Despite historically low interest rates and negative PR (most recently this Washington Post Editorial) resulting from the unconscionable business practices by some secondary market companies, the primary structured settlement market continues to experience incremental growth since hitting an annual annuity premium nadir of $4.82 billion in 2012.
The " " developed by the National Structured Settlement Trade Association (NSSTA), under the leadership of Presidents Michael Goodman and Len Blonder, has helped to sustain primary market growth by prioritizing specific objectives the first of which have included: 1) rejuvenate defense programs; 2) amend the Federal Employee Compensation Act; and 3) develop convertible deferred lump sum product options.
Other factors contributing to recent primary market growth ($5.3 billion of annuity sales in 2015):
- Increased industry unity - Advocated by the Presidents of NSSTA, the Society of Settlement Planners (SSP) and the National Association of Settlement Purchasers (NASP), these associations recently have taken significant steps to overcome their historic acrimony which had divided plaintiff and defense brokers as well as the primary and secondary markets.
- Legislative collaboration - One result of increased industry unity has been a proactive and collaborative legislative strategy by NSSTA and NASP to add consumer protection amendments to targeted state structured settlement protection statutes with preliminary success in Illinois, Wisconsin, Florida, Maryland and Virginia.
- Expanding education - NSSTA continues to expand and improve its educational offerings adding new programs such as Structures 202, the Masters Structured Settlement Consultant (MSSC) certification and Structured Settlement University. SSP recently sponsored a joint educational program with the Academy of Special Needs Planners (ASNP) providing attendees an opportunity to evaluate structured settlements within the larger, more complex personal injury settlement planning market.
Consistent with these growth initiatives, recent updates of "Structured Settlements and Periodic Payment Judgments" (S2P2J), including newly issued Release 59, highlight multiple opportunities to expand the structured settlement market, providing technical guidance and practice advice, in addition to describing related industry developments and issues.
Publisher Law Journal Press distributed hard copy supplements for S2P2J Release 59 earlier this month with online S2P2J subscribers receiving their update automatically and simultaneously. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.
First published in 1986 and updated semi-annually, S2P2J is co-authored by Daniel W. Hindert, Joseph J. Dehner, and Patrick J. Hindert (S2KM's Managing Director). Both NSSTA and SSP have utilized S2P2J as an educational resource for their certification programs.
Release 59 Highlights
"Release 59 for 'Structured Settlements and Periodic Payment Judgments' features analysis of the Wrongful Convictions Tax Relief Act of 2015. This new federal legislation, enacted December 18, 2015, creates an exclusion from gross income for civil damages, restitution, or other monetary awards that are received as compensation for wrongful incarceration. The Act includes an important one-year time-sensitive retroactivity provision.
"This Release also outlines recommendations to defense counsel for seeking court approval of settlements whenever parties have a duty to consider the provisions of the Medicare Secondary Payer Act (“MSP”). The advice is applicable whether or not the claimant has a legal disability that mandates such court approval or if doing so as a means to reduce risks of a finding of MSP noncompliance and its attendant possible sanctions.
"Noteworthy new case law in Release 59 includes:
- "An important 2015 decision by the U.S. Court of Appeals for the Third Circuit which includes in-depth analysis of 'safe harbor' annuity rules under the Deficit Reduction Act of 2005 when annuities are sought to be used to preserve Medicaid eligibility.
- "Review of new cases under state Structured Settlement Protection Acts ('SSPAs'), where courts have identified standard questions to assist judges in making the determination of whether a proposed transfer of future payment rights is in a given claimant’s 'best interest' as required for court approval under the SSPAs.
Previous S2P2J releases have highlighted and addressed the following recent structured settlement developments and primary market growth opportunities:
- Non-qualified assignment issues - including tax and security issues raised by off-shore assignment companies.
- Templates for: 1) approval of MSAs; and 2) disclosure of consultants' roles and compensation.
- Expanded coverage of Workers Compensation MSAs.
- Summary and discussion of recent PLR for indexed annuities and commutation riders.
- Summarized results of CLM Advisors surveys commissioned by NSSTA to determine the value claims executives, claims professionals and plaintiff attorneys place on structured settlements and structured settlement consultants.
- Introduction to ABLE Accounts.
- A new section to introduce and explain federal and international regulatory developments and entities resulting from the 2008 global financial crisis.
- Updated analysis of the changing role of and standards for plaintiff attorneys engaged in personal injury settlement planning and when negotiating structured settlements.
- Summary and analysis of recent U.S. Treasury Regulations for IRC 104(a)(2).
- Practice tips for minimizing the risk of an IRS settlement challenge.
- Updated summary of lessons learned from the Executive Life Insurance of New York (ELNY) insolvency.
- Periodic payment reinsurance as an alternative means of funding structured settlements.
For S2KM's most recent analysis of the structured settlement industry, see: "Structured Settlements 2015":