insurance settlement - Posted by Mike Rodetsky

Posted by David Butler on February 21, 2001 at 12:56:10:

Hello Mike,

If I am following along with this, your client has a “structured settlement” with $58,000 in remaining payments left due him/her, payable at $25,000 due Feb 5, 2002… and $28,000 final payment due Feb 5, 2005?

Not sure where you are going with the real estate part of your discussion, but “Structured settlement” generally refers to a deferred payment obligation resulting from the settlement of a personal injury legal claim. In such instances, rather that receiving a lump sum settlement amount, the plaintiff (injured party), agrees to accept a settlement that is “structured” to be paid out in a series of installment payments made over time. Most often, the defendant or their insurance carrier, guarantees the settlement obligations by purchasing an annuity and naming the plaintiff or claimant as the payee.

To be sure, the “Structured settlement” is a significant category of cash flow instruments that are actively bought and sold in the private cash flow secondary marketplace.

Technically, Plaintiffs can not “unlock” structured settlements because they have signed contracts agreeing to periodic payments. The annuity itself is not assignable, because the claimant does not own the annuity. And most annuity contracts contain non-assignability language, which the vast majority of insurance companies argue prohibits transfer to third parties. But beneficiaries do own the absolute right to receive the payment benefits under the annuity contract ? and it is this right that is transferred in secondary-market transactions. And there is a strong market for them.

For a discounted purchase price, these “secondary market” investors will buy the right to receive the annuity payments. Typically, the plaintiff agrees to sell all or part of the stream of payments to which he is entitled, for a price that generally ranges between 50% to 80% of the face value of the payments purchased.

There are some legal risks to the purchasers of structured settlements, and they must be properly addressed and priced accordingly. Over the past few years, the structured settlement industry has been fighting an uphill battle against the insurance industry?s National Structured Settlements Trade Association (NSSTA), which has continued to introduce laws into the individual states in an effort to restrict the capability of structured settlement buyers to purchase structured settlement payment streams.

Such laws, where implemented, have generally restricted the sale of these payments to cases of absolute and dire necessity. However, in July of 2000, the National Conference of Insurance Legislators (NCOIL) drafted a model act for all states to adopt, that would allow the sale of structured settlement payments if the sale was “in the best interest” of the seller; a much less onerous burden, which would accommodate sellers who wanted cash to use as a down payment for a new house, as tuition for college, or for other purposes of economic gain (such as starting a new business, etc.), that would not necessarily be construed as a dire necessity. The state where the beneficiary lives will dictate what exactly can be done, in view of their current legal restrictions.

Probably the best place for you to start would be to go to ANN’s FREE nationwide Note Listing Service, and enter all the specific information about the cash flow under the category “Structured Settlement”, at:

Also, if you would like, feel free to email me a one page summary of the deal, along with a check list of the supporting documentation you have in file. I’ll be happy to take a look at what you have there.

Hope this helps, and best of luck on the deal!

David P. Butler

insurance settlement - Posted by Mike Rodetsky

Posted by Mike Rodetsky on February 19, 2001 at 19:46:55:

situation: prospective cash flow seller has been awarded a settlement of $103,000 she has rec’d 2 by $25,000 and is due … $25,000 2-5-02 and $28,000 2-5-05 in addition has sfh with adjacent 1 acre parcel combined value as of 1-1-00 $92,000 subject ot 1st 0f $67,000 and 2nd of $13,500 the folks had rec’d a commitment to purchase cash flows for $35,400 by xmas 2000 but buyere did not close … I have negotiated a " anything reasonable" acceptance DUE TO THEIR UNVELIEVABLE disrespect for money… problem … PAYOR Ins Co a subsiduary of the awarding company indicates she is entitled to receve cash flows butholds no ownershio in annuity providing same… thus not saleable or assignable ?? any ideas I have a step payment plan worked out requiring $8,000 now to catch them up $ 5,000 in mid year 01 and $15,000 some time in 03 then $5,000 in o5 any sugestions offers or jt venture ideas I have original paperwork signed agreement and small investment in legal research … Mike Rodetsky Largo Fl 727 593 3353 1-800 335 0256 see me a