Beyond Structured Settlements

NSSTA 2017 Annual Conference

When Len Blonder was elevated to the role of President of the National Structured Settlement Trade Association (NSSTA) for an unprecedented third time during NSSTA's 2016 Annual Conference, he identified a very clear vision for the structured settlement industry.

"The times are changing and we must change", Blonder stated in 2016, as he addressed NSSTA's membership to begin his third term as President. "The business is more complicated. We must determine how the parts fit together. Despite plaintiff growth, defendants remain indispensable to structured settlements. Defendants must continue to play a key role."

NSSTA's 2017 Annual Conference, which occurred April 19-21 in San Francisco, provided an educational program consistent with Blonder's vision. The conference also re-confirmed that now is an exciting time to be part of the structured settlement industry and that NSSTA is well-organized to address the current challenges and opportunities confronting the industry.

Speakers and Topics

• Opening Remarks - Len Blonder, NSSTA President
• NSSTA Objectives - Jim Early - NSSTA President Elect
• Access to Justice - Elise Sanquinetti; Laurie Klimchock; Melissa Baldwin (Moderator)
• NSSTA Board of Director Candidate Speeches
• My Story: Meg Hertzel-Busing; Mike Wostoupal (Moderator)
• Getting Claims Professionals Invested in Structured Settlements: Taylor Smith; Dean Harring; Al Luther; Brad Cantwell; Jerry Lothrop; Jim Early (Moderator)
• ABLE Act Implementation - Stephen Dale
• Government Benefit Programs - Amos Goodale
• Special Needs Attorneys and Structured Settlement Consultants: Morris Klein; Phillip Krause; Eric Vaughn; Patrick Hindert (Moderator)
• Washington Update - Eric Vaughn
• MSAs in Third Party Settlements - Robert Sagrillo
• A Claimant's Story: Judge Larry Quan (retired); John Allan); Eric Vaughn (Moderator)
• Educating Defense Counsel - Kathy Martin; John Kouris; Nolan Robinson (Moderator)
• Structured Settlement Education - Patricia Fairhurst; Debbie Sink; Jordan Bossler; Matt Ross.

NSSTA Challenges

• Protecting and Preserving IRC Sections 104(a)(1) and (2) and 130 - the existential foundation of the structured settlement industry. Among many individuals, past and present, responsible for organizing and maintaining the political coalition responsible for safeguarding these code sections (including the Congressional Structured Settlement Caucus), Blonder (now NSSTA's immediate Past President), NSSTA Executive Director Eric Vaughn, and NSSTA General Counsel John Stanton have been the longtime leaders of NSSTA's diligent and successful legislative and regulatory team. Without overlooking this traditional tax priority, NSSTA has also become more proactive in seeking new legislation and regulation (both tax and non-tax related) to expand structured settlement opportunities.
• Transitioning to Next Generation Leadership - NSSTA's leadership continues to balance experience with fresh thinking as evidenced by new NSSTA President James Early, President-elect Geoffrey Kissel and newly elected/re-elected Directors: Michelle Caine; Michael Goodman; Melissa Baldwin; Jordan Bossler; and Ross Duncan. Among NSSTA's retiring Directors, Randy Dyer is especially noteworthy. Dyer, who previously served as NSSTA's Executive Director during its formative years, also received this year's NSSTA's President's Award. Among NSSTA's conference speakers, Next Generation leaders Phillip Krause, Brad Cantwell, Nolan Robinson and Jordan Bossler were featured. Robinson and Bossler received NSSTA's Leadership Award for their shared contribution to NSSTA's educational programming.
• Transitioning to New Business Models - No longer simply a "zero sum" negotiation alternative (structure vs. cash), the future growth of structured settlements requires an in depth strategic re-analysis of two separate but related transitional markets (defendant claim management and plaintiff settlement planning) and how best to integrate structured settlements into those markets. Historically slow to provide its members with an in-depth, continuing educational focus on these developing markets, NSSTA's 2017 Annual Conference provided a valuable "deep-dive" into defendant claim management and special needs planning as it relates to plaintiff settlement planning - both of which are discussed below under "NSSTA Opportunities".
• Updating/Improving NSSTA Educational Programs - or how best to educate NSSTA members, who possess varying degrees of experience and who market to a diverse group of structured settlement producers and decision makers, to deliver high value services to their respective clients - with multiple additional objectives including: attracting new industry participants and knowledge leaders; helping industry participants develop skill sets needed for success in transitional markets; better utilizing Internet and other technology resources to improve educational efficiencies; competing (and collaborating) with other professional associations and providers for members' educational time and dollars. NSSTA has addressed this challenge by upgrading multiple educational offerings in addition to its Annual and Fall conferences (egs.CSSC program; NSSTA University; Structures 202). The 2017 Annual provided both a foundation and a perspective for future educational development.
• Overcoming Negative Secondary Market Publicity - During his term as NSSTA President (2015-2016), Michael Goodman identified several goals for NSSTA including "moving beyond a focus on factoring". One way to help accomplish this objective is to focus on the many positive, inspiring life stories of structured settlement recipients. NSSTA's 2017 Annual Conference presented two such stories. The first featured Meg Hertzel-Busing who suffered traumatic brain injury as a result of a car accident, then developed epilepsy. During college summers, she volunteered at a California camp for kids with cancer and their siblings. Seeing the positive impact, she made her life mission to bring life-affirming experience to children with epilepsy in the Midwest by founding, with her husband Kael, Midwest YouCan Foundation in 2011. The second featured retired Judge Larry Quan who received a structured settlement after sustaining a spinal cord injury resulting in quadriplegia.
• Other Challenges - Of course, NSSTA and its members have other challenges - such as low interest rates; adding new life companies; promoting greater diversity among its membership. However, by highlighting the challenges listed above during its 2017 Annual Conference, NSSTA's Board of Directors and its Education Committee demonstrated an appropriate awareness and focus that should enable NSSTA to successfully pursue its current Growth Initiative.

NSSTA Opportunities

Rejuvenating Defense Programs

• During Michael Goodman's Presidency (2015-2016), NSSTA revised its historic and defensive "protect and preserve" strategy by embracing a new "Growth Initiative" - "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement industry marketplace." Continued and expanded during Len Blonder's Presidency, NSSTA's first Growth Initiatives prioritized "Rejuvenating Defense Programs".
• Originally the prime movers for structured settlements, many defense insurers have since reduced or completely abandoned their structured settlement programs citing a variety of reasons. A NSSTA sponsored survey of claims professionals conducted by CLM Advisors in 2014 produced some troubling, yet opportunistic results and raised some important strategic questions for structured settlement brokers who market to defendants - as did an earlier CLM Advisors survey of senior claims executives also conducted for NSSTA.
• NSSTA's 2017 Annual Conference featured two outstanding panels addressing defense issues and opportunities: 1) "Getting Claims Professionals Invested in Structured Settlements"; and 2) "Educating Defense Counsel." The first panel, moderated by incoming NSSTA President James Early, featured three representatives of CLM Advisors including President Taylor Smith (who personally conducted the marketing surveys for NSSTA), as well as NSSTA brokers Brad Cantwell and Jerry Lothrop.
• The information generated from both panels provided a valuable supplement to NSSTA's earlier surveys and should help NSSTA's Growth Initiative Committee (and NSSTA members) accomplish its primary strategic objective. Examples:
• Professional backgrounds of today's claims executives have changed. They are less likely to be promoted from within the claims department and are more likely to be lawyers, accountants and/or MBAs hired from the outside. Question: what impact, if any, should this change in claims executive prototype have on structured settlement hiring practices and business strategy?
• These new claims executives focus more often on process rather than loss ratio. "What is important is what gets measured - and process gets measured," added one of the panelists. Observation: plaintiff structured settlement brokers transitioning to settlement planners are also emphasizing "process" - over "product" (see this S2KM report which includes the Society of Settlement Planner's (SSP)description of the "settlement planning process".). Question: How many defense brokers currently prioritize claim management process issues and metrics in their structured settlement marketing, sales and services?
• Also note, to double down on metrics - as S2KM previously reported, one of the "key findings" of a 2011 study titled: "National Litigation Management Study", conducted by CLM Alliance, the parent company of CLM Advisors, was: "litigation executives are not happy with the metrics and analytics available to them."
• One of the CLM Advisor panelists pointed out that "many young claim handlers don't understand structured settlements." They view structured settlements as "nothing more than post-settlement financial planning tools" and "have never seen any evidence that structured settlements save money." Questions: do structured settlements save money? If yes, in what context? (see next bullet). Focusing on claim management "process" (see above), should defense brokers develop a new structured sales strategy with supporting metrics - at least in this current economic/interest rate environment? For more on historic structured settlement metrics, see this 2011 S2KM blog series.
• Repeating a theme highlighted in NSSTA's 2014 surveys of both senior claims executives and claims professionals, one of the CLM Advisor panelists pointed out that claim adjustors "need help navigating Medicare Set-Aside (MSA) requirements." Every defense broker should understand exactly why his or her client can save money funding an MSA with a structured settlement as opposed to cash. For an explanation in the workers compensation context, see this S2KM blog post. Although CMS has not published similar rules for liability MSAs, many defendants are already utilizing structured settlements to fund liability MSAs and NSSTA's 2017 conference featured MSA expert Robert Sagrillo discussing that topic.

Special Needs Attorneys and Settlement Planning

• Within the personal injury settlement planning market, plaintiff structured settlement brokers interact with, and face competition from, other professional product and service providers who market to plaintiff attorneys. Among the most important of these other professionals are special needs attorneys. Settlement planning is now viewed as a growth opportunity by many special needs and elder law attorneys.
• Two national associations of special needs attorneys exist: the Special Needs Alliance (SN Alliance) and the Academy of Special Needs Planners (ASNP). SN Alliance members typically represent a majority of the speakers at the annual Stetson and University of Texas SNT conferences. The National Academy of Elder Law Attorneys (NAELA), to which most SN Alliance and ASNP members also belong, increasing emphasizes special needs as well as elder law issues among its educational and legislative lobbying priorities.
• Although their signature products are special needs trusts (SNTs), special needs attorneys play a variety of settlement planning roles (guardian; conservator; trustee; QSF administrator; in addition to legal advisor) and provide a variety of settlement planning legal products and services. Their expertise encompasses government benefits including: Social Security; Medicare; Medicaid; the Affordable Care Act (ACA); ABLE Act; veterans benefits; and public housing.
• Although special needs planning and settlement planning overlap in many respects, there are important differences. For example, "special needs" generally refers to birth-related or developmental disabilities. Special needs professional advice typically falls outside of the personal injury litigation process. Third party SNTs represent a prominent special needs planning tool rarely utilized in settlement planning. Unlike plaintiff structured settlement brokers, whose client relationships typically end once a case settles, the relationships of special needs attorneys and other special needs advisors may extend for their clients' lifetimes.
• Both plaintiff structured settlement brokers and special needs attorneys who practice settlement planning market their products and services to plaintiff attorneys who continue to perform the following essential settlement planning roles regardless of case complexity:
  • Recognizing settlement planning issues which impact their clients;
  • Recommending appropriate settlement planning professional resources to their clients; and
  • Retaining ultimate responsibility for effectuating settlements.
• Logically, structured settlement brokers and special needs attorneys could and should be natural settlement planning marketing allies and work product collaboration partners. This strategic relationship, however, has never achieved its full potential. Among other reasons, one of NSSTA's historic public policy justifications for structured settlements ("structured settlements enable injury victims to live free of reliance on government assistance") positioned NSSTA and its members at odds with special needs attorneys (who specialize in government benefits) and also contradicted multiple structured settlement growth opportunities (Medicare set-asides; SNTs; ACA benefits) which require integrating structured settlement annuities with government benefits.
• To change the direction and dynamics of its relationship with special needs attorneys, NSSTA created a Special Needs Attorney Task Force in 2015 and made it part of its Growth Initiative Committee in 2016 with the following Mission: "to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement marketplace by:
  • "Improving NSSTA's relationships with, and understanding of, SN attorneys and the primary national associations to which they belong;
  • "Improving SN attorney’s knowledge and understanding of the benefits and appropriate applications for structured settlements;
  • "Collaborating with SN attorneys in a professionally responsible and ethical manner to improve the lives of personal injury victims and their families."
• NSSTA's 2017 Annual Conference featured three special needs attorneys:
  • Stephen Dale - One of the nation's leading disability law experts, Dale provided NSSTA attendees with an overview of the Achieving a Better Life Experience Act (ABLE Act), which was signed into law in 2014 and for which 18 states have now opened qualifying ABLE programs offering various investment options. For eligible, disabled individuals and their families, Dale recommended ABLE accounts as an important supplement and/or alternative to special needs and/or pooled trusts. He views ABLE accounts as a valuable, immediate marketing and sales opportunity for both structured settlement brokers and special needs attorneys.
  • Amos Goodall - Goodall supplemented Dale's presentation with a general overview and introduction to government benefits. NSSTA and its members have traditionally emphasized and sold structured settlements based upon their inherent tax advantages compared with cash settlements. For many personal injury victims, however, maintaining Medicaid or other "means-tested" government benefits utilizing structured settlements may be an equally or more persuasive sales rationale. As pointed out above, current CMS rules for MSAs provide a cost advantage for structured settlements compared with cash.
  • Morris Klein - Klein, Co-Chair of NAELA's Public Policy Committee joined NSSTA broker Phillip Krause and NSSTA Executive Director Eric Vaughn on a panel to discuss: 1) how structured settlement consultants can improve their business relationships with special needs attorneys; 2) current political priorities of the SN Alliance and NAELA; and 3) how NSSTA and those associations might collaborate in the future. Among recent legislative developments, Klein highlighted the SNT Fairness Act (SNTFA) as significant for clients of both special needs attorneys and structured settlement consultants.

CONCLUSION: To achieve strategic success, it is important for NSSTA to link its educational programming with its Growth Initiative opportunities and priorities. From S2KM's perspective, NSSTA's Educational Committee Co-Chairs Jordan Bossler and Nolan Robinson, and NSSTA's Executive Administrator Debbie Sink, should be congratulated for accomplishing that objective to a remarkable degree in San Francisco. In particular, NSSTA's 2017 Annual Conference presentations focusing on rejuvenating defense programs, as well as those featuring structured settlement recipients and special needs attorneys, should provide NSSTA with a solid foundation for future educational programming and help NSSTA with strategic and legislative prioritization. For S2KM reports about prior NSSTA educational conferences, see the structured settlement wiki.

NSSTA 2016 Annual Conference

Len Blonder is a structured settlement pioneer now beginning an unprecedented third term as President of the National Structured Settlement Trade Association (NSSTA). It may seem counterintuitive, therefore, or perhaps wishful thinking, but one could describe NSSTA's 2016 Annual Conference, which occurred April 6-8 in Palm Beach Gardens, Florida April 6-8, as a "New Beginning."

Following the transformative leadership of Michael Goodman, NSSTA's immediate past President, however, the opportunity for such a new beginning now exists and the 2016 NSSTA Annual Conference Educational Program outlined some of the future possibilities.

TOPICS AND SPEAKERS

• Opening Remarks - Michael Goodman
• NSSTA Objectives - Len Blonder
• Settlement Experiences and Aftermath - Michael Goodman (Moderator); Tania Root; Todd Falzone, Esq.
• Wrongful Imprisonment: Claimant Story - Michael Goodman (Moderator); Kwame Ajamu
• Structuring Wrongful Imprisonment Claims - John McCulloch and Ryan Jandreau
• Trusts and Structured Settlements - Dan McCarthy (Moderator); Phillip Krause; Tim Denehy
• Mediators and Structured Settlements - Connie Klingler (Moderator); Hyram Montero; Len Blonder
• Projecting Future Economic Damages After the ACA - Roger Bernstein; Noah Katz; Nichole Segal
• Property & Casualty Insurance Program Growth - (Michael Goodman and Len Blonder - Moderators); David Crowe; Richard Woollams
• Legislative and Political Update - Eric Vaughn
• NSSTA Growth Initiative Update - Sean Coleman (Moderator); Jim Early; Melissa Evola Price; Ryan Jandreau
• SSPA Success Stories - Michael Goodman (Moderator); Andy Prindable; Sally Greenberg
• NSSTA Legal Update - Tim O'Driscoll; Peter Vodola; Steve Harris

S2KM COMMENTARY ON SELECTED TOPICS

NSSTA Growth Initiative

During Goodman's Presidency, NSSTA revised its historic and defensive "protect and preserve" strategy by embracing a new "Growth Initiative" which already appears to have generated new energy and improved "community" spirit. Progress reports for preliminary "Growth Initiative" priorities [re-starting P&C programs; convertible lump sums; and Federal Employee Compensation Act (FECA) amendment(s)] were all positive. Equally important, the overall theme was forward looking asking: "How can we move forward? How can we change the dialogue?"

Supporting its "Growth Initiative", NSSTA has also expanded its industry outreach and networking with other professional associations. Improved relationships among NSSTA, the Society of Settlement Planners (SSP) and the National Association of Settlement Purchasers (NASP) has helped unify the structured settlement market. Working together, NSSTA and NASP have added important consumer protection provisions to five state structured settlement protection statutes. As one result, Goodman declared in his Opening Remarks: "we can no longer use factoring as an excuse for not growing the industry."

Len Blonder Presidency

How will Blonder, a 38 year plus industry veteran who, as much as any single individual, has been personally responsible for "protecting and preserving" the tax foundation for structured settlements, respond to NSSTA's current leadership challenges and market opportunities?

"The times are changing and we must change", Blonder stated, as he addressed NSSTA's membership to begin his third term as President. "The business is more complicated. We must determine how the parts fit together. Despite plaintiff growth, defendants remain indispensable to structured settlements. Defendants must continue to play a key role."

Unless NSSTA faces an unexpected crisis, Blonder said his plans for NSSTA include continued industry and community growth. Based upon the preliminary success of the "Growth Initiative", Blonder announced it would become a permanent NSSTA committee and expand its current list of priorities. As a result of recent state legislative successes, Blonder stated he expects NSSTA to spend less time on factoring legislation and more time on judicial education during his term as president.

Among NSSTA's challenges and priorities, Blonder highlighted: growing NSSTA's membership and increasing membership diversity; continuing to improve relationships with outside associations; and improving public relations generally for both NSSTA and structured settlements.

Re-starting P&C Programs

Speaking as part of a panel discussing Property and Casualty Company Program Growth, Richard Woollams, President of Claims for AIG Commercial Insurance, provided a contrarian perspective concerning future structured settlement growth and industry change. Asked to predict what the structured settlement market will look like in five years, Woollams opined: "the same as today with more broker consolidation and better technology."

