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

"Yabba Dabba Doo" Insurance Company Needs To Get With The Times

Other commentators have waxed toxic of their disdain for casualty company approved lists. So, having been given the appropriate "stimulus" I've decided to weight in.
One wonders what "dinosaur" of the structured settlement industry  is advising a P&C company to remain nameless which today proffered, through its legal representative, to one of our readers, an approved list of "structured settlement annuity companies" that includes (among others):

American National Co.
Canada Life Assurance Co,
Canada Life Insurance Co. of America
Hartford Life and Annuity Ins. Co.
Massachusetts Mutual Life insurance (*)
MetLife and Annuity Co. of CT
Metropolitan Tower Life Insurance Company
Monumental Life Insurance Group
Pacific Life Insurance Company
Prudential Retirement Insurance & Annuity Co. (*)
Sun Life Assurance Co. of Canada
Sun Life Assurance Company of Canada US
Transamerica Life Insurance Company

It is unknown to this author what the significance of the asterisk is.

Some of these companies stopped writing structured settlement annuities YEARS AGO! Other companies NEVER wrote structured settlement annuities.

WIIIIILLLLLLLMMMAAAAAAAAAAA!

If you are with the unnamed  insurance company, the legal representative that produced this list, the settlement consultant doing such a stellar job of keeping your client informed and you recognize this, DUDE, YOU NEED HELP!
If you don't want to look like, please take a look at this CURRENT list of Who Writes Structured Settlement Annuties and update YOUR list for goodness sakes. 

For a good laugh (or cry) you can download the full approved list of "Yabba Dabba Doo" here  Download Casualty Company Approved List

Structured Settlement "Seminal Text" promoted as " Helping People Transfer Payments From Their Structured Settlements"

by Structured Settlement Watchdog

This in from one of our readers who alerted us to the following after reading yesterday's post  Structured Settlement Annuity in One Wordy "Inarticulate Articulation"”

"This also from Settlementblog.net on what I thought was the seminal text on our industry:

“Structured Settlements and Periodic Payment Judgments” is a great book about the effects of “Structured Settlement Factoring Transactions“. The book provides readers with guidelines, procedures and definitions to help them transfer payments from their structured settlements.
The book has a total of 1050 pages, is written in English and has a weight of 10.04 ounces, it can be bought from amazon.com at the price of $279.00 and ships in 1-4 weeks.

WOW".

Ironically, one of the co-authors of the text is a former President of the NSSTA  and serves on the association's legal committee. He is also a member and former Executive Director of the Society of Settlement Planners. Neither the co-author of the seminal text, nor the two trade associations have publicly addressed the subject of servicing of structured settlement payments by factoring companies and whether (or not) a financial impairment or bankruptcy of the servicing factoring company would negatively affect applicable structured settlement payees.

Sing it Phil! (as an aside, in my opinion this semi "a capella" is one of the best renditions of the song "True Colors" featuring Phil Collins)

Do We Need More Symmetry, OR Should Insurance Law Simply Make Insurance Rebates, Bribes and Kickbacks Legal?

It goes without saying that paying bribes, kick backs and rebates in the process of soliciting insurance is illegal!

Ostensibly such rebate restrictions are to protect consumers from being tempted to business with those whose best quality is the rebate itself and to help prevent the "big bad guys" from trampling on the "small good guys".

Structured settlement professionals are regulated by state insurance departments where they solicit business. To solicit structured settlements one must possess an active life insurance license in each state of solicitation and follow the concomitant laws of the state governing such practices.

Factoring companies who buy structured settlement payment rights are unregulated and unlicensed and can do just about what ever the heck they please when it comes to attracting people to part with long term financial security.

The following appears on the website of "financial crack" dealer Woodbridge Investments:

"Fill out form for a free, no-obligation quote.
 

NOTE: 09/05/09 CALL IN BONUS: call us at 865-7044 today, receive a $500 FREE gas card on the completion of your transaction. For phone call inquires only.

"

Financial consideration that is tied to the sale of insurance, including structured settlement annuities is illegal, however the fact that politicians and regulators are either not aware or not doing anything about this factoring company loophole is a national tragedy. Or is it?

By the logic employed by the political and regulatory inaction on this issue, WHY shouldn't insurance producers be allowed to PAY REBATES, BRIBES OR KICK BACKS OR MAKE SERIAL FALSE ADVERTISEMENTS as an inducement for business?  Why shouldn't an insurance agent be allowed, for example, to buy a TV for a client (like Woodbridge)? Why shouldn't a structured settlement consultant be able to pay the mortgage for a client (like Imperial structured Settlements- factoring company says) or make fraudulent advertising promises  (like many factoring companies baiting with "cash now").

HOW ABOUT SIMPLY SUBMITTING TO TOTAL FRICKIN' ANARCHY IN THE INSURANCE BUSINESS? 

Yeah right, rainbow Mohawk topped insurance agents and a mosh pit, that is is all we need! "A little Sid Vicious in my life, A little Johnny Rotten by my side" (apologies to Lou Bega for the "bastardization" of his mambo)

The status quo however, is patently unfair in view of what Woodbridge Investments is doing, is it not?

How is it that such companies are referred to as "vultures" by a Rhode Island judge (Netti C. Vogel) and others yet the "vultures" marketing practices continue to be unregulated?

Lock In Form Asks For Settlement Broker's CLIENT'S Contact Name and Address

The lock-in form generated by Quote in The Box software for one of the structured annuity issuers is asking for a contact name and address for the Purchaser/Assignor.

Pardon my fleeting skepticism, BUT the fact is that some life insurance company relationship representatives have ended up getting hired by your competitors. Who hasn't demurred when out with someone from a life insurer who has asked who your biggest clients are?  Therefore pay attention and do not give up the strategic intelligence of contacts that you have taken years and considerable resources to build. Furthermore, and this is not meant as distrust of our many friends at life insurance companies, but where does this information go? Is it stored in paper form, or does the information on it end up in a data base, or attached to an electronic file where these contacts can be mailed or cross sold behind the back of the settlement consultant or even the relationship manager at the annuity issuing life insurance company.

No offense to the life companies, we love them, BUT c'mon now!

Structured Asset Funding and the Servicing of Structured Settlement Payments

by Structured Settlement Watchdog®

Structured Asset Funding, the purchaser of a portion of CT woman's structured settlement payment rights (and the servicer of the rest) can't give the CT woman a definitive time each month when she can expect to receive the structured settlement payments that she didn't sell. The CT woman tells me that when the payments were coming directly from American International Life Assurance Company of New York they were on time. The issue is that Structured Asset Funding must receive them and then turn them around. This inevitably results in a delay that means that payments are not made in accordance with the date set forth in the settlement agreement.

Audrey Nadler, the SAF representative has informed the CT woman that SAF is trying to find a solution by applying for a credit line that purportedly should improve turnaround time on serviced payments. If it can be put in place SAF can advance the payments a few days ahead so that the structure payments arrive the same day they would have if the servicing agreement were not in place. It was related to me that Audrey Nadler purportedly said that such credit line, if approved, would not be put in place until at least October. Until it is put in place, if it actual is put in place, there is no definitive date each month when the CT woman can expect the payments. One must presume the same holds true for cases serviced by cash now pusher Structured Asset Funding as well as the cash now pusher's own clientele.

I write this so that my industry brethren, particularly the insurance companies see the result of  allegedly not splitting payments.

Please consider the following:

1. Regardless of the factoring company, with a servicing agreement the annuitant is more susceptible to approach by factoring company to sell more payments.
2. There is a HUGE lost branding opportunity for the insurance company, whose name and possibly logo would otherwise be on every check, on every envelope every month, or each time a structured settlement payment is made to an annuitant. How does that value compare with the administrative savings of not splitting payments?
3. Lost cross sell/service opportunity. Other services that the company offers may not reach the consumer because the factoring company has control of the payments. What else do many factoring companies offer to a structured settlement recipient except more cash in 60-90 days, if lucky? How does that value compare with the administrative savings of not splitting payments?
4. Still no answer to the important question of what happens if the servicing factoring company goes Chapter 7, insolvent or is otherwise financially impaired. This afternoon I wrote to primary representatives of all A.M. Best rated A, or better rated insurance companies that currently write structured settlements (except Symetra) and copied the letter to the leaders in both the National Structured Settlement Trade Association and the Society of Settlement Planners. I have asked those life insurance companies to comment on their current business practices and to inform their appointed brokers. This question must be answered to permit structured settlement brokers and settlement planners to provide comprehensive advice to their clients.
5. What duties and responsibilities do those settlement planners who insist on IRC 5891 language (so called "factoring enabling language") in releases have,  to inform their clients at the time of settlement of what servicing is all about, to gain an understanding of the business practices of all the insurance companies they may be recommending before they make recomendations and to inform clients what it would mean to them if they later find themselves in urgent need of cash, with no other alternative but to go to a cash now pusher?

I leave you with a comment left by Registered Settlement Planner Chuck Derenne of Premier Settlements to my previous post about the allegations of Matt Bracy of Settlement Capital as to the root cause for servicing.

"John,

I commend you on proactive concerns regarding the servicing of "partial factoring transactions", especially with regard to potential bankruptcy proceedings affecting said factoring purchasers.  Even though I am one of the first 50 or so structured settlement professionals in our industry, I was blindsided by the statistics you quoted with regard to the frequency with which structured settlement recipients factor their payments.  While I have no knowledge of the life companies' policies regarding the servicing and/or "split-servicing" of periodic payments, it causes me deep concern to wonder whether the injury victims whom I have counseled will lose the ability to be in direct contact with either myself and/or the annuity carriers with which I have placed their settlement recoveries.

As you know, I am not an expert in bankruptcy laws but I am very much interested in learning what my clients' rights will be should a factoring company which assumes servicing responsibilities file for any form of "bankruptcy". 

Again, I commend you for your proactive concerns with regard to this issue and I hope all stakeholders give this matter their most serious and immediate attention.

Chuck"

N.B. Underlines added for emphasis

Matt Bracy Says Structured Settlement Servicing Is The Fault of Life Insurance Companies Issuing Structured Annuities

by John Darer CLU ChFC CSSC RSP

In response to our open market letter concerning structured settlement servicing I  received a response from Matt Bracy, General Counsel of Settlement Capital Corporation whose finger points squarely at the structured settlement annuity issuers, although he does not name names.

Before we get to Bracy, let's make it clear that structured settlement servicing ONLY affects those annuitants who chose to sell a part, however small, of their structured settlement payment rights.

Bracy states that the root cause of servicing is the unnamed structured settlement annuity issuers who do not want to split payments. This means that even if the tort victim does not want to sell all payments they must give up their abilty to deal directly with the annuity issuer and must instead deal with a third party. Moreover, it is unclear what happens if the servicer goes belly up.

Ergo, the resulting savings in administrative cost is allegedly at the expense of the tort victim who was sold on the qualities of the structured annuity issuer by the settlement planner or structured settlement broker. WHY?

The issue of structured settlement servicing is particularly disturbing because I have the sickening feeling from several conversations with some people whose competency I respect, that this critical issue may be lost on the majority of the structured settlement industry.

So I am going to continue pounding the table on this issue until it is solved. I ask any life insurance companies that are currently issuing structured settlement annuities to come out and let the industry know what their business practice is with respect to splitting annuity payments.

As an aside, the need for such practices would be mitigated if the structured annuity issuers handled commutation internally.