Many industry observers view the United States structured settlement primary market as a strategic, underperforming segment of the larger personal injury settlement planning market.
Structured settlement industry surveys and Towers Watson's annual updates of "U.S. Tort Cost Trends" provide additional evidence the primary market has not yet achieved its full potential.
Using 2008 as a baseline, the primary market annuity premium has steadily declined during the past four years:
- 2008 - $6.2 billion
- 2009 - $5.4 billion
- 2010 - $5.5 billion
- 2011 - $4.97 billion
- 2012 - $4.82 billion
Sales results for the first six months of 2013 suggest structured settlement production will continue its downward trend this year - or, at least, fall far below the premium levels achieved from 2001 to 2008.
Among the explanations for this declining primary market, industry leaders frequently mention: 1) the 2008 financial crisis; 2) historically low interest rates; 3) new regulatory restrictions; 4) the Executive Life of New York (ELNY) liquidation; and 5) the departure of several product providers including: Allstate, John Hancock, Symetra and Hartford.
Although members of the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP) have sought answers and proposed strategies to reverse this downward trend and grow the primary market, they have not been successful.
What is needed to grow the primary structured settlement market?
During the past few weeks, Patrick Hindert (S2KM's blog author) has participated in discussions exploring this question with a group of individuals including insurance executives who see underdeveloped opportunities in the primary structured settlement market.
One of these individuals is Daniel Durbin, a former NSSTA President and Senior Sales Manager with Allstate Life. Durbin currently is speaking with structured settlement industry leaders to obtain their input and evaluate their interest in representing a potential new product provider. In addition to conducting a broker survey, Durbin will be attending NSSTA's 2013 Fall Marketing Meeting November 5-6 in Dallas, Texas for additional one-on-one meetings.
"Members of our industry perform a vital public policy function by advocating for the financial well being of physically injured claimants", Durbin stated during a recent telephone interview. "In addition, we serve as important resources for all parties in personal injury negotiations."
"To jump start primary market growth", Durbin added: "we need new, more competitive product providers. To that end, I am contacting industry leaders to solicit their suggestions and support for my current efforts to expand and improve structured settlement product provider options."
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