Beyond Structured Settlements

NSSTA 2006 Winter Regional - Take 2

This post includes a January 13, 2006 podcast interview of weblog author Patrick Hindert by Mark Wahlstrom for The Settlement Channel.  The Settlement Channel is part of The Legal Broadcast Network (LBN). 

The interview summarizes the NSSTA 2006 Winter Regional Meeting and the Mangelsdorf Companies 2006 Annual Meeting. 

The NSSTA meeting included a collaborative presentation by Wahlstrom and Hindert titled "Introduction to Podcasting". 

Hindert delivered the keynote address at the Mangelsdorf meeting titled: "The Future of Structured Settlements".

Settlement Transfers - Wentworth and Symetra

Structured settlement transfers (aka factoring) continue as a prominent and contentious issue within the structured settlement industry. The most recent evidence is a January 23, 2006 article in the Philadelphia Inquirer written by Todd Mason titled “Wentworth gains in growing industry”.

Wentworth - On its website, J.G.Wentworth describes itself as “the undisputed leader in the structured settlement industry” and further states: “this claim is substantiated by our longevity, the dollar volume of our transactions, the AAA Ratings on our financings, and the contribution we have made to the legal framework that regulates the funding of structured settlements.”

However, not everyone views Wentworth as a “leader”. According to Joseph J. Hoffman Jr., a New Jersey attorney quoted in the Philadelphia Inquirer article: Wentworth “preys on the unsophisticated”. Hoffman adds: “it is a sad commentary on how low companies will go to make money.” Randy Dyer, Executive Director of NSSTA, the leading structured settlement trade association, observes: Wentworth “seems to be a business that exists on lawsuits”.

Symetra - So what does (or should) the structured settlement industry think about Symetra Financial, a traditional annuity provider and member of NSSTA, who recently announced the formation of Clearscape Funding Corporation to compete with Wentworth in the transfer business?

The immediate answer appears to be confusion – and anger. For one example of the anger, see John Darer’s recent weblog post about Symetra as well as John’s prior weblog posts about transfers.

The confusion about transfers results, in part, from the history of settlement transfers including political and legal battles between NSSTA (and its members) and NASP, a transfer company trade association (and its members). The continuing results for many NSSTA members include simplistic and anachronistic thinking – structured settlements are good; settlement transfer companies behave badly; therefore, settlement transfers are bad – and somehow remain separate from structured settlements.

The confusion about transfers within the traditional structured settlement industry also results from two industry failures: one educational and the other strategic.   

The education failure - To date, the two leading structured settlement trade associations, NSSTA and SSP, have done a remarkably poor job in educating their members about settlement transfers. With the exception of annuity providers (like Symetra) who self-fund transfers, NSSTA does not permit transfer companies to join their organization or participate in their educational programs. Unlike NSSTA, SSP does include transfer companies as members.

Hopefully, beginning in 2006, both NSSTA and SSP will organize and promote improved education and public discussion about settlement transfers. In the Philadelphia Inquirer article, NSSTA General Counsel Craig Ulman states that “insurers are offering education” about transfers.  Unfortunately, none of that education is occuring at the NSSTA educational meetings.   Ulman, a partner at Hogan & Hartson, and Daniel Hindert, a partner at Parsons, Behle & Latimer, have recently co-authored an ABA article about settlement transfers for judges.

SSP recently announced the educational program for its 2006 Annual Meeting (March 9-10 in Washington D.C.) will include a presentation about settlement transfers.  The SSP presentation is titled “Are Settlement Transfers Good or Bad” with a “cross-fire” type format featuring two leading settlement transfer commentators: Adam Scales and Patrick Hindert, author of this weblog.   Scales is an associate professor at Washington and Lee University School of Law and author of an inciteful and controversial 2002 law review article: “Against Settlement Factoring? The Market in Tort Claims has Arrived”.  Hindert is Managing Director of S2KM Limited and co-author with Daniel Hindert and Joseph Dehner of "Structured Settlements and Periodic Payment Judgments".  Ward Zimmerman will moderate.

The strategic failure – Confusion about transfers also results from the failure of the traditional structured settlement industry to strategically re-align itself with the legal realities of Stage 3 structured settlements. The issues that need to be addressed include public policy as well as how the new federal and state transfer laws impact traditional structured settlement business practices and products. At the recent NSSTA Winter Regional Meeting, one structured settlement veteran offered this prescription for industry growth: “we need to spend more time selling instead of servicing structured settlements”. How about some strategic thinking and analysis as a prelude to sales and growth? For additional information about Stage 3 Structured Settlements see S2KM’s weblog post entitled: “The Future of Structured Settlements”.

Structured Settlement Weblogs

S2KM welcomes two new bloggers to the structured settlement blogosphere:

1. Mark Wahlstrom - Mark is co-owner (with Jan Schlichtmann) of the Legal Broadcast Network.  Mark's podcast and weblog commentary appears on The Settlement Channel.  One of Mark's recent weblog posts addresses the EPS SFA merger.

2.  John Darer - John is a leading structured settlement consultant and industry commentator.  John has an interesting take on Symetra's recent announcement to expand its settlement transfer business.  For those who have not seen the Symetra announcment, here is a copy:
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"Introducing Clearscape Funding Corporation

Dear Structured Settlement Consultant:

Nine months ago we launched an "advanced funding" pilot program, giving payees under Symetra Assigned Benefits Service Company (SABSCO)-owned annuities the ability to transfer their structured settlement payments to SABSCO in exchange for an immediate lump sum. The results of this program have been outstanding! Clients tell us they are grateful for our ability to quickly meet their immediate financial needs and for the professional manner in which we've shepherded their cases through the courts.

SABSCO's funding services are now available in all states. We're also expanding with a new service to payees under non-SABSCO-owned contracts, including those issued by other life companies. At the heart of this expansion is the latest addition to the Symetra Financial corporate family ?

Clearscape Funding Corporation!

Beginning January 11, 2006, Clearscape Funding Corporation will offer payees the same helpful and responsive service that many have come to know through Symetra Life. Clearscape Funding continues the Symetra tradition with fair pricing, fast turnarounds, and strong technical knowledge. It's yet another example of how Symetra Financial is working to meet your customers' needs by providing financial solutions for navigating the unforeseen changes that life can present. For more information, visit www.clearscapefunding.com.

If you have questions about our structured settlement or funding services, or need assistance with a nonqualified opportunity, please call your new business representative or me at 1-800-599-5732.

Sincerely,

Kim McSheridan

Vice President

Income Annuities

Symetra Life Insurance Company"

The Future of Structured Settlements

This weblog entry features four slides from a power point entitled “The Future of Structured Settlements" presented as the keynote address at the Managelsdorf Companies' Annual Meeting in Phoenix, AZ on January 12, 2006 by Patrick Hindert, S2KM’s Managing Director:

Thanks to T.V. Mangelsdorf and Dick Lewis for the invitation and presentation opportunity.  Thanks also to Keith Burtoft for developing the illustrations.

History Diagram - click on individual images to enlarge.

 

 

Transaction Diagram

Stage 3 Transition

Impact of the Internet

 

 S2KM's analysis of  “The Future of Structured Settlements” is a work in progress.  For earlier S2KM thinking about structured settlements, see: “New Basics for Structured Settlements” and “Understanding Structured Settlements” .

S2KM welcomes comments and will continue to update and improve these documents.

See also the most recent comments about structured settlements by Denham Grey on Denham's weblog: "Structured Settlements 3.0?"

As structured settlements become increasingly complex and important, new  knowledge leaders are needed to address priority industry issues. Contact S2KM for additional assistance in understanding structured settlements or in transitioning your structured settlement knowledge to the Internet.

Introduction to Podcasting

 This entry updates, summarizes and links prior S2KM weblog entries about podcasting.

The update includes a new S2KM power point (“Introduction to Podcasting”) presented at the NSSTA 2006 Winter Regional in collaboration with The Legal Broadcast Network (LBN).  The powerpoint features a concept map by Barbara Bowen.

Click on the image below to enlarge the concept map.

In addition to Barbara,  NSSTA, and LBN (Mark Wahlstrom and Ed Vogt), S2KM thanks  Denham Grey and  Keith Burtoft for their collaboration in developing the following materials:

S2KM Powerpoint (“Introduction to Podcasting”) Download NSSTA.ppt

  LBN video podcast (requires Windows Media Player) – Mark Wahlstrom and Ed Vogt;

LBN podcast interview of Patrick Hindert - by Mark Wahlstrom;

The Settlement Channel - a leading provider of structured settlement (S2) podcast programing.

Ringler Radio - a second leading provider of S2 podcast programing.

eRadio - audio video engineers (including Ed Vogt) who specialize in S2 podcast programing.

NSSTA 2006 Winter Regional Meeting

The National Structured Settlement Trade Association (NSSTA) hosted its Winter Regional Meeting at the Arizona Biltmore in Phoenix January 11-13 2006. The meeting featured record attendance, business and educational programs; committee meetings; plus a reception.  Representatives of The Legal Broadcast Network (LBN) attended the NSSTA meeting and recorded audio video podcast interviews with many speakers and attendees for future Internet broadcast and distribution.

Congratulations to Larry Curtis and the NSSTA Education Committee for their excellent work in selecting and organizing guest speakers with industry veterans in an educational program that focused on selling structured settlements. The guests included: keynote speaker, Congressman J.D. Hayworth of Arizona; Susan Bradley of the Sudden Money Institute; Daniel Shapiro of the Harvard University School of Law; Mark Leach of Conquest Training Systems; Amy Lieberman of the American Arbitration Association.

NSSTA members who participated in the educational program included: Tom Little; Joe Costello; Brad Cantell; Mike Tucker; Andy McLean; Mark Alpert; Tom Ronce;  Larry Curtis; Mark Wahlstrom; and S2KM weblog author, Patrick Hindert.  NSSTA representatives Randy Dyer; Eric Vaughn and Peter Arnold also spoke.

Wahlstrom, LBN’s President, and Hindert repeated a podcasting presentation in Phoenix (entitled “Introduction to Podcasting”) they also delivered at the NSSTA 2005 Fall Regional Meeting.

NSSTA President Jeff Bowers chaired the NSSTA business meeting where several NSSTA directors and committee chairpersons provided reports including: Dick Lewis and Brad Cantwell (Long Range Planning); Larry Curtis (Education); John McCulloch (Broker Relations); and Tom Murray (Government Benefits).  Bowers announced that NSSTA will be using a new survey tool to obtain member input on industry issues.  An independent accounting firm administers the survey and maintains confidentiality of member input.  NSSTA receives the survey results without any informational linkage to specific NSSTA members.

NSSTA will continue to improve its educational programs by building on the successes of its 2006 Winter Regional and targeting these priorities:   

1. Internet technologies – In Phoenix, NSSTA’s education program included an introduction to podcasting plus a series of podcast interviews featuring speakers and attendees. NSSTA, however, has been slow to implement XML-based technologies - and to educate its members about Internet transition and survival strategies.  The issues are immediate and long term      for NSSTA.   NSSTA should survey its members about Internet technology and begin to think strategically about the Internet. 

2. Wider vision – NSSTA needs to widen its vision and re-examine structured settlements in the context of continuing industry legal developments. The NSSTA Legal Committee should be contributing more than tax updates to NSSTA’s educational program. NSSTA should be updating its members regularly about all legal developments impacting structured settlements. Especially during a time of industry change, NSSTA should be encouraging multiple viewpoints and perspectives about the most important industry issues. 

3. Public policy – Public policy will continue to play an important role in the development of structured settlements. Public policy should remain a central focus for all structured settlement industry leaders. NSSTA should prioritize and elevate the discussion of public policy in the context of existing and developing structured settlement laws.  Although traditional thinking should be acknowledged, new thinking is needed. NSSTA should identify and recruit the “best and the brightest” to discuss and debate structured settlement public policy. 

4. Business practices and products – As a trade association, NSSTA pays close attention to anti-trust issues involving  business practices and discussions about business practices. With due respect to anti-trust considerations, the same laws impacting structured settlement public policy are also impacting structured settlement business practices - and products. NSSTA should be educating its members on a regular basis about legal developments relating to structured settlement business practices as well as new product opportunities and requirements. 

S2KM Limited is an associate member of NSSTA and regularly attends NSSTA meetings. The NSSTA 2006 Annual Meeting will take place May 7-10 in Puerto Rico.

For previous S2KM reports about NSSTA meetings, see:

    1.  NSSTA 2005 Fall Regional Meeting

    2. NSSTA 2005 Annual Meeting