Woollams also identified reasons why some P&C companies have reduced their structured settlement program participation: "competing priorities; increasing compliance requirements; and inertia". Woollams further challenged NSSTA's membership by stating: "in workers compensation cases, the savings for defendants is obvious. Can you quantify the cost savings with liability cases? Even a couple of points pays for program compliance and administration."

Woollams' challenge concerning "cost savings for liability cases" echoes findings about "metrics and analytics" from a 2011 study (titled: "National Litigation Management Study") commissioned by the Claims and Litigation Management (CLM) Alliance (formerly "the Council on Litigation Management") as well as NSSTA's own 2014 survey of Senior Claim Advisors conducted by CLM Advisors.

Based upon interviews with leading litigation management executives, the 2011 CLM Alliance study identified structured settlement as the "most penetrated external initiative" among 30 litigation-related service areas analyzed. Another "key finding" that emerged from the answers to the more than 160 questions covered in that 2011 CLM Alliance study: "litigation executives are not happy with the metrics and analytics available to them."

Also relative to metrics and analytics, NSSTA's 2014 survey of senior claims executives found:

• Only 20 percent of the participants reported having any set of objectives around the use of structured settlements.
• A majority of the participants did not measure referral volume and only half measure the volume of successfully written structures.

Affordable Care Act

A separate NSSTA conference panel discussion about the Affordable Care Act (ACA) titled "Projecting Future Economic Damages After the ACA and Collateral Source Rule Changes" highlighted one way NSSTA members can utilize structured settlements to quantify potential cost savings for defendants. That being part of an expert team that provides defendants with two-tier (with and without ACA coverage) case specific calculations of future economic damages.

As NSSTA's ACA panel pointed out, the admissibility of ACA coverage for trial purposes (both for evidence and damage calculation) depends upon the common law collateral source rule which not only varies by state, but also is subject to current, state-specific post-ACA legal disputes as to applicability. This contested claims environment, plus the applicable expert damage team recommended by the NSSTA panel (featuring a structured settlement broker), represents both a strategic growth opportunity for NSSTA members as well as a priority for continued in-depth education.

Trusts and Structured Settlements

The NSSTA conference panel discussing "Trusts and Structured Settlements" provided another window for viewing potential structured settlement change and growth. Contrary of traditional structured settlement perspectives, which view trusts as competitive products in a zero sum settlement game, panelist Tim Denehy (who identified himself as a "settlement planner" offering trusts and structured settlement annuities) insisted: "A structured settlement does not solve every problem. However, by offering additional products, I can sell more structures."

Fellow trust panelist Phillip Krause, who also sells multiple settlement products, stated: "I analyze products as an investment fiduciary." He added, however: "There is more potential liability with a multi-product model." As an alternative to a multi-product model, Krause suggested structured settlement brokers might partner with, or delegate product sales to, a trust provider. Moderator Dan McCarthy supported a more traditional approach saying he continues to defer to plaintiff attorneys' relationships with banks and trust companies.

NSSTA has been slow to explore and/or embrace the evolving settlement planning profession in which structured settlement annuities, as well as trusts, represent strategic, interactive products. Other professional associations, especially SSP and the Academy of Special Needs Planners (ASNP), have been more proactive than NSSTA in analyzing settlement planning issues. As more plaintiff brokers offer trusts and other non-structured settlement products, and share commissions with defense brokers, NSSTA should consider helping its members better understand how settlement planning impacts the sale of structured settlements - creating new opportunities as well as risks.

Structuring Wrongful Imprisonment Claims

John McCulloch and Ryan Jandreau traced the history and explained the significance of IRC 139F which was enacted December 21, 2015 as part of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). "In the case of any wrongfully incarcerated individual," IRC section 139F provides: "gross income shall not include any civil damages, restitution, or other monetary award (including compensatory or statutory damages and restitution imposed in a criminal matter) relating to the incarceration of such individual for the covered offense for which the individual was convicted." Damages paid for wrongful imprisonment, however, which are not derived from a personal, physical injury, are not eligible for an IRC section 130 qualified assignment. Although the exact number of exonerees is not known, McCulloch and Jandreau cited sources estimating approximately 4000 nationally over the past 15 years.

NSSTA DIRECTORS AND AWARD WINNERS - NSSTA announced the election of two Directors: Mal Deener and Ryan Jandreau. In addition, the following individuals were honored during the conference:

• President's Award - Debbie Sink
• Leadership Award - Susan Clark and Robert Caples
• Service to the Industry Award - Andrew McClain

CONCLUSION

Assuming NSSTA's 2016 Annual Conference represents a "New Beginning" for the structured settlement industry, the upcoming year will be one of the most important, if not the most important, in NSSTA's history. Based upon his leadership experience and prior accomplishments, Len Blonder appears uniquely qualified to help NSSTA determine how the parts of an increasingly complicated business fit together in order to continue to grow structured settlement annuity sales and improve the lives of personal injury victims.

CORRECTIONS AND  OMISSIONS

S2KM began receiving valuable feedback to this blog post almost immediately following its publication. Examples:

The second paragraph under "Trusts and Structured Settlements" above has been changed from what originally appeared in this blog post, at the request of Phillip Krause, to clarify that he used the word "investment" and not the word "professional." Krause explained: "An 'investment fiduciary' is a specific role within the management of a Trust. The Trustee delegates or directs investment decisions to the 'investment fiduciary.' The role of 'investment fiduciary,' is separate from the role of a 'structured settlement consultant.' An investment fiduciary uses registered investments with the SEC/FINRA.  A broker dealer may also be involved in the approval of the appropriateness of investments held within the Trust.  The oversight by an OSJ or compliance officer is also common."

S2KM could (still might) write an entire blog post about the informative "Property & Casualty Insurance Program Growth" discussion moderated by Michael Goodman and Len Blonder and featuring Richard Woollams and David Crowe. Some of Woollams' comments appear in the original blog post. Crowe also offered valuable insights and recommendations for re-starting P&C structured settlement programs including the importance of: 1) identifyinging one or more internal structured settlement "champions"; 2) showing the impact on a P&C's bottom line; 3) defense and plaintiff brokers working together for a more efficient settlement process; 4) attracting bright young professionals to the structured settlement industry - a problem, he stated, is shared more generally by the insurance industry.

NSSTA Marketing Surveys - Plaintiff Attorneys

The National Structured Settlement Trade Association (NSSTA) has previously announced an "Industry Growth Initiative" - "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement marketplace" - which appears to focus multiple growth-oriented goals NSSTA president Michael Goodman identified during NSSTA's 2015 Annual Meeting.

Although the first progress report for its Growth Initiative will not occur until NSSTA's 2015 Fall Educational Meeting, expanded use by traditional stakeholders represents one logical priority - a priority which NSSTA highlighted during 2014 by commissioning CLM Advisors to conduct a three-part survey of senior claims executives (Part 1); front line claims professionals (Part 2); and plaintiff attorneys (Part 3).

S2KM has previously reviewed Part 1 and Part 2 of NSSTA's structured settlement survey - the results of which NSSTA has made available to its members, including S2KM. NSSTA and CLM Advisor representatives have also provided their own interpretive analyses of these surveys during prior NSSTA educational conferences.

This blog post discusses selected portions of Part 3 (Titled: "Plaintiff Attorney Survey of Structured Settlements") the results of which: 1) NSSTA has made available to its members, including S2KM; 2) neither NSSTA nor CLM Advisors has yet to discuss or analyze during a NSSTA educational conference. 130 attorneys participated in the Part 3 survey. Not every attorney responded to every question.

S2KM INTRODUCTION

Until the Weil lawsuit settled in 1996, defendants retained exclusive control of structured settlements. Many defense brokers, as well as their liability insurance company clients, historically have referred to unsuccessful sales as "cash outs". As a general rule, their professional interests in structured settlements have been narrowly defined and focused upon their own product to the exclusion of other settlement related financial and insurance products.

To a much greater extent than defense brokers, plaintiff structured settlement brokers (and settlement planners, their evolutionary progeny) face direct competition from other product and service providers who market to plaintiff attorneys. These settlement planning product and service providers include: tax attorneys, special needs attorneys, settlement trustees, financial planners, life care planners, case managers, economists, Medicare set-aside (MSA) specialists and damage allocators - as well as structured settlement consultants. In response, many plaintiff structured settlement brokers and settlement planners increasingly offer financial and insurance products and services which extend beyond structured settlements.

Regardless of case complexity, or the involvement of other settlement planning professionals, plaintiff attorneys continue to perform the following essential settlement planning roles:

• Recognizing settlement planning issues which impact their clients;
• Recommending appropriate settlement planning professional resources to their clients; and
• Retaining ultimate responsibility for effectuating settlements.

For these reasons, plaintiff attorneys represent the primary marketing target for companies and professionals offering settlement planning services - as well as a logical priority marketing target for growing the structured settlement market.

To effectively analyze the growth opportunities and obstacles for structured settlements and structured settlement brokers from the plaintiff attorney's perspective, therefore, both need to be viewed (and surveyed) in a broader context - as subsets of, and participants in, the larger and more complex personal injury settlement planning market. Although the results of NSSTA's Part 3 Survey provide valuable marketing information, the survey questions neither attempt nor accomplish this more comprehensive objective.

This shortcoming is understandable - even predictable. CLM Advisors, which conducted all three of the NSSTA surveys, is an affiliate of Claims and Litigation Management (CLM) Alliance - "the only national organization created to meet the needs of professionals in the claims and litigation management industries". Perhaps as a result, NSSTA's Part 3 Survey has a defense-oriented, historic quality. Some of their survey questions use awkward or unfamiliar language ("ancillary products to structures"). Some important issues (fiduciary responsibilities) are only addressed obliquely. Other important topics (Non-Qualified Assignments; Qualified Settlement Funds; Affordable Care Act) are not addressed at all.

Borrowing a phrase from an excellent presentation titled "Marketing Attorney Fees", delivered by Spooner Phillips and Rebecca Metzger at NSSTA's inaugural Structures 202 Conference, and applying it more broadly, perhaps it's time for proponents of structured settlements to "change the conversation" when marketing to plaintiff attorneys.

NSSTA SURVEY PART 3 SELECTED RESPONSES WITH S2KM COMMENTS

• 40% of respondents stated low interest rates have not negatively affected their perception of structured settlements.
• 67% said factoring has no impact on their willingness to consider a structured settlement or that they are indifferent to the factoring industry.

S2KM Comment: These findings should encourage NSSTA members to re-think standard explanations for recent lackluster industry sales results. They also support two of the seven goals Michael Goodman has identified for NSSTA during his term as president.

• 89% believe they "have adequate knowledge of structured settlements so that [they are] able to recognize when they would be in the best interest of an injured party..."
• Only 28% said they suggest a structured settlement for cases involving Medicare set-asides (MSAs).

S2KM Comment: Similar to NSSTA surveys Parts 1 and 2, Part 3 identifies a need and opportunity to educate all structured settlement stakeholders to the advantages of funding MSAs with structured settlements including their inherent cost advantage compared with lump sums resulting from current CMS regulations for calculating present values.

• Less than 25% are likely to have a client sign a letter acknowledging that they were exposed to the opportunity to structure a portion of their settlement before opting for an all cash settlement.

S2KM Comment: Every plaintiff structured settlement broker and settlement planner who sells structured settlements should be familiar with the Grillo case and use it help educate plaintiff attorneys about their potential liability for not advising their clients about structured settlements.

• 40% said they felt obligated to introduce the idea of a structured settlement to a client if a case has a value between $101,000 and $500,000.
• An additional 32% felt obligated for cases having a value in excess of $500,000.

S2KM Comment: Although there is nothing inherently wrong with utilizing case values to identify potential structured settlement cases, this approach represents a more traditional, defense-oriented methodology rather than a plaintiff-oriented, comprehensive planning methodology that attempts to match products to needs.

• 48% stated the most significant drawback of a structured settlement is lack of liquidity.

S2KM Comment: NSSTA and its members should carefully consider how to improve primary market sales by proactively addressing this finding based upon the following, previously highlighted finding: 67% said factoring has no impact on their willingness to consider a structured settlement or that they are indifferent to the factoring industry.

• Only 4% view structured settlement consultants as adding value for negotiations and/or case evaluations separate from, or in addition to, their knowledge of structured settlements.
• 35% stated that structured settlement consultants fail to deliver value because they are concerned with structuring as much of a settlement as possible.
• 52% contact a structured settlement broker one week (possibly less) prior to a mediation.
• 38% make contact only after a case settles.
• 40% said they would use the defendant's structured settlement consultant.
• Only 20% assume a defendant will be offering more money if a defense structured settlement consultant is present.
• 38% work with financial planners instead of structured settlement consultants - at least on some cases.

S2KM Comment: This feedback provide an excellent starting point for NSSTA and its members to think strategically about how to increase structured settlements sales within the larger, more complex personal injury settlement planning market.

• Only 26% have ever structured their fees.

S2KM Comment: Similar to MSAs, structured attorney fees appear to represent an underdeveloped opportunity to grow the structured settlement market. Among the significant takeaways from the Structures 202 "Marketing Attorneys Fees" presentation referenced above: 1) the presenters were a settlement planner, who sells multiple products including structured settlement annuities, and a tax attorney; 2) their recommended sale encompasses tax, business, retirement and estate planning.

CONCLUSION

Although somewhat circumscribed by a traditional, defense perspective, NSSTA's Part 3 Survey of plaintiff attorneys provides valuable information for re-positioning the structured settlement industry for additional growth within the personal injury settlement market. The findings support and supplement the goals for growth previously identified by NSSTA president Michael Goodman and should assist NSSTA's Growth Initiative Committee in formulating its strategic priorities.

NSSTA Marketing Surveys - Claims Professionals

The National Structured Settlement Trade Association (NSSTA) recently announced an "Industry Growth Initiative" - "which is designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement marketplace."

Among the structured settlement growth opportunities, expanded use by traditional stakeholders represents one priority - a priority which NSSTA highlighted during 2014 by commissioning CLM Advisors to conduct a three-part survey of senior claims executives (Part 1); front line claims professionals (Part 2); and plaintiff attorneys (Part 3).

S2KM previously summarized and analyzed Part 1 of NSSTA's survey consisting of senior claims executives from ten leading insurance carriers "of varied size ... whose book of business and style of operation lends itself to the use of structured settlements" and who do not underwrite their own structured settlements.

This blog post compares and comments upon selected findings from Part 2 of NSSTA's survey (Front Line Claims Professionals). Results of NSSTA's Part 2 survey were first reported to NSSTA members at NSSTA's Fall 2014 Educational Conference, by Jeff Livingston, Susan Clark and Taylor Smith. The results were also summarized in an article titled "Understanding Structured Settlements", written by Kevin Silo and Taylor Smith, which appeared in the May 2015 issue of "Claims Management" magazine.

Part 2 of NSSTA's survey was titled: "What P&C Claims Professionals Think About the Value of Structured Settlements and the Consultants They Work With." It consisted of 103 responding front line claims professionals, 97% of whom had more than 8 years of claims experience. The participants represented 14 insurance carriers which, although "diverse in size, lines of business, and geographic focus", do not utilize affiliate life companies to write structured settlement annuities. S2KM has made no attempt to determine the extent to which the insurance carriers involved in the first two NSSTA surveys overlap.

CONCLUSIONS

As the summary and analysis below indicates, there appear to be multiple and significant disconnects between how front line claims professionals and senior claims executives view structured settlements and structured settlement consultants. To reconnect these two groups of important structured settlement stakeholders and improve industry performance more generally, S2KM recommends increased prioritization on program analytics and metrics.

For defense brokers, the most troubling, yet opportunistic, results of NSSTA's Part 2 survey appear to be: 1) the surprisingly low percentage of front line claims professionals who believe the involvement of a structured settlement consultant makes a claim more likely to settle; and 2) the relatively low rating they give to the helpfulness of attendance by consultants at settlement conferences and mediations,

Additional strategic questions defense brokers should be asking themselves following NSSTA's Part 2 survey: 1) how can they help improve their clients' structured settlement educational programs? and 2) what new, unique "value added" knowledge, if any, will they provide to their clients, customers and other settlement planning professionals in the context of a changing legal and claims environment?

S2KM SUMMARY AND ANALYSIS - Selected NSSTA Part 2 Survey Questions and Responses - with Comparisons to Part 1 Survey Responses from Senior Claims Executives

Does your organization have a formalized program which requires you to use a specific structured settlement company or consultant?

• RESPONSE: 45% do not or do not know.
• COMPARE SENIOR CLAIMS EXECUTIVES:
  • Almost all Part 1 survey participants viewed their companies as having a "formal" structured settlement program either as an exclusive (one broker partner) or preferred (approved broker partner) program.
  • Only 20 percent of the survey participants reported having any set of objectives around the use of structured settlements.
• S2KM COMMENT: This response appears to indicate a significant disconnect between a high percentage of the participating front line claims professionals and their senior claims executives (perhaps also with their broker "partners") related to their companys' structured settlement programs. It also suggests the need for appropriate structured settlement metrics and analytics as well as better education and program management. For additional S2KM commentary about structured settlement metrics and analytics in the context of NSSTA's Part 1 survey, see this prior blog post.

Does your company educate you about how structured settlements help to settle claims?

• RESPONSE: More than 40% receive no education. Only 54% would like more education.
• COMPARE SENIOR CLAIMS EXECUTIVES: 100 per cent of the survey participants said their companies could do more to proactively use structured settlements.
• S2KM COMMENT: An apparent conflict exists among front line claims professionals between the need for structured settlement education and the desire for more education. Depending upon alternative company priorities, including educational priorities, additional structured settlement education, linked with and to appropriate structured settlement metrics and analytics, represents the type of proactive commitment senior claims executives and structured settlement brokers should discuss to improve program performance.

Preferred areas for more education.

• RESPONSE:
  • MSAs - 71%
  • Benefits of structures - 55%
  • Settlement and negotiation strategies - 53%
• COMPARE SENIOR CLAIMS EXECUTIVES: Survey participants would value more educational and informational services from structured settlement consultants on such topics as: 1) their facilitation roles; 2) MSA requirements; 3) structured settlement benefits; 4) internal rates of returns; 5) industry developments and trends; 5) case specific advice including post-mortems and how claim handlers perform.
• S2KM COMMENT: Front line claims professionals and senior claims executives agree on the importance of MSA education and a need for more information about the benefits of structured settlements. Although MSAs, at present, are primarily limited to workers compensation cases, MSAs (including liability MSAs) represent a strategic growth opportunity for structured settlements. The assumed "benefits" of structured settlements may not be obvious or adequately demonstrated. For examples, in the Part 1 survey, most senior claims executives disagreed with two traditional structured settlement value propositions (achieve earlier settlements; benefit to society). Professed structured settlement benefits should be confirmed with appropriate metrics and analytics.

How important do you believe it is to your Company that you use a structure in all “appropriate situations?”

• RESPONSE: Only 53% gave a score of greater than 5 (on a scale of 1 to 10).
• COMPARE SENIOR CLAIMS EXECUTIVES: Survey participants, on average, believed their companies utilized structured settlement consultants in only 66 percent of appropriate cases.
• S2KM COMMENT: This response identifies another apparent disconnect between front line claims professionals and senior claims executives (relative importance of structured settlements in appropriate cases) representing a potential priority for education, metrics and analytics to improve structured settlement program performance.

What is the biggest obstacle to using structures more frequently on your cases?

• RESPONSE:
  • Plaintiff objection - want cash
  • Low interest rates/rate of return - responding to a separate, related question, 58% of the responding front line claims professionals said current interest rates affected their perception of the value of structured settlements.
  • Low case value
• COMPARE SENIOR CLAIMS EXECUTIVES:
  • Most of the claims executives surveyed believed structured settlement utilization has not decreased during the past three years but has decreased during the past 10 years - and that lower interest rates are the primary factor.
  • Survey participants disagreed with the following structured settlement value propositions:equally effective on smaller and larger claims.
• S2KM COMMENT: During the NSSTA 2015 Annual Meeting, NSSTA president Michael Goodman identified "moving beyond 'interest rate selling'" as an industry priority which presumably NSSTA will incorporate into the educational component of its "Industry Growth Initiative". Responses from both front line claims professionals and senior claims executives suggest a need to rethink the historic push to broaden the application of structured settlements to lower value cases.

What is your average success rate, defined as the ratio of quotes you obtain vs. the number of claims you successfully settle with a structure?

• RESPONSE: 40%
• COMPARE SENIOR CLAIMS EXECUTIVES: A majority of the survey participants do not measure referral volume and only half measure the volume of successfully written structures.
• S2KM COMMENT: Based upon other survey responses, including the "obstacles to using structured settlements" identified in the previous question, and S2KM's experience, this response appears high and potentially self-serving. It could easily be confirmed or negated with appropriate metrics and analytics.

All other things being equal, would you prefer to settle your cases with cash, an annuity, or a combination of both?

• RESPONSE: Only 50% said cash.
• COMPARE SENIOR CLAIMS EXECUTIVES: Although in agreement, survey participants viewed two traditional structured settlement value propositions less strongly: 1) lower claims payouts; and 2) earlier claims resolution.
• S2KM COMMENT: The question seems confusing with the answer depending upon how the respondents interpret "all other things being equal". A better, multi-response question might be: assuming you do not save money or achieve earlier claims resolution using structured settlements, what types of cases, if any, would you attempt to structure and why?

Do you believe the involvement of a structured settlement consultant in a claim makes that claim more likely to settle?

• RESPONSE: 54% said it has no effect on settlement. In response to a separate question asking front line claims professionals to rate the helpfulness of attendance by consultants at settlement conferences and mediations, only 60% answered with scores greater than 5 (on a scale of 1 to 10).
• COMPARE SENIOR CLAIMS EXECUTIVES:
  • 90 percent believed involvement of a structured settlement consultant made a case more likely to settle.
  • Two thirds of the survey participants believed that front line claims professionals in their organizations shared their perspective on a consultants' value.
• S2KM COMMENT: These responses by front line claims professionals should be especially troubling to defense structured settlement brokers and appear to a indicate a significant disconnect between front line claims professionals and senior claims executives. Most structured settlement brokers believe their attendance at settlement conferences and mediations substantially improves the likelihood for sales success. Improving the response to this question, and closing the related disconnect with senior claims executives, represents an important strategic opportunity for defense brokers.

What are the primary values that a consultant brings to the table (separate from the annuity)?

• RESPONSE:
  • Effective communication
  • Bridging the gap
  • Knowledge, expertise, neutral file evaluation
  • Trust and credibility
• COMPARE SENIOR CLAIMS EXECUTIVES:
  • Survey participants viewed consultants' primary value proposition related to their knowledge of, and ability to sell, structured settlements.
  • 90 per cent of the survey participants believed consultants do a good job of describing their value.
• S2KM COMMENT: This response appears to indicated a different type of disconnect. The primary values identified by front line claims professionals seem extremely important, individually and collectively, for achieving effective settlements. So what explains the relatively weak (or lack of) endorsement these same respondents provide above when asked: 1) Do you believe the involvement of a structured settlement consultant in a claim makes that claim more likely to settle? 2) How helpful is consultant attendance at settlement conferences and mediations? Because of the assumed significance of broker attendance for achieving a structured settlement sale, these related, but contradictory, findings require additional analysis - and may be the most important discovery of Parts 1 and 2 of the NSSTA surveys.

Rank the value of your consultants’ experience and knowledge on a scale of 1-10?

• RESPONSE:
  • 71% greater than 5. 25% gave a 10 (on a scale of 1 to 10).
  • Responding to a separate question, 70% of the respondents rated their own loyalty to their structured settlement consultants as greater than 5 on a 1-10 scale. 25% rated their loyalty as 10.
• COMPARE SENIOR CLAIMS EXECUTIVES: Two thirds of the survey participants believed that consultants skills have stayed the same, while the other one third said the skills have improved, when compared to 10 years ago.
• S2KM COMMENT: Defense brokers should not be self-satisfied with these results. As indicated above, almost all Part 1 senior claims executive survey participants viewed their companies as having a "formal" structured settlement program either as an exclusive (one broker partner) or preferred (approved broker partner) program. Unlike plaintiff structured settlement brokers, defense brokers do not compete directly with financial planners and/or settlement trustees. In other words, most front line claims professionals have limited broker options and almost no performance comparisons.

What are the top 3 Areas for Consultant Improvement?

• RESPONSE:
  • Persuasiveness
  • Responsiveness
  • Ease of quoting
• COMPARE SENIOR CLAIMS EXECUTIVES: Other recommendations: 1) expand Medicare services; 2) add online resources to price benefits; 3) obtain references from defense counsel.
• S2KM COMMENT: Among the responses from front line claims professionals "ease of quoting" stands out in part because it doubles down on the senior claims executives' recommendation to "add online resources to price benefits". The concerns here for defense structured settlement brokers should be: 1) whether, and to what extent, their product-specific structured settlement knowledge has become a commodity? 2) what new, unique "value added" knowledge, if any, will they provide to their clients, customers and other settlement planning professionals?

NSSTA Marketing Surveys - Senior Claims Executives 3

Senior claims executives of property and casualty insurance companies have represented one of the most important advocate groups supporting structured settlements since the concept was first introduced in the late 1970s.

During 2014, the National Structured Settlement Trade Association (NSSTA) commissioned a survey of senior claims executives as Part 1 of a three-part survey project, conducted by CLM Advisors, which also included claims professionals (Part 2) and plaintiff attorneys (Part 3).

The purpose of NSSTA's survey of senior claims executives was "to generate ideas and a foundation for developing an effective marketing strategy for this industry segment."

This purpose complements the more recent NSSTA "Industry Growth Initiative" which is "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement industry marketplace."

NSSTA's survey of senior claims executives confirmed continuing support among survey participants for structured settlements as well as their perception that structured settlement consultants add value to the liability insurance claims process. 100 per cent of the senior claims executives who participated in the survey said their companies could do more to proactively use structured settlements.

In two prior blog posts, S2KM summarized NSSTA's survey of senior claims executives and discussed the importance of metrics and analytics in formulating an improved and updated marketing strategy for this strategic group of structured settlement advocates. This blog post offers additional S2KM commentary about selected findings from the NSSTA survey.

Structured Settlement Value Propositions

SURVEY FINDINGS: The strongest value propositions for using structured settlements, as viewed by the survey participants: 1) addressing future medical expenses; 2) "needs-based" negotiation; 3) addressing future lost wages; 4) adds no additional work.

S2KM COMMENT: In serious personal injury cases, "needs based" negotiation, as well as proactive defense of damages, are both premised upon economic loss analysis, life care planning and damage allocation. Preparation of the necessary, related work product generally is assigned to outside experts - including structured settlement consultants who are traditionally compensated by contingent commissions paid by annuity providers. Nevertheless, the "strongest value propositions" (1-3) identified above do add additional work and costs to traditional claims practices. If properly implemented, however, these same structured settlement propositions should achieve justifiable reductions in claims costs. To sustain these positive survey findings, structured settlement consultants should consider recommending and helping to implement appropriate metrics and analytics.

SURVEY FINDINGS: Although still in agreement, survey participants viewed two traditional structured settlement value propositions less strongly: 1) lower claims payouts; and 2) earlier claims resolution.

S2KM COMMENT: "Lower claims payouts" and "earlier claims resolution" represent two of the most important traditional justifications for defense utilization of structured settlements. These survey findings suggest structured settlement consultants should either: 1) adjust their traditional sales presentation to senior claims executives; or 2) recommend and help implement appropriate metrics and analytics to support these justifications.

SURVEY FINDINGS AND S2KM COMMENTS: Survey participants disagreed with the following structured settlement value propositions:

• Achieve earlier settlements - This finding appears to repeat (with even less support) the survey finding above for "earlier claims resolution".
• Benefit to society - Historically, in S2KM's experience, senior claims executives have been strong supporters of the public policy justification for structured settlements - i.e. that structured settlements prevent the dissipation of lump sum settlements. The most likely explanations for this change in perspective: 1) factoring; 2) how structured settlement consultants discuss factoring with their clients generally and, for purposes of this survey, with senior claims executives specifically. In S2KM's opinion, growing the structured settlement market will require structured settlement consultants to become better informed about the secondary market and to more positively incorporate references to the secondary market into their selling proposition.
• 35 per cent savings on MSAs - This finding probably can be explained, in part, by use of the number "35 per cent" - the questionable use of an unsupported metric in a survey question. The structured settlement industry has a bad habit of using unsubstantiated metrics to support the sale of their product. For Medicare set-asides (MSAs), this is both unnecessary and easily correctable. Unnecessary because, at least for workers compensation MSAs, CMS has provided structured settlement annuities with an inherent cost advantage compared with lump sums. For details, see this prior S2KM blog post. Correctable, assuming NSSTA offers its members an educational program explaining this cost advantage so that NSSTA members, in turn, can better educate senior claims executives and thereby increase structured settlement sales.
• Equally effective on smaller and larger claims - One key related question is whether, and to what extent, structured settlement consultants, annuity providers and property casualty insurers want to pursue structured settlements on "smaller" claims - and what constitutes "smaller" for this consideration. In other words, based upon past experience, what is the cost-benefit breakeven claim reserve or annuity premium number for each of these three stakeholder groups?

Structured Settlement Consultants

SURVEY FINDINGS: 90 per cent of the survey participants believed: 1) consultants do a good job of describing their value; and 2) involvement of a structured settlement consultant made a case more likely to settle. Two thirds of the survey participants believed that front line claims professionals in their organizations shared their perspective on a consultants' value. Yet, survey participants, on average, believed their companies utilized structured settlement consultants in only 66 percent of appropriate cases.

S2KM COMMENT: There are several possible explanations for the apparent under utilization of structured settlement consultants. For examples: The "seat of the pants" 66 percent metric could be wrong and would be worthwhile confirming. Senior claims executives and front line claims professionals might not necessarily share the same perspective on the value of a structured settlement consultants. See S2KM's subsequent blog review of NSSTA's survey (Part 2) of claims professionals for more details.

SURVEY FINDINGS:

• Survey participants viewed consultants' primary value proposition related to their knowledge of, and ability to sell, structured settlements.
• Two thirds of the survey participants believe that consultants skills have stayed the same, while the other one third say the skills have improved, when compared to 10 years ago.

S2KM COMMENT: Results (including the findings below) from NSSTA's survey of senior claims executives suggest the need for structured settlement consultants to improve their skill sets and services including: 1) identifying, developing and implementing metrics and analytics; 2) adding and/or improving: claim management advice and evaluations; negotiation facilitation; MSA and online services.

Additional Marketing Feedback

SURVEY FINDINGS:

• Survey participants would value more educational and informational services from structured settlement consultants on such topics as: 1) their facilitation roles; 2) MSA requirements; 3) structