During the National Structured Settlement Trade Association (NSSTA) 2015 Annual Conference, NSSTA President Michael Goodman announced an ambitious set of goals for growing the structured settlement market.
With NSSTA's 2015 Fall Conference scheduled for October 28-30 in Phoenix, Goodman agreed to an S2KM interview wherein he assesses NSSTA's progress toward achieving those goals as well as the status more generally of the structured settlement market.
S2KM: Welcome Michael and thank you for participating in this interview. Recent NSSTA conferences have emphasized the importance of "industry unity". As NSSTA president, what are your priorities for improving industry unity?
GOODMAN: My first priority as President of NSSTA is to identify growth opportunities for the structured settlement industry. In order to do so, we are reaching out to all NSSTA members to request that they submit suggestions and ideas to help expand and enhance the structured settlement industry. Regardless of the focus of your business, I want all stakeholders to work together to create growth opportunities that will benefit everyone in our industry.
S2KM: During your introductory comments at NSSTA's 2015 Annual Meeting, you suggested NSSTA needs to modify its traditional "protect and preserve" political message to inspire industry growth? What alternative are you proposing?
GOODMAN: Preserving the ability to structure cases and protecting I.R.C. Sections 104(a)(2) and 130 have always been one of the main priorities of NSSTA on Capitol Hill with Members of Congress, and it will continue to be important. We have built a strong base of political support for structured settlements in the U.S. Congress. We have also established close organizational relationships with disability groups, consumer organizations and attorneys. I want to use our support in Congress and work with our advocates and friends to expand the use of structured settlements. We have a very talented and highly professional group of structured settlement consultants in our industry and we need to really look at ourselves and determine as an industry the best way forward. For this reason, I have created a Growth Committee that includes many of the most talented and respected structured settlement industry leaders from across the country. I have asked these leaders to focus time and energy on growing the business for all of our members. Furthermore, we just hired a new public relations company, the Pipitone Group, which is going to revamp our website and help us to get our message out to the public.
S2KM: You referenced a "Growth Committee". NSSTA recently announced an “Industry Growth Initiative.” What is the NSSTA "Industry Growth Initiative"?
GOODMAN: Once installed as President of NSSTA, this was my first task. First, we asked all NSSTA members to submit ideas for growth at Growth@NSSTA.com. To date, we have received more than a dozen exceptional growth suggestions. Second, I tried to put together a committee of leaders within the industry that have different perspectives. There are plaintiff brokers, defense brokers, life company representatives, property & casualty representatives and folks within management of broker firms. With this diverse group, I have asked them to review and evaluate all of the NSSTA member growth proposals that have been submitted. Third, the Growth Committee members have been asked to develop plans to implement specific growth opportunities and develop the metrics necessary to evaluate the benefits to our industry. We just held our Board meeting and the Growth Committee presented the best ideas and we will be announcing those to the NSSTA membership shortly and discussing in Phoenix at our upcoming Fall Meeting.
S2KM: What features and benefits will the Growth Committee offer NSSTA members?
GOODMAN: It is important to remember that the NSSTA Growth Committee represents a highly talented cross section of industry leaders and they are going to select the very best growth initiatives developed and submitted by NSSTA members. The Growth Committee ideas were just presented to the NSSTA Board of Directors for final approval. All of the growth ideas approved by the Growth Committee will be provided to all our members and everyone in our industry will be invited to assist efforts to implement the new growth initiatives.
S2KM: What metrics will determine the scope and time framework for success of the Growth Initiative?
GOODMAN: Establishing clear metrics from the outset is critical for the success of the Growth Initiative. Every growth project proposal submitted by NSSTA members will be fully analyzed to determine the scope of the project, the cost to implement the project and the time frame necessary to complete the project. Most importantly, the Growth Committee will work to determine the potential benefits for our industry and our members. Once I formed the committee, it was then necessary to pick folks that were willing to lead. My brother Bill, John McCulloch, Sean Coleman and John Arendt were selected to lead this initiative. During our very first phone call, this was the first question that arose. How are we going to define success and what metrics should we utilize to determine what is the best idea. This is an ongoing debate, but with the leaders of the committee, I have complete confidence that we will have a defined path with clear goals.
S2KM: Will NSSTA's "Growth Initiative" prioritize new markets for structured settlements, expansion of traditional markets or both?
GOODMAN: That remains to be seen. However, I think it is important to have a completely open mind. Our industry has changed. We are no longer simply annuity sales folks. With the need to understand Medicare, Medicaid, The Affordable Care Act, Lien Resolution and so much more - to be effective, it is necessary to be a settlement consultant with a wide range of knowledge. Furthermore, the plaintiff practice has changed. This inevitably has also led to changes within the settlement consulting landscape.
S2KM: Which "new" or non-traditional markets do you view as most promising for structured settlements?
GOODMAN: There are several non-traditional markets that we are exploring. Several ideas were proposed to the Growth Committee. One idea in particular focuses on trying to structure FECA claims. Federal Employers Compensation Act is the corollary to worker’s compensation for federal employees. The government self-insures this exposure. The system spends about $3B per annum on claims. We are going to see if we can start utilizing structured settlements on these claims. Separate and aside, I think it is important for us to go back to our traditional base as well. Certain casualty programs have lost interest and it is necessary to re-engage these clients.
S2KM: NSSTA recently completed a three-part survey of its traditional sales targets: senior claims executives, claims professionals and plaintiff attorneys. What were the most important findings for purposes of NSSTA's "Growth Initiative"?
GOODMAN: NSSTA has worked with CLM Advisors on two major surveys with more than 200 senior claims officials to find out what claims professionals think about structured settlements. What we learned from the surveys includes the fact that an overwhelming majority of senior claims officials consider the use of structured settlements very important to their business. Senior claims executives also reported that structured settlement consultants are well trained and provide valuable professional services. Claims officials also reported that structured settlement consultants have the ability to help identify and meet the needs of the injured party. We also found out that senior claims officials would like more training regarding the benefits of structures generally, the use of structures in claims that involve Medicare Set-Asides and negotiation strategies when using structures. NSSTA has recently launched NSSTA University, where our members can secure continuing education credits through the state department of insurances for their structured settlement presentation to adjusters. This will allow our members to build those relationships critical during the claims negotiation process. The best way to connect with the claims professional is through education.
S2KM: Based on recent Towers Watson studies, S2KM has estimated that more than $170 billion of United States tort costs (excluding workers compensation) represented payments to injury victims and their attorneys during 2014 compared with $5.3 billion of structured settlement premium (including workers compensation). How large is the potential U.S. annual structured settlement market?
GOODMAN: My own estimate of potential market size for the structured settlement industry is in the $8 to $10 billion range per year.
S2KM: Traditional public policy justifications assume and maintain "structured settlements enable injury victims to live free of reliance on government assistance." This statement, on its face, does not appear to acknowledge:
- The use of structured settlements to fund Medicare set-aside arrangements (MSAs) and special needs trusts (SNTs); and/or
- A strategic role for structured settlements in personal injury settlement planning which has been defined as "ensuring that a plaintiff who has a significant disability, lacks capacity, or has a complex financial situation will receive his or her litigation proceeds in such a way that it will not jeopardize his or her future retention of other benefits."
Isn’t it time to modify this traditional public policy justification to recognize how structured settlements can also be utilized to preserve and/or maximize public benefits?
GOODMAN: This has been an area of focus and we have a task force that is looking how best to promote structured settlements use in the government benefits arena. We are reaching out to various groups and associations to ensure that we work together to grow the industry. We are working with the Special Needs Alliance, the Academy of Special Needs Planners, the National Academy of Elder Law Attorneys, and National Alliance of Medicare Set-A-Side Professionals to name a few. Within NSSTA, our task force includes Patrick Hindert, John McCulloch, Len Blonder and me.
S2KM: You have been a critic of "interest rate selling" as a detriment to structured settlement industry growth. What do you mean by "interest rate selling" and how can such selling be avoided in a low interest rate environment?
GOODMAN: Far too many brokers focus on interest rates when selling structured settlements. This makes the structured settlement strictly an investment. My goal is always to focus on future needs. There is no other investment that can produce the same security and tax-free payments. I look to have a structured settlement in place to cover the recurring future needs. If you utilize a structured settlement in this fashion, the interest rate becomes irrelevant.
S2KM: The National Association of Settlement Purchasers (NASP) has announced that you will be a featured speaker at NASP’s 2015 Annual Conference. Why did you (presumably with NSSTA’s Board of Director approval) agree to participate at a NASP conference?
GOODMAN: We have worked very hard to address some of the “loop-holes” in certain State Structured Settlement Protection Acts. Craig Ulman’s efforts have been amazing. By the end of the 2016 state legislative sessions, I expect we will have tightened the structured settlement protection acts in as many as four of the states with weaker statutes. Wisconsin and DC should have enacted strong statutes. We have worked with NASP to try to ensure that plaintiffs have to attend hearings if they want to factor their settlement funds. We also want to avoid forum shopping by factoring companies. In addition, we want plaintiffs to have to disclose whether they have previously sold any portion of their structured settlement. Rather than disagree with NASP, we have focused on trying to find common ground to provide even more consumer protections for our annuitants.
S2KM: Why have so many life companies (annuity providers) exited the structured settlement market - and what can NSSTA do to attract new companies to the market?
GOODMAN: While some life companies had exited our industry, we have also gained new firms over the past few years. We are working on encouraging more life companies to join the industry. That being said, I think we need to continue to be thankful and honor those companies that are currently in our marketplace.
S2KM: With the retirement of an entire generation of pioneering structured settlement brokers, does the primary market face a "succession crisis"?
GOODMAN: I wouldn’t say we have a crisis, but it is certainly a concern. We are looking to address the issue. Melissa Price, from SFA, is researching new ways to offer training for new brokers. This has always been an issue. Our industry provides a great service and I am sure we will attract new brokers.
S2KM: Going forward, what professional backgrounds and/or skill sets best qualify an individual for success in the structured settlement market?
GOODMAN: It is very hard to predict who will succeed and who will fail in this industry. There have been folks that I thought would be a huge success and instead they have gotten out of our industry. Obviously, it has become a much more complicated process over the past decade. Understanding law, claims, public benefits and finance has become a necessity. The most important quality to have in our industry is compassion.
S2KM: NSSTA has recently added multiple new educational programs for its members - for examples: Structures 202; "NSSTA University"; the MSSC Program. Do you see the need for any additional new and/or improved NSSTA educational initiatives?
GOODMAN: As previously mentioned, we are looking to create new training programs for brokers that are brand new to the industry. Other than that, I believe NSSTA has done a great job with its current educational initiatives.
S2KM: What lessons, if any, did NSSTA members learn from the ELNY liquidation that will improve the structured settlement market going forward?
GOODMAN: I believe the entire experience educated brokers. I believe it has made us look into the financials of each life company and made us understand how to address concerns. Lastly, I believe split-funding has become much more commonplace.
S2KM: In addition to what we have already discussed, what other priorities, if any, have you identified for your term as NSSTA president?
GOODMAN: My main priority is to grow the industry. I am excited about the ideas that have been presented. I am also excited about the enthusiasm that has been created. I am proud that this effort has brought everyone together to focus on a common theme: how to grow the industry for all.
S2KM: Thank you, Michael - and continued success for the remainder of your term as NSSTA President.
For additional and related recent S2KM reporting about NSSTA, see: