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.
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