulated in IRC Section 104(a)(2). When one boils down a properly constructed personal injury structured settlement transaction, each of the future periodic payments is considered payment of damages under IRC 104(a)(2).

Read more about the tax benefits of structured settlements

ColoradoHB1420  #coloradostructuredsettlements

Post Script  Good news for Coloradans and assignment companies domiciled in Colorado

A joint statement from a coalition of trade organizations, including; the American Council of Life Insurers, the National Structured Settlements Trade Association, the American Association of People with Disabilities, the National Association of Insurance and Financial Advisors and IRI was sent to the Colorado state legislature on June 12th urging them to reject a tax increase on injured people in Colorado and retirement savers that could impact 20-thousand Coloradans. As a result of these industry and as partner organizations along with considerable grassroots efforts in the state, the Colorado legislature dropped the bill and efforts to impose taxes on annuities

Milestone Consulting Trashes Annuities in Annuity Market Stare Down,

by Structured Settlement Watchdog

I've been provided with a copy of a Milestone Consulting email blast to trial lawyers that states  "Eliminate annuities from your client portfolios and settlement plans". 

So you want to  play chicken?

A Game of Chicken?

The Buffalo, New York firm is tripling and quadrupling down on its assault on annuities while upon information and belief, it retains the appointments with all   but 3 of the life insurers issuing structured settlement annuities.  Milestone is not appointed by USAA Life Insurance Company, United States Life Insurance Company or American General Life Insurance Company. One wonders whether Milestone's leadership is simply playing a game of chicken with Metropolitan Tower Life, Independent Life Insurance Company, Pacific Life Insurance Company, Berkshire Hathaway Life Insurance Company of Nebraska, United of Omaha and Prudential gambling that they won't terminate his appointment and/or he fancies himself as a poor man's Ken Fisher.

It seems with a number of things written and posted by Milestone these days, that the devil is in the details.  Readers may wish to review some of my posts within the last few months that provide what is, in my opinion, essential critical commentary.

Intellectual dishonesty?

Milestone says "Who wants to pay a 4% commission for an asset that yields 1.7%?  Milestone provides no cite of start date or duration, rated age, or context. One clue. In his January 11, 2020 blog, Milestone CEO John T. Bair used 1.6% and indicated it was for a 10 year immediate annuity. What would be the yield over a longer period of time?  Milestone's headline says it all. The example Milestone uses for justification is intellectually dishonest in my opinion. When you start adding up the costs of Milestone and affiliated companies' qualified settlement fund, the cost of the assignment fee, the asset management fees, the trustee and/or custodial fees, what is the effective cost?

Today the 10 year bond is at 0.55, 20 year bond is 1.04% and taxable. One of my colleagues recently got a 3% IRR from New York Life with a daily rate and I have a quote for an 11 year old boy, with no rated age, on a 30 years certain and life that is 2.95% IRR. 3%, 2.5% and even 1.7% betters an investment in the S&P 500 from January 1, 2000 to December 31, 2019 by someone who missed the 20 biggest trading days in the market, according to data compiled by JP Morgan in its 2020 retirement guide. That's the 20 biggest days over 20 years folks!  See How Structured Settlements Compare.

As to the 4%, if Bair stated in January 2020 that "we have placed $2 billion+ worth of structured settlement annuities". If that can be substantiated, with a few pro bono special exceptions that would mean that Bair and/or the companies he is/was affiliated with, earned about $80,000,000.  in the alternative, some might argue that the an annual asset management fee of 1.5% annually for an unmanaged portfolio is overkill. Who wants to pay 1.5% annually for something like a factored structured settlement payment stream that earns a gross rate in the neighborhood of 3%?

You Say You Want a Revolution? 

This statement by Milestone Consulting makes no sense   "We believe that clients benefit greatly by directly owning the stocks in their portfolios, which includes their structured settlements and settlement plans"

• Is Milestone stating that structured settlements are securities?
• Is Milestone stating that settlement plans are investments?
• If a plaintiff or attorney were to directly own the funding assets of their structured settlement, what are the tax consequences to them?  Where are the tax rulings that substantiate this?

The words "eliminate annuities from your client portfolios and settlement plans", compounded by the fact that Bair has admitted in writing to being a factoring originator, begs the obvious question about whether Milestone is itself, or together with entities of common ownership ,  seeking to cannibalize or  churn its own business. Milestone has been heavily promoting the commonly owned factoring firm CrowFly LLC and factored structured settlement payments streams to investors using the tertiary structured settlement market scam label "secondary market annuities" as part of its FeeMaster campaign.

In the words of Lennon and McCartney:

"Well you know
We all want to change the world
You tell me that it's evolution
Well you know
We all want to change the world
But when you talk about destruction
Don't you know you can count me out"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Structured Settlement 4Real Blog Reaches 1 Million Page Views

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Commissioner of Social Security's Structured Settlement "Daisy Cutter" Is Reversed

by John Darer CLU ChFC MSSC CeFT RSP CLTC

An Administrative Law Judge ("ALJ") previously found that a Plaintiff’s structured settlement annuity was not an excluded resource for purposes of SSI

"Driving Miss Daisy"

The ALJ found that Plaintiff’s lawsuit was “largely based on the premise that he had been injured by [the] loss of his service dog, Daisy, beyond her replacement value,” and even if service animals were considered resources, the exclusion would only apply to the cost to replace the animal.  [see Dennis H., Plaintiff v Commissioner, Social Security Administration United States District Court, D. Oregon 6:17-cv-01563-MC]

The ALJ found that:

1. Plaintiff’s lawsuit included issues beyond Daisy’s replacement, and the “precise sources of the claimant’s damages, and what amount of his total settlement are attributable to what injuries, are not established.” 
2. Plaintiff’s $27,000 award far exceeded the cost to replace Daisy.
3.  the settlement terms did not limit or dictate Plaintiff’s use of the benefits, and Plaintiff has not used any of the funds to replace Daisy.  The ALJ said that a service animal would be considered a resource at the hearing but did not find that Daisy was a resource in his opinion. See tr. 347, 351, 34. The Court assumes, arguendo, that Daisy was a resource.

On Appeal to the United States District Court, District of Oregon, Plaintiff Dennis H. argued that the Administrative Law Judge (“ALJ”) erred by:

1. finding that none of Plaintiff’s settlement award was attributable to the loss of his service animal;
2. finding that the settlement award far exceeded the cost to obtain a new service animal; and
3. failing to make a “special determination.” Pl.’s Br. 1–3, ECF No. 18.

Plaintiff also argues that he received ineffective assistance of counsel because the ALJ erred in finding that none of Plaintiff’s settlement award was an excludable resource.

In a February 19, 2020 decision, the Commissioner of Social Security's decision was REVERSED and this matter was REMANDED for recalculation of benefits.

Eligibility for SSI

Aged, blind, and disabled individuals whom the Social Security Administration determines to be eligible based on their income and resources are eligible for SSI benefits. 42 U.S.C. § 1381a. “Income is anything you receive in cash or in kind that you can use to meet your needs for food and shelter.” 20 C.F.R. § 416.1102. “Income” encompasses earned and unearned income. 42 U.S.C. § 1382a(a). Unearned income includes “[a]nnuities, pensions, and other periodic payments” and “awards,” such as those one receives “as the result of a decision by a court, board of arbitration, or the like.” 20 C.F.R. § 416.1121(a) and (f); see also 42 U.S.C. § 1382a(a)(2)(B) and (C). Certain income is excluded, including “[r]eceipts from the sale, exchange, or replacement of a resource” and “any cash or in-kind item that is provided to replace or repair a resource [ ] that has been lost, damaged, or stolen.” 20 C.F.R. § 416.1103(c).

What is a "Resource" for Purpose of SSI?

“Resource” is defined as “cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance.” 20 C.F.R. § 416.1201(a). An individual’s asset or property is a resource if “the individual has the right, authority, or power to liquidate” it.” 20 C.F.R. § 416.1201(a)(1). Cash that a claimant uses “to repair or replace the excluded resource” within nine months of the date it is received is considered an excluded resource. See 20 C.F.R. § 416.1232(a). Any cash that a claimant does not use “to repair or replace the excluded resource” within nine months will be counted as a resource starting the month after the nine-month period expires.

The ALJ found that Plaintiff’s structured settlement annuity was not an excluded resource. Tr. 34. The ALJ found that Plaintiff’s lawsuit was “largely based on the premise that he had been injured by [the] loss of Daisy beyond her replacement value,” and even if service animals were considered resources, the exclusion would only apply to the cost to replace the animal. Id. The ALJ found that Plaintiff’s lawsuit included issues beyond Daisy’s replacement, and the “precise sources of the claimant’s damages, and what amount of his total settlement are attributable to what injuries, are not established.” Id. The ALJ found that Plaintiff’s $27,000 award far exceeded the cost to replace Daisy. Id. Finally, the ALJ found that the settlement terms did not limit or dictate Plaintiff’s use of the benefits, and Plaintiff has not used any of the funds to replace Daisy. Tr. 34–35. The ALJ said that a service animal would be considered a resource at the hearing but did not find that Daisy was a resource in his opinion. See tr. 347, 351, 34. The Oregon District County assumes, arguendo, that Daisy was a resource.

NY Settlement Planner's Happy Hannukah Card Fail | Know Your Customer, Know Their Holiday

by Structured Settlement Watchdog

The devil is in the details and a December 2019 holiday card tweeted by a non-Jewish NY settlement planner to Jewish clients is a perfect example. 

Even Santa knows there's 9 branches in a Hannukah menorah or Hannukiah

The Upstate New York's settlement planning firm's good intentions are fly specked by the image of a 7 branch menorah. One wonders whether it was emailed to clients. Oy Vey.

"Hanukkah is the Festival of Lights. Instead of One Day of Presents We Get Eight Crazy Nights"  -Adam Sandler

The 7 branch menorah is a representation of the seven-branched lamp which was in the First Temple and is a dedication to the First Temple.. The Festival of Hannukah, on the other hand is a celebration of rededication of the Second Temple where as the story goes, a small amount of oil that was supposed to last only one night miraculously lasted eight days and nights.

The 9 branch menorah is actually called a Hannukiah, a lamp designed specifically to be used at Hannukah, to light the eight candles for the eight days of the holiday. The ninth candle is known as the Shamesh and is used to light the other candles.

 

 

John Hancock Life Introduces Structured Settlement Exchange Program for Its Annuitants

by John Darer® CLU ChFC MSSC CeFT RSP CLTC

John Hancock Life is rolling out a structured settlement exchange program that enables John Hancock annuitants to address their liquidity needs while providing a measure of protection against secondary market predators. 

The John Hancock Structured Settlement Exchange program is unique for being established at a time when John Hancock is not writing structured settlement annuities.  John Hancock ceased writing structured settlement annuities in 2013.

The John Hancock Structured Settlement Exchange program is similar to the Allstate AFEN program and Berkshire Hathaway's Hardship Exchange Program, at a discount rate that is competitive, but definitely not the lowest possible rate. Always shop around. Selling structured settlement payments usually doesn't make sense for most people, but at least John Hancock Life annuitants who must go down that road, now have a ceiling above which they should not be paying to another structured settlement buyer.  No John Hancock Life annuitant should pay more than 8% on any sale of structured settlement payments. 8%

Commutation programs are a source of consternation from structured settlement factoring companies who complain that it gives the annuity issuer an unfair advantage, while factoring companies must incur advertising expense to find prospects.

On the other hand one has to consider that the structured settlement factoring industry has no licensing requirement, unregulated sales practices and has an appalling history that has earned blistering exposes in national news media for member business practices (not to mention all the Structured Settlement Watchdog® has sniffed out). There are currently two ongoing lawsuits against life insurers for not doing enough for their annuitants when noticed of a structured settlement factoring transaction.  In my opinion offering a structured settlement exchange or hardship provision is smart business.