Beyond Structured Settlements

Settlement Consulting - 3

In prior posts about settlement consulting, S2KM:

• Reviewed Joseph DiGangi's discussion at the NSSTA 2009 Winter Meeting titled: "Comprehensive Settlement Consulting in the 21st Century". See: "Settlement Consulting".
• Continued DiGangi's discussion by asking questions and offering comments about "settlement consulting" definitions and scope. See: "Settlement Consulting - 2".

This S2KM post outlines settlement consulting history - from a structured settlement perspective.

S2KM's structured settlement history diagram (developed with graphic artist Keith Burtoft) concludes with the founding of the National Association of Medicare Set-Aside Professionals (NAMSAP) in 2005.

Beginning in 2005, S2KM has continued to monitor structured settlement history by attending and reporting about settlement consulting conferences addressing structured settlements.

For the past three years, S2KM has also published annual reports about structured settlement developments:

• Structured Settlements in 2008;
  
• Structured Settlements in 2007;
• Structured Settlements in 2006.

Using the same categories as S2KM's structured settlement history diagram, here are some of the more recent settlement consulting highlights:

Social Security

• Deficit Reduction Act of 2005 (DRA);
• The Ahlborn Case (2006) - see John Campbell's analysis of the Eighth Circuit's decision which the U.S. Supreme Court unanimously affirmed.
• Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA);
• Additional MSA rules for structured settlements (2008);
• New POMS for Special Needs Trusts (2009) - see David Lillesand's report;

Taxation - see related articles on the Wood & Porter website:

• Banks and Banaitis cases (2005) - attorney fees;
• Murphy case (2007);
• IRS Letter Ruling 200836019 (2008) - Non-qualified 130 assignments and attorney fees.

State Legislation (2005-2008) - see Release 45 of "Structured Settlements and Periodic Payment Judgments" (S2P2J).

• Structured settlement protection statutes;
• Uniform Trust Code;
• UCC Article 9 anti-assignment provisions;
• Medicaid annuity rules.

Other Developments

• Academy of Special Needs Planners (ASNP) founded (2007);
• AIG receives $150 billion U.S. Government bailout (2008);
• Joseph Ricci replaces Randy Dyer as NSSTA Executive Director (2008);
• SSP publishes its "Standards of Professional Conduct" (2008) and begins its Registered Settlement Planner (RSP) certification (2008);
• American Association of Nurse Life Care Planners (AANLCP) founded (2008);
• Several annuity providers depart the structured settlement market (2005-2008);
• Structured settlement annuity premium remains level at $6 billion per year (2001-2008);
  
• Structured settlement surveys identify a larger market (2006-2008);
• Settlement consulting bloggers and podcast providers emerge (2004-2009).

For reasons why S2KM views 1982, 2001 and 2008 as strategically important for structured settlements, see "Structured Settlements in 2008 - 1".

Structured Settlement Credo - 2

If the structured settlement industry is experiencing  "transition", what exactly is changing and why?

Structured settlement industry transition:

• Internet technologies - their impact on business models, strategies, tools and skill set requirements.
• Legislation and regulations - the secondary market; Medicare; Medicaid; and IRC 468B;
• Financial meltdown - the impact on AIG, J.G. Wentworth and others.
• New U.S. President - expected legislative and regulatory change.
• Aging industry leadership - the need for a new generation of younger and more intelligent industry leaders.

How will the structured settlement "transition" impact industry:

• Credo
• Ethics
• Values
• Standards 
• Public policy?

And vice versa?

When and where will these "transition" issues be addressed?

Assuming ability to adapt is critical for survival, how will the structured settlement industry "adapt" its historic structured settlement credo to the new settlement planning landscape?

Structured Settlements in 2008 - 3

This S2KM blog post, the third of three analyzing structured settlements in 2008, highlights the challenges facing the structured settlement industry as it enters 2009.

Two prior S2KM blog posts evaluated 2008 from an historical perspective (Structured Settlements in 2008 -1) and summarized the conferences S2KM attended throughout the year (Structured Settlements in 2008 - 2).

Who does your client trust? The National Structured Settlement Trade Association (NSSTA) spotlighted the "trust issue" during its 2007 Winter meeting when NSSTA also reported the results of its structured settlement survey of injury victims and attorneys. Structured settlements require trust by injury victims and their attorneys that:

• Structured settlement consultants are qualified professional financial advisers; and
• Annuity providers will pay promised future periodic payments.

Traditionally important to structured settlements, issues of trust have been magnified in 2008 by the widespread financial collapse that required a federal bailout of AIG and called into question the reliability of financial rating assessments as well as the protection afforded consumers and investors by government regulators. A corollary issue for structured settlement consultants is "professionalism" - one of four strategic priorities NSSTA President Chris Diamantis identified during the NSSTA 2008 Annual Meeting.

• Should injury victims and their attorneys trust structured settlement consultants and engage them as financial advisers?
• What are the professional qualifications and services of individual structured settlement consultants?
• Are structured settlement consultants problem solvers or product pushers?
• Do they understand their own product - an increasingly complex transaction as visualized in this structured settlement diagram ?
• Are structured settlement consultants capable of objectively and comprehensively advising injury victims and their attorneys about such fundamental structured settlement issues as:
  • IRC 468B;
  • IRC 5891;
  • State-specific structured settlement protection statutes;
  • The Medicare Secondary Payer Statute; and
  • The Deficit Reduction Act?
• Are individual structured settlement consultants licensed and educated to sell non-insurance investment products?
• Are they professionally capable of recognizing, and do they proactively communicate, their own conflicts of interest?
• Do they proactively disclose their structured settlement compensation arrangements and obtain an injury victim's informed consent for such compensation?

How strong are structured settlements? The structured settlement industry should expect injury victims and their attorneys to demand additional assurances in 2009 about the financial security of structured settlement annuities. If "sophisticated" investors and financial institutions are hoarding cash and/or buying U.S. government securities, why should injury victims and their attorneys accept long term financial promises with limited or no liquidity? Will these traditional industry arguments continue to successfully drive structured settlement annuity sales in 2009:

• Except for United States treasury obligations, life insurance annuities are among the most secure long term investments.
• Fixed annuities are especially secure because they do not depend upon the vagaries of interest rates and securities markets.
• Fixed annuities, however, require the obligating party(s) to remain in business for the duration of the annuity obligation.
• The 30 year performance record of structured settlement annuities (to date) has been close to perfection.
• With strong support from legislators, regulators and judges, the structured settlement industry has survived its worst potential disasters.
• These potential disasters include the failures of AIG, Executive Life; Confederation Life; Capital Life; and Monarch Capital.
• By contrast, the most spectacular structured settlement failures have not involved annuities.
• These failures, which include SBU and Stanwich, involved IRC 130 structured settlement treasury bond trusts - i.e. (poorly or criminally) managed assets.
• Life insurance companies that issue structured settlement annuities are regulated by state insurance departments.
• State insurance guarantee funds provide a safety net for individual company failures.
• Life insurance companies that issue structured settlement annuities, therefore, are among the strongest of the financially strong.
• If injury victims want income tax-free periodic payments with lifetime security, they should include a structured settlement annuity as part of their settlement plan.

Competing business models - two alternative business models will continue to compete in 2009 for the future of structured settlements:

• The traditional claim management (defense-controlled) business model characterized by:
  • IRC 130 as a funding model;
  • Single product (annuity) orientation;
  • Defendant "approved" structured settlement agents;
  • Defendant "approved" structured settlement annuity providers;
  • Defendant "right of last refusal" to match funding alternatives;
  • Defendant "right" to deny structured settlements to injury victims;
  • Opposition to single claimant 468B;
  • Failure to fully inform injury victims about settlement transfers;
  • Failure to promote full disclosure and informed consent of structured settlement compensation.
• The emerging settlement planning (plaintiff-controlled) business model characterized by:
  • IRC 468B and 130 as a two-step, court-approved funding model;
  • Multiple product (annuity and trust) alternatives;
  • Integration of structured settlements with other government benefits;
  • Claimant selection of structured settlement consultants;
  • Claimant selection of structured settlement annuity providers;
  • Claimant's right to a structured settlement;
  • Claimant's right to information about the secondary market prior to settlement;
  • Claimant's right to full disclosure and informed consent about structured settlement compensation.

Primary vs. secondary structured settlement markets

• The National Structured Settlement Trade Association (NSSTA) and the National Association of Settlement Purchasers (NASP) cooperated in 2000 and 2001 to draft the Model State Structured Settlement Protection Act and to help enact IRC section 5891.
• Relatively limited educational, marketing and transactional interaction, however, has occurred historically between the primary and secondary markets.
• S2KM's 2006 concept map ("How the Primary Market Views Factoring") highlights the generally hostile attitude many primary market participants continue to express toward the secondary market and factoring companies.
• Among other results, the primary market's attitude has limited:
  • The education structured settlement stakeholders have received about settlement transfers;
  • The advice and assistance structured settlement consultants offer their customers about settlement transfers.
• One of the continuing industry challenges in 2009 will be whether various factions within the primary and secondary markets are able to work collaboratively to improve and expand structured settlements.
• As a positive developments:
  
  • NSSTA, the Society of Settlement Planners (SSP), and the Academy of Special Needs Planners (ASNP) each offered educational programs about settlement transfers during 2008;
  • Representatives of the primary and secondary markets jointly addressed improving structured settlement business practices at both the SSP and NASP 2008 Annual Meetings as well as the 2008 Structured Settlement Thought Leadership Conference.

Structured Settlements and Government Benefits

• A traditional structured settlement industry argument, promoted by defenders of the claim management business model, proclaims "structured settlements enable injured victims to live free of reliance on government assistance".
• This promotional statement is false and misleading. Many, if not most, structured settlement recipients depend upon government benefits in addition to structured settlements to address basic financial needs.
• These government benefits include: Social Security, Medicaid, Medicare, Veterans Benefits and Federally Assisted Housing.
• As David Lillesand, a leading social security and special needs attorney, stated at the SSP 2008 Annual Meeting: Medicaid alone represents a "life or death issue" for disabled persons including structured settlement recipients.
• The challenges of maximizing and successfully integrating government benefits are more complicated with a structured settlement than with a lump sum benefit in part because of a lack of legal authority.
• With anticipated budget cuts and reforms for Medicaid and Medicare in 2009, the structured settlement industry must improve and expand its educational and lobbying strategies if it expects structured settlements to play a vital role in this changing legislative and regulatory landscape.

Growing the structured settlement market

• As evidenced by annuity premium, the primary structured settlement market has not grown since 2001.
• Several structured settlement annuity providers have left the market since 2006. Concurrently, the number of individual structured settlement consultants remains relatively constant while their average age continues to increase.
• Recent structured settlement surveys and market studies by NSSTA, AIG, J.G. Wentworth and Towers Perrin confirm opportunities exist to grow the structured settlement market and suggest the structured settlement market is underperforming.
• Some of the important issues related to structured settlement market growth:
  
  • Managing transition and change
  • Structured settlement advocacy
  • Marketing to plaintiff attorneys
  • Problem solving vs. product sales
  • Building settlement planning teams
  • 468B as a standard funding model
  • Integrating structured settlements with settlement trusts
  • Improving industry Internet applications and skill sets
  • Continuing market research
• In a 2008 S2KM interview, paralympic champion Randy Snow offered the following advice for successfully transitioning and growing the structured settlement industry: listen to the customer; design the best products; surround yourself with the best people; have fun.

Thank you and best holiday wishes to all structured settlement stakeholders who followed S2KM's blog reports during 2008. The New Year should be interesting and challenging for the financial markets generally and the structured settlement industry more specifically.

Structured Settlements in 2008 - 2

This S2KM blog post, the second of three analyzing structured settlements in 2008, summarizes conferences S2KM attended throughout the year. A prior post evaluated 2008 from an historical structured settlement perspective. A subsequent post will discuss challenges facing the structured settlement industry in 2009. Conferences and associations are listed alphabetically. For more detailed reports about these conferences, check the parenthetical links for related S2KM blog posts. For S2KM's complete historical review of professional associations and conferences, see S2KM's structured settlement wiki.

Academy of Special Needs Planners (ASNP) - The second annual ASNP conference underscored the strategic nexus that exists between special needs planning, settlement planning and structured settlements. ASNP's "extra-curricular" program featured a social service project where 30 ASNP conference attendees assisted Families Helping Families of Southeast Louisiana repair and improve its office headquarters. The ASNP conference confirmed for this author why special needs attorneys and financial planners, as opposed to former life insurance salesmen and claim managers, represent the future of structured settlements and settlement planning. Although several NSSTA and SSP members attended and/or participated as speakers, most of the structured settlement industry missed this valuable conference.

American Association for Persons with Disabilities (AAPD) - Structured settlement leaders from both NSSTA and SSP attended the 2008 AAPD Leadership Gala dinner in Washington, D.C. - in addition to many Congressional and Disability leaders. NSSTA was one of the event sponsors and had earlier featured Andrew J. Imparato, AAPD President and CEO, as a speaker at NSSTA's 2007 Fall Meeting. Imparato, a visionary and inspirational leader, is dedicated to transitioning disabled persons from poverty to economic self-sufficiency. AAPD's strategy includes uniting disabled persons as a political block and business market. AAPD's political priorities include changing the social security statutory definition of "disability" from "unable to work" to address "barriers to work" for disabled persons. Imparato's message for structured settlement professionals: involve yourselves at the local level with independent living centers.

National Academy of Elder Law Attorneys (NAELA) - NAELA's Mission is "is to establish NAELA members as the premier providers of legal advocacy, guidance and services to enhance the lives of seniors and people with disabilities". NAELA's membership consists of 4400 attorneys in the United States, Canada, Australia and the United Kingdom. Most of the members of ASNP and the Special Needs Alliance (SNA) are members of NAELA including many NAELA founders and former Presidents and Directors. S2KM developed a "Web 2.0 for Lawyers" wiki for the NAELA 2008 Symposium which was also featured in a Legal Broadcast Network (LBN) podcast interview by Scott Drake with S2KM's Managing Director, Patrick Hindert. S2KM also published a 2008 blog post analyzing NAELA and NAELA's CELA certification program from a knowledge management and web 2.0 perspective.

National Alliance of Medicare Set-Aside Professionals (NAMSAP) - Founded in 2005, NAMSAP is a non-profit organization devoted to improving Medicare set-aside arrangements (MSAs) and to facilitating compliance with Medicare conditional payment recovery.

• Background - MSAs are administrative and funding mechanisms utilized in certain categories of settlements to protect Medicare's interests as "secondary payer" under the Medicare Secondary Payer (MSP) statute. Although the MSP rules were enacted by Congress in 1980, CMS did not begin to enforce the MSP statute until 2001 based upon a series of CMS policy memoranda for workers compensation cases, several of which address structured settlement issues.
• MMSEA - On December 29, 2007, President George W. Bush signed into law the "Medicare, Medicaid and SCHIP Extension Act of 2007" (MMSEA). Beginning July 1, 2009, MMSEA requires liability insurers (including self-insurers, no-fault insurers and workers compensation insurers) to determine Medicare status for all claimants and report all claims involving a Medicare beneficiary to CMS when those claims are resolved. If the reporting for any claimant is not done in a timely manner, MMSEA authorizes CMS to enforce a civil penalty against liability insurers of $1000 per day per claimant. These information requirements and penalty provisions provide the basis for expanded enforcement by CMS of the MSP statute.
• MARC - One of the featured presenters at the NAMSAP 2008 Annual meeting was Roy Franco, Director of Safeway's Risk Management Strategies and Chairman of the Medicare Advocacy Recovery Coalition (MARC).
  • In discussing the MMSEA requirements for liability cases, Franco said "the issue is not just about reporting" and predicted a "claim freeze" as liability insurers and self-insureds wait for resolution and approval before they pay claims.
  • Franco characterized the MMSEA MSP rules as an attack on traditional best practices for liability claim management. He predicted legal challenges and criticized MMSEA rules.
  • Franco outlined MARC's priorities for MMSEA which include changing the law or, alternatively, obtaining an injunction to stop its July 1, 2009 implementation.
• S2KM reporting - S2KM published seven blog posts in 2008 highlighting recent MSA and MMSEA developments that impact structured settlements including several developments that have occured during 2008.
• S2P2J analysis - S2P2J Release 44 features an extensive update of MSA rules for structured settlements as well as a summary of MMSEA.

National Association of Settlement Purchasers (NASP) - At the NASP 2008 Annual Meeting, Patrick Hindert, S2KM's blog author, moderated a panel discussion titled "How to Improve and Grow the Structured Settlement Market". Participants included: Jack Meligan, Michael Upchurch and Matthew Bracy. As settlement planners, both Meligan and Upchurch described their view of the secondary market as a "mixed-bag" of bad and good. The "bad" part of factoring results from non-professional ("cash now") advertisements promoted by many factoring companies.

Not only do plaintiff attorneys dislike "cash now" advertisements, according to Meligan and Upchurch, they are also less likely to recommend structured settlements if they believe their clients will eventually sell their payment rights.

The potential liquidity provided by settlement transfers improves the structured settlement annuity product. Lives change. Unexpected events occur. Even the best personal injury settlement plans need to be reviewed post-settlement and sometimes adjusted. Settlement transfers, which must be reviewed and approved by state judges, are appropriate in some cases.

Bracy emphasized the need for well-educated plaintiffs and plaintiff attorneys - as well as judges. He noted that many primary market participants have ignored the settlement transfer business. Bracy acknowledged that good and bad business practices exist in the secondary market as well as the primary market. According to Bracy, the potential secondary structured settlement represents between 5% and 7% of the total primary market. Most structured settlement cases, according to Bracy, neither require nor qualify for a settlement transfer.

National Settlement Consultants (NSC) - Patrick Hindert, S2KM's Managing Director and blog author, was privileged to speak at the NSC 2008 Annual Meeting and also to attend NSC presentations and social functions. In addition to Michael and William Goodman, NSC founders and principals, the NSC presenters included representatives from ten (10) structured settlement annuity providers as well as several national settlement planning experts. In retrospect, the "not-for-publication" May 2008 NSC presentations by some of the annuity providers now seem especially interesting and important. Among other topics, these presentations addressed investment exposure to real estate mortgages plus one annuity provider's study of settlement transfers by its own structured settlement recipients. Randy Snow's NSC keynote presentation about change and growth was humorous and thought-provoking. Randy subsequently participated in a series of S2KM blog interviews about change and growth in the structured settlement industry. Hindert provided a structured settlement Medicaid update as part of the NSC educational program.

National Structured Settlement Trade Association (NSSTA) - Founded in 1985, NSSTA is the oldest and largest structured settlement professional trade association. NSSTA's members are primarily structured settlement consultants and annuity providers. In addition to providing education and certification, NSSTA historically has served as the legislative and lobbying voice of the primary structured settlement market. NSSTA's committees, especially NSSTA's legal committee, are among the most valuable sources of information about the structured settlement industry.

• Winter Meeting - Prominent educational themes and presentations at the NSSTA 2008 Winter Meeting included: trial attorneys; disabled persons and disability associations; government benefits; structured settlement legal documentation; legislative and regulatory developments; Internet marketing; and professionalism.
• Annual Meeting - Chris Diamantis, NSSTA's 2008 President, introduced Joseph Ricci as NSSTA's new Executive Director, and identified NSSTA's strategic priorities for 2008: factoring; advocacy and marketing; professionalism; and governance and communication. J.P. Steele announced the results of a Structured Settlement Survey Report sponsored by AIG which S2KM summarized in a November 23, 2008 blog post. Eric Vaughn, NSSTA's lobbyist, provided a "Washington Report" analyzing the then-upcoming federal election from a structured settlement perspective. Legal committee co-chairman, Michael Miller, summarized results from 100 factoring cases in which his law firm, Drinker Biddle, had participated since January 2008. Craig Ulman, NSSTA's General Legal Counsel, provided a State Guarantee Funds primer. Bradley Frigon spoke about special needs trusts. Among other topics, two actuarial presentations discussed structured settlement pricing.
• Fall Meeting - Although S2KM participated in four committee meetings at NSSTA's 2008 Fall Meeting, S2KM did not attend NSSTA's educational program because of a scheduling conflict. S2KM's blog coverage of this meeting therefore was limited to editorial commentary.

Society of Settlement Planners (SSP) - Founded in 2001, SSP is a national nonprofit educational and public policy association of professional structured settlement producers and others who assist injured claimants in the settlement process. At its 2008 Annual meeting, the SSP adopted its "Standards of Professional Conduct for Settlement Planners", a multi-year SSP project initiated and managed by SSP Director and attorney Richard Risk.

Carl A. Pierce, distinguished professor of law at the University of Tennessee, assisted SSP with this ethics project. Pierce served as a reporter for the latest revision of the American Bar Association's Model Rules of Professional Conduct.

Frank Johns, a leading special needs attorney and settlement planning ethicist, also advised SSP on its Standards of Professional Conduct. Johns' 2008 SSP presentation introduced a proposed Request for Proposal (RFP) for settlement planners.

Risk organized and moderated SSP's tax panel that featured Jody Brewster, Glenn Mackies and Michael Montemurro.

SSP devoted three presentations to government benefits, the highlight being David Lillesand, a national leader among social security and special needs trust attorneys. Based upon his discussions with the Social Security Administration (SSA), Lillesand stated that Nancy Veillon's January 31, 2006 letters to attorneys Roger Bernstein and Jay Sangerman representing NSSTA are "inoperative" - a statement Lillesand repeated during his presentation with SSA executive attorney Ken Brown at the ASNP 2008 Annual Meeting.

SSP's panel discussion about the secondary markets included NASP Executive Earl Nesbitt, Stephen Harris and Rhonda Bentzen. Other SSP educational presentations included a legislation and litigation update, settlement planning case studies, and advice about Internet marketing.

Stetson Special Needs Trust X (SSNTX) - Throughout its 10 year history, the Stetson Conference has been recognized as the leading special needs trust (SNT) knowledge forum in the United States. Most of the speakers are members of either the Academy of Special Needs Planners (ASNP) or the Special Needs Alliance (SNA). For structured settlement professionals, the 2008 Stetson program titled "The Basics of Special Needs Trusts" offered analyses of several important settlement planning topics and included two presentations specifically focusing on structured settlements:

• Texas Attorney Pi-Yi Mayo spoke about the January 31, 2006 Social Security Administration (SSA) letters to attorneys Roger Bernstein and Jay Sangerman as well as the application of the Deficit Reduction Act of 2005 (DRA) to structured settlements used to fund special needs trusts; and
• Leo Govoni provided "An Economic Analysis of Structured Settlements".

Structured Settlement Knowledge Leadership Conference (SSKLC) - Focusing on the "needs and best interests of consumers", the first Structured Settlement Thought Leadership Conference, sponsored by J.G. Wentworth, was designed to bring together knowledge leaders who are "redefining structured settlement roles and processes". The Leadership Conference objective was to provide an educational platform and open forum dedicated to growing and improving the structured settlement market. In addition to four panel discussions and two individual presentations, the Leadership Conference featured a brainstorming session to improve the structured settlement process for plaintiffs based upon the subjects discussed in prior sessions. The panel discussions addressed the economic life cycle of a personal injury claim identified by Adam Scales in his 2002 Wisconsin Law Review article titled "Against Settlement Factoring? The Market in Tort Claims has Arrived". One result of the Leadership Conference was the subsequent 2008 structured settlement survey conducted by J.G. Wentworth.

Structured Settlements in 2008 - 1

This S2KM blog post, the first of three summarizing structured settlements in 2008, evaluates the year from an historical perspective. Two subsequent posts will:

• Summarize 2008 conferences attended by S2KM;
• Highlight challenges facing the industry in 2009.

"Structured Settlements and Periodic Payment Judgments" (S2P2J), co-authored by Daniel Hindert, Joseph Dehner, and Patrick Hindert, features historical summaries of both the primary and secondary structured settlement markets. S2P2J Release 44 is now available.

S2KM previously has published three online historical summaries of structured settlements:

• A visual history of structured settlements to 2005;
• Structured Settlements in 2006;
• Structured Settlements in 2007.

As these summaries demonstrate, the history of structured settlements includes many diverse and inter-related developments. From S2KM's perspective, the most strategically important years in the history of structured settlements prior to 2008 have been:

• 1982 - during which Congress enacted the Periodic Payment Settlement Act of 1982:
  • Adding "periodic payments" to IRC section 104(a);
  • Creating IRC section 130 and "Qualified Assignments";
  • Establishing a public policy to support structured settlements.
• 2001 - during which:
  • Congress enacted IRC section 5891to provide tax rules, definitions and penalties for transfers of structured settlement payment payment rights and to create a state run system for reviewing and approving such transfers;
  • CMS published its first policy memorandum for Medicare set-aside arrangements (MSAs);
  • The Society of Settlement Planners (SSP) was founded as an alternative to the National Structured Settlement Trade Association (NSSTA) which was formed in 1985.

Although it is premature to evaluate the full historical impact of 2008 for the structured settlement industry, the cataclysmic financial events of the past four months have already created serious repercussions for both the primary and secondary markets. The good news: thanks to the federal government bailout of AIG, no structured settlement recipients have suffered any loss of structured settlement payments to date because of the economic meltdown. The bad news: the U.S. economy and financial markets remain in jeopardy creating unprecedented challenges for the structured settlement industry in 2009.

2008 Structured Settlement Financial Summary

• The Wall Street Journal characterized September 14-20, 2008 as "The Week That Changed American Capitalism". Among other developments, United States Treasury Secretary Henry Paulson announced on September 16 the federal government had seized control of AIG in an $85 billion bailout. Paulson stated AIG had been only "hours from bankruptcy". On October 8, the Federal Reserve Board increased its loan to AIG by an additional $37.8 billion.
• AIG subsequently announced it planned to sell its North American life subsidiaries, including American General, as part of its plan to repay the bailout loan from the U.S. government. For additional information and continuing reports about the Federal government's bailout of AIG, see S2KM's AIG structured settlement wiki.
• Until September 2008, AIG had been the largest purchaser and the largest seller of structured settlements. In 2006, AIG sold more than $1.4 billion of the $6.1 billion annual U.S. structured settlement annuity premium. In 2007, AIG sold more than $1.4 billion of the $5.9 billion annual U.S. structured settlement annuity premium. During the first nine months of 2008, AIG sold more than $1.2 billion of the $4.4 billion of the U.S. structured settlement annuity premium.
• Along with other financial and insurance companies, the stock prices of structured settlement annuity providers have been battered during the fourth quarter of 2008. Some annuity providers have experienced rating downgrades. Analysts, investors and rating agencies have expressed concerns about the potential exposures these companies may have to failed or bailed out companies as well as the general decline in their stock portfolios and shareholder equity.
• On December 16, 2008, Aviva Life announced it was exiting the structured settlement business to concentrate its resources on less capital intensive businesses. Aviva joined other annuity providers who exited the structured settlement business during 2006 and 2007 including Mass Mutual, Genworth, Travelers and Aegon.
• The financial crisis has frozen the credit markets and shut down most asset-backed securitizations causing substantial problems for the secondary structured settlement market. In November, Standard & Poor's cut J.G. Wentworth's counterparty and senior-secured bank loan ratings from B- to CCC+ due to "severe dislocation of the credit markets" that have "rendered unprofitable" some financing transactions.
  
• On December 5, J.G. Wentworth announced the pricing of $74.6 million of Class A-1 Notes in connection with its 2008-3 securitization. The Class A-1 Notes were priced at 700 bps over benchmark interest rate swaps and will have ratings of Aaa and aaa by Moody's and A.M. Best respectively. The purpose: to provide the necessary proceeds to satisfy one of the conditions under J.G. Wentworth's November 28, 2008 margin call waiver agreement with Deutsche Bank to reduce warehouse loan indebtedness by $50 million.
• Although demand for settlement transfers has remained strong throughout 2008, discount rates have increased from 8% to 16% during the past six months.

J.G. Wentworth - 1

J.G. Wentworth, the leading structured settlement factoring company, has been featured in news reports and announcements this past week.

Article posted November 28, 2008 by Joseph N. Distefano on the philly.com website:

"Standard & Poor's cut counterparty and senior-secured bank loan ratings on J.G. Wentworth Inc., the Bryn Mawr "structured settlement" firm that buys insurance payouts, to 'CCC+' from 'B-', and warned it could cut again. "Wentworth's financial position could deteriorate further unless it receives additional capital to meet margin calls, fund structured settlement/annuity purchases, and pay fixed obligations," due to "severe dislocation of the credit markets" that have "rendered unprofitable" some financing transactions, said S&P analyst Rian M. Pressman in a statement."

"Wentworth received an additional margin call of $16.9 million on Oct. 22, 2008, the payment of which was waived until Nov. 21, 2008. The payment has not yet been made," S&P added. Wentworth makes most of its money by selling asset-backed securities. Because such asset-backed transactions are tough to make in the current market, Wentworth has been reporting losses, S&P said. Wentworth is owned by New York investment firm JLL Partners. "

JGW Interim Announcement
Distributed December 5, 2008

"Today J.G. Wentworth priced $74.6 million of Class A-1 Notes in connection with its 2008-3 securitization. The Class A-1 Notes were priced at 700 bps over benchmark interest rate swaps and will have ratings of Aaa and aaa by both Moody's and A.M. Best, respectively.

"The transaction is scheduled to close December 16, 2008 and is intended to provide the necessary proceeds to satisfy one of the conditions under the November 28, 2008 margin call waiver agreement with Deutsche Bank to reduce warehouse loan indebtedness by $50 million."

S2KM will continue to report on financial and market developments impacting J.G. Wentworth, other structured settlement companies including AIG, and the structured settlement industry in general.

J.G. Wentworth Survey - 5

Four prior S2KM blog posts:

• Introduced the J.G. Wentworth (JGW) 2008 structured settlement survey;
• Summarized other related and recent structured settlement reports and surveys; and
• Identified the nine (9) JGW survey questions JGW has given S2KM permission to publish.
• Published responses to five JGW survey questions directly related to the primary structured settlement market.

This S2KM blog post publishes responses to four JGW survey questions about the secondary structured settlement market. In reporting these questions and responses, S2KM has altered both the numbering system and the related response sequence (but not the questions or response results) to better present the survey results to structured settlement stakeholders.

S2KM's blog posts about the JGW survey are also featured on S2KM's structured settlement wiki.

JGW Secondary Market Survey Questions

• Question 6: Why did you sell all or part of your structured settlement?
• Question 7: Did selling your structured settlement help solve your financial problem?
• Question 8: Would you sell payments again?
• Question 9: If you sold only part of your settlement, do you plan to keep the rest of your payments as a structured settlement?

Question 6: Why did you sell all or part of your structured settlement?

Responses:

• Pay bills - 60.2%
• Start a business - 8.3%
• Home improvement - 8.3%
• Pay for education - 5.6%
• Cash made more sense than waiting - 5.6%
• Buy a house - 4.6%

S2KM comments

• Both the AIG survey and the JGW survey highlight paying bills as the primary reasons for structured settlement decisions.
  
• In the AIG survey, 71% of respondents who said they favored a structured settlement did so "to provide a regimented stream of income designed to cover expenses".
• In the JGW survey, 60.2% of the respondents stated paying bills was the reason they sold all or part of their structured settlement.
• Questions: what happened? How and when do settlement plans featuring structured settlements fail? What is more fundemental and periodic than paying bills? Were the original settlement plans flawed? What were the settlement planning objectives and alternatives? What financial education did these structured settlement recipients receive? What educational services, if any, did the structured settlement agent provide? Why and when did the respondents whose structured settlements originated when they were minors (approximately 25% of the survey respondents) sell their structured settlement payment rights?
  
• NSSTA's survey of injury victims determined that most respondents were uncertain whether a structured settlement consultant was involved with their case.
• NSSTA attorney survey results include the following responses to the question: "Whom do you prefer to use for purposes of financial planning for your clients?" The results: Trust company/department - 30%; Financial planner - 28%; Structured settlement consultant - 23%; No response - 19%.

Question 7: Did selling your structured settlement help solve your financial problem?

Responses:

• Mostly - 40.7%
• Yes - 32.4%
• Only helped a little - 21.3%
• No, it did not help - 5.6%

S2KM comments

• 94.4% of the respondents to JGW's survey said selling their structured settlement helped to solve their financial problem - 32.4% without qualification; 40.7% "mostly"; and 21.3% "a little".
• If the 21.3% "helped a little" response is interpreted as "no", then 73.1% of the respondents said selling their structured settlement helped to solve their financial problem.

Question 8: Would you sell payments again?

Responses:

• Maybe - 36.3%
• No - 30.1%
• Yes - 18.6%
• Probably - 8.0%
• I have already sold all of my payments - 7.1%

S2KM comments

• 62.9% of JGW's survey respondents appear to be candidates for future sales of structured settlement payment rights (18.6% + 8.0% + 36.3%)
• The 30.1% who said they would not sell payments again could change their minds. Alternatively, they could also be saying: 1) they are satisfied with their remaining structured settlement payments; and/or 2) their prior sale(s) of structured settlement payment rights accomplished its intended financial purpose.

Question 9: If you sold only part of your settlement, do you plan to keep the rest of your payments as a structured settlement?

Responses:

• Yes - 42.3%
• I don't know - 35.1%
• No, I plan on selling all of my payments - 9.0%
• I already sold all of my payments - 8.1%
• No, I plan on selling some of my payments - 5.4%

S2KM comments

• The 42.3% "yes" response represents a strong endorsement for structured settlements.
• Responses from the other 57.7% of JGW survey respondents raise questions and issues that settlement planners should identify and address. These questions and issues include how best to integrate structured settlements with other government benefits.

J.G. Wentworth Survey - 4

Three prior S2KM blog posts:

• Introduced the J.G. Wentworth (JGW) 2008 structured settlement survey;
• Summarized other related and recent structured settlement reports and surveys; and
• Identified the nine (9) JGW survey questions JGW has given S2KM permission to publish.

This S2KM blog post summarizes responses to five JGW survey questions directly related to the primary structured settlement market. A subsequent S2KM blog post will summarize responses to four JGW survey questions about the secondary structured settlement market.

According to Ken Murray, JGW's chief marketing officer, the JGW structured settlement survey resulted from recommendations made during the 2008 Structured Settlement Thought Leadership Conference. The JGW survey included 115 structured settlement recipients who have sold some or all of their structured settlement payment rights to JGW.  Not all survey participants responded to all questions.

JGW Primary Market Survey Questions

• Question 1: How many years ago did you settle your original lawsuit?
• Question 2: When you settled your original lawsuit, why did you accept payments over time rather than a single lump sum of cash?
• Question 3: How satisfied are you that you accepted a structured settlement?
• Question 4: Do you wish you and your attorney had negotiated for a single lump sum settlement?
• Question 5: When you settled your original lawsuit, how well informed were you about structured settlements?

Question 1: How many years ago did you settle your original lawsuit?

Responses:

• More than 10 years ago - 70.9%
• 5 to 10 years ago - 14.5%
• 1 to 5 years ago - 13.6%
• Past 12 months - 0.9%

S2KM comments:

• Based upon industry estimates, "Structured Settlements and Periodic Payment Judgments" (S2P2J) reports approximately $107 billion of structured settlement annuity premium from 1976 to 2007.
• Of this $107 billion, $54.3 billion (approximately 51%) was produced during the past 10 years (1998 to 2007) and $52.4 billion (approximately 49%) was produced during the prior 22 years (1976 to 1997).
• Industry sources report that $4.4 billion of structured settlement annuity premium has been produced during the first nine months of 2008 for an estimated $111 of historical structured settlement annuity premium.
• Transfers of structured settlement payment rights began in the late 1980s. IRC section 5891 was enacted in 2002. 46 states have enacted structured settlement protection statutes.
• Various sources have provided S2KM with estimates of historical structured settlement transfers ranging between 2% ($2.2 billion) and 6% ($6.6 billion) of historical structured settlement premium ($111 billion) as measured by payments made by transfer (factoring) companies to original structured settlement recipients.
• The responses to this JGW survey question conflict with one study by one structured settlement annuity provider released privately in 2008. This annuity provider reported at the National Settlement Consultants (NSC) 2008 Annual Meeting that most transfers of its structured settlement annuities occur during the first 10 years following origination.

Question 2: When you settled your original lawsuit, why did you accept payments over time rather than a single lump sum of cash?

Responses:

• Due to status as a minor, structured settlement considered best option - 38.3%
• Lump sum was not offered - 23.4%
• Payments over time seemed like a better deal - 23.4%
• Not sure I could manage a large amount of cash - 7.4%
• To pay future medical expenses or special needs - 6.4%
• Faster way to settle - 1.1%

S2KM comments:

• In response to this question, 61.7% of the structured settlement recipients in JGW's survey said they never were given a lump sum option.
• 38.3% of those structured settlement recipients were minors whose settlements presumably were approved and/or selected by judges and guardians. An additional 23.4% of the structured settlement survey respondents (presumably not minors) stated they were not offered a lump sum alternative to a structured settlement.
• Only 38.3% of the JGW survey respondents (23.4% + 7.4% + 6.4% + 1.1%) identified a positive reason for accepting a structured settlement.
• Compare these JGW results with the results of a structured settlement survey sponsored by NSSTA in 2006.
• As reported by Joseph Costello at NSSTA's 2007 Winter Meeting and 2007 Annual Meeting, 95% of the attorneys NSSTA surveyed in 2006 said they are proponents of structured settlements.
• And yet, as also reported by Costello, NSSTA's study found that only 7% of personal injury settlements between $75,000 and $100,000 include structured settlements; and only 30% of personal injury settlements above $1 million include structured settlements.
• Based upon a 2002 Towers Perrin "best estimate" of U.S. tort cost categories and percentages applied to the results of Towers Perrin's study of 2006 U.S. tort costs, $161 billion (65%) of 2006 U.S. tort costs represented payments to injury victims and their attorneys.

Question 3: How satisfied are you that you accepted a structured settlement?

Responses:

• As a minor, a structured settlement was considered the best option - 25.0%
• Mostly satisfied - 24.1%
• Neither satisfied nor dissatisfied - 21.3%
• Completely satisfied - 18.5%
• Slightly dissatisfied - 6.5%
• Completely dissatisfied - 4.6%

S2KM comments:

• 42.6% of JGW's survey respondents said they were "completely satisfied" (18.5%) or "mostly satisfied" (24.1%) that they accepted a structured settlement.
• 46.3% either stated they were not satisfied or dissatisfied (21.3%) or they were minors (25%) for whom courts and guardians selected a structured settlement.
• 11.1% stated they were either slightly dissatisfied (6.5%) or completely dissatisfied (4.6%) with their structured settlement.
• Note: 100% of the JGW survey respondents have sold some or all of their structured settlement payment rights to JGW.
• By comparison, the NSSTA survey found 75% of its survey respondents who received structured settlements said they were very happy their settlement included structured settlement annuities. The same percentage (75%) said they would recommend a structured settlement.

Question 4: Do you wish you and your attorney had negotiated for a single lump sum settlement?

Responses:

• No - 31.5%
• As a minor, I was unable to negotiate my settlement terms - 27.8%
• Maybe - 20.4%
• Yes - 10.2%
• I don't know - 10.2%

S2KM comments:

• 31.5% of the JGW survey respondents (all of whom have previously sold payment rights to JGW) expressed no second or negative thoughts about their decision to negotiate a structured settlment instead of a lump sum settlement.
• 27.8% of the respondents, as minors, were unable to negotiate their own settlement terms - but subsequently decided to sell some or all of their payment rights to JGW.
• 40.8% of the respondents express regrets or uncertainty about structured settlements without any positive endorsement of structured settlements.
• Among the important structured settlement issues the JGW survey highlights are structured settlements for minors. More than 25% of the JGW survey respondents are minors who did not personally negotiate their own settlements.

Question 5: When you settled your original lawsuit, how well informed were you about structured settlements?

Responses:

• Due to my status as a minor, I was not informed - 30.5%
• Very well informed - 27.6%
• Not well informed - 24.8%
• Well informed but still had questions post-settlement - 17.1%

S2KM comments:

• Only 27.6% of the respondents to JGW's survey believe they were "very well informed" about structured settlements when they settled their lawsuits.
• 30.5% said they were minors when their case was settled meaning they did not personally approve their own settlement. Questions: what information about structured settlements does the industry provide to minor recipients of structured settlements when they attain their age of majority? Should every minor structured settlement recipient be allowed to sell his or her payment rights when they reach the age of majority? Why not?
• 41.9% reported an inadequate education about structured settlements.
• Compare the JGW survey results with these results from the NSSTA survey: 65% of injury victim respondents to the NSSTA survey said they had not heard about structured settlements prior to settlement; most injury victim respondents to the NSSTA survey were uncertain whether a structured settlement consultant was involved with their case; only 34% recalled receiving educational information; 75% of this 34% who recalled receiving structured settlement educational information said the information was helpful; 66% of the injury victim respondents first learned about structured settlements from their trial attorney; 95% of the attorneys NSSTA surveyed said they are proponents of structured settlements.

In a subsequent S2KM blog post, S2KM will summarize responses to four JGW survey questions about structured settlement transfer decisions.

J.G. Wentworth Survey - 3

Two prior S2KM blog posts:

• Introduced the J.G. Wentworth (JGW) 2008 structured settlement survey; and
• Summarized other related and recent structured settlement reports and surveys.

This S2KM blog post publishes the nine (9) JGW survey questions JGW has given S2KM permission to publish. These JGW survey questions address structured settlement industry issues - for both the primary and secondary markets.

S2KM has reviewed the results of additional JGW structured settlement survey questions (14 questions out of 23 total). These JGW survey questions address J.G. Wentworth's products and services. S2KM has neither requested nor received permission from JGW to publish these additional survey questions and results.

S2KM introductory comments:

• In publishing JGW survey questions and results, S2KM has altered the order of JGW's survey questions and responses as reported to S2KM - but not the questions or responses themselves. S2KM's purpose: to better present and highlight those JGW survey questions and results S2KM believes are most important for the structured settlement and settlement planning industries.
• 115 persons participated in the JGW survey. Not all participants answered every question.
• All JGW survey participants were structured settlement recipients who have sold some or all of their payment rights to JGW through state court approved structured settlement transfers pursuant to IRC section 5891 and one of the 46 state structured settlement protection statutes.

JGW Primary Market Survey Questions

• How many years ago did you settle your original lawsuit?
• When you settled your original lawsuit, why did you accept payments over time rather than a single lump sum of cash?
• How satisfied are you that you accepted a structured settlement?
• Do you wish you and your attorney had negotiated for a single lump sum settlement?
• When you settled your original lawsuit, how well informed were you about structured settlements?

JGW Secondary Market Survey Questions

• Why did you sell all or part of your structured settlement?
• Did selling your structured settlement help solve your financial problem?
• Would you sell payments again?
• If you sold only part of your settlement, do you plan to keep the rest of your payments as a structured settlement?

Additional S2KM comments about the JGW survey:

• The JGW structured settlement survey differs significantly from other recent structured settlement surveys sponsored by NSSTA and AIG. For S2KM summaries of these other structured settlement surveys, see S2KM's earlier blog post titled "Structured Settlement Surveys".
• As of November 28, 2008, neither JGW nor NSSTA have published their structured settlement survey results online. AIG has reported the results of the AIG sponsored survey on the AIG website.
• Towers Perrin has recently reported updated results (2008 update) for Tower Perrin's continuing study of U.S. tort costs on the Towers Perrin website. S2KM has summarized the results of Tower Perrin's 2007 update in this S2KM blog post.
• JGW conducted its own survey. NSSTA and AIG retained outside resources to conduct their surveys.
• JGW, NSSTA and AIG each appear to have utilized Internet communications as part of their surveys.
• JGW's survey participants are all structured settlement recipients who have sold structure settlement payment rights to JGW.
• JGW's survey does not include attorneys for structured settlement recipients or lump sum recipients.
• By comparison, NSSTA's survey includes some attorneys and structured settlement recipients as well as lump sum settlement recipients. NSSTA has not indicated whether any of its survey participants have sold structured settlement payment rights.
• AIG's survey is more hypothetical and does not confirm whether any respondents have sold structured settlement payment rights.

S2KM comments about the JGW survey questions:

• JGW's survey includes questions related to both primary structured settlements and secondary market transfers.
• By comparison, neither the NSSTA survey nor the AIG survey ask any questions about structured settlement liquidity features or secondary market transfers.
• JGW's survey focuses upon the reasons 115 structured settlement recipients: 1) agreed to a structured settlement; and 2) subsequently sold (transferred) some or all of their structured settlement payment rights.
• In addition, JGW's survey asks these 115 structured settlement recipients to evaluate retrospectively the results of both transactions.

S2KM will publish and analyze responses to JGW's 2008 structured settlement survey in subsequent blog posts.

Structured Settlement Surveys

A prior S2KM blog post (J.G. Wentworth Structured Settlement Survey) introduces the J.G. Wentworth structured settlement survey and highlights other market reports and surveys important for "Growing the Structured Settlement Market".

These prior reports and surveys include:

• Market analysis by Towers Perrin titled "2007 Update on U.S. Tort Cost Trends"
• NSSTA 2006 Survey - as summarized by Joseph Costello at the NSSTA 2007 Winter Meeting and the NSSTA 2007 Annual Meeting;
• AIG 2007 Survey - as reported by AIG on the AIG website.

S2KM's summary of these three structured settlement marketing reports follows. The purpose of this S2KM summary is to provide context and perspective for S2KM's summary of J.G. Wentworth's more recent structured settlement survey. S2KM's review and analysis of the J.G. Wentworth survey will appear in subsequent S2KM blog posts.

Towers Perrin Study

• Reports $247 billion of 2006 U.S. tort costs.
• Does not address structured settlements or any other settlement planning products;
• Does not address the secondary structured settlement market;
• Consists of three components: 1) losses paid to third parties; 2) defense costs; and 3) administrative expenses.
• Calculates tort costs resulting from five insured plus uninsured business lines: 1) commercial multi-peril; 2) medical malpractice; 3) product liability; 4) other liability; and 5) commercial auto;
• Study excludes: 1) no-fault auto insurance; 2) property coverages; 3) workers compensation; 4) certain extraordinary (one time) costs - example: tobacco litigation.
• S2KM Note 1: a 2002 Towers Perrin study translated overall tort costs in 2001 into these additional cost categories and percentages: 1) administrative costs - 21%; 2) defense costs - 14%; 3) plaintiff attorneys -19%; 4) econcomic loss - 22%; and 5) non-economic loss - 24%.
• S2KM Note 2: Towers Perrin discontinued this portion of its analysis in 2002. It was "devilishly difficult" according to Russ Sutter, a Tillinghast principal and actuary who directs the Towers Perrin study, "primarily because we lack reliable information from plaintiff attorneys". The percentages represented Tillinghast's "best estimate" in 2002.
• S2KM assumption: for lack of more reliable estimates of tort cost payment categories and percentages, S2KM will use Tillinghast's "best estimate" in 2002 for 2001. The results for 2006 would be approximately: 1) $161 billion (65%) of 2006 U.S. tort costs represented payments to injury victims and their attorneys; and 2) $86 billion (35%) represented defense and administrative costs.

The NSSTA Survey

• Was never published online and never distributed to NSSTA members.
• S2KM is a NSSTA member. This S2KM summary is based upon S2KM's typewritten notes from the NSSTA 2007 Winter Meeting and the NSSTA 2007 Annual Meeting.
• The NSSTA-sponsored survey is titled: "A Study of the Structured Settlement Process Conducted on behalf of the National Structured Settlement Trade Association".
• The NSSTA survey was directed by Robert E. Hoyt, the Dudley L. Moore, Jr. Chair of Insurance at the Terry College of Business at the University of Georgia.
• The NSSTA survey consisted of attorneys involved in structured settlements (43 telephone surveys) and structured settlement recipients (1275 telephone and Internet surveys).
• As reported by Joseph Costello at NSSTA's 2007 Winter Meeting and 2007 Annual Meeting, only 7% of personal injury settlements between $75,000 and $100,000 include structured settlements; and only 30% of personal injury settlements above $1 million include structured settlements.
• The NSSTA attorney survey results include the following responses to the question: "Whom do you prefer to use for purposes of financial planning for your clients?" The results: Trust company/department - 30%; Financial planner - 28%; Structured settlement consultant - 23%; No response - 19%.
• Additional attorney responses: 95% of the attorneys surveyed said they are proponents of structured settlements; 70% of the attorneys said they retain a structured settlement consultant at least for some cases; 93% of the attorneys are satisfied with their structured settlement consultant; 50% want to learn more about structured settlements; 75% said financial strength was the most important consideration in recommending annuity providers; 88% said they were aware they could structure their fees.
• Injury victim responses: 65% said they had not heard about structured settlements prior to settlement; most injury victim respondents were uncertain whether a structured settlement consultant was involved with their case; 34% recalled receiving educational information; 75% of this 34% who recalled receiving structured settlement educational information said the information was helpful; 66% of the injury victim respondents first learned about structured settlements from their trial attorney; 75% said they were very happy their settlement included structured settlement annuities; 75% of the injury victim respondents said they would recommend a structured settlement.
• The NSSTA survey did not include any questions about the secondary structured settlement annuity market.

The AIG Survey

• The AIG survey was sponsored by AIG American General Structured Settlements and conducted by Esearch.com, Inc. in September 2007.
• The AIG survey included 1000 U.S. participants - 80% had no connection with any personal injury case; 20% had previously been involved directly or indirectly through a family member in a personal injury case.
• Accuracy: AIG claims its survey has a margin of error of plus or minus 3.10 percent at a 95% level of confidence.
  
• AIG's conclusion: the structured settlement industry needs to educate Americans about structured settlements.
  
• AIG survey procedure: respondents who had no connection to a personal injury case were asked to read two hypothetical scenarios and answer questions on how they would react.Those with a direct connection to a personal injury case were not only asked to read the hypothetical scenarios, but also to answer questions based upon their real life experience.
• In AIG's first survey hypothetical, AIG provides no information about structured settlements. Results: 65% of respondents said they would elect a lump sum of which 49% said they believed they could make their own long term decisions and 26% said the lump sum was more appropriate to pay bills and pay off debt.
  
• In AIG's second survey hypothetical, AIG provided survey respondents with information about structured settlements - presumably this "AIG Backgrounder" which AIG features on its website. Results: 73% of respondents said they would elect a structured settlement.
  
• 206 of 1000 participants said they or their family had been involved with a personal injury case. Of the 206, 86% had elected lump sum; 57% said they were unaware of structured settlements; 64% said their attorneys did not inform them about structured settlements; 57% of those that elected a lump sum said their settlement funds were already depleted; 71% of respondents who said they favored a structured settlement did so "to provide a regimented stream of income designed to cover expenses".
• The AIG structured settlement survey did not include any questions or information about the secondary structured settlement market.