As more structured settlement annuity providers initiate self-funded transfer (aka factoring) programs, agents for those annuity providers should prepare for increased due diligence about settlement transfers prior to the settlement of all personal injury cases and some workers compensation cases. Here are some questions about settlement transfers that settlement planners and structured settlement sales representatives should be prepared to answer:
- Does your annuity provider currently purchase payment rights
from structured settlement claimants? If not, why not?
- If yes, when did your annuity provider begin its self-funded transfer program?
- Does your annuity provider’s self-funded tranfer program, company or product have a name?
- How does your annuity provider market its transfer program?
- What are the key features of your annuity provider’s transfer program?
- Does the program qualify as a commutation? A settlement transfer? Or both?
- Does the program offer purchases or loans?
- What types of transfer cases does your annuity provider purchase - Lifetime obligations? Deferred lump sums? Workers compensation?
- What additional underwriting guidelines does your annuity provider follow to meet the “best interest” tests under state structured settlement protection statutes?
- Does your annuity provider purchase payment rights from structured settlement annuities issued by other annuity providers?
- What information about settlement transfers, if any, does your annuity provider offer its current structured settlement annuity recipients?
- What information about settlement transfers, if any, does your annuity provider offer for parties who are negotiating the resolution of a personal injury or workers compensation case?
- Has your annuity provider obtained any tax rulings or opinion letters to support its transfer program?
- What compensation, if any, does your annuity provider pay to:
- Agents who originated the structured settlements if and when your annuity provider purchases resulting payment rights?
- Other intermediaries who identify and (re)-introduce transfer cases to your annuity provider?
- What pricing criteria does your annuity provider use to purchase structured settlement payment rights?
- How does your annuity provider’s current pricing compare with other transfer companies?
For additional information about settlement transfers see:
- S2KM's earlier weblog post titled "Structured Settlement Transfers" ;
- New Chapter 16 in hardcopy "Structured Settlements and Periodic Payment Judgments" - available April 2006.
For additional information about self-funding of settlement transfers see: "Settlement Transfers - Wentworth and Symetra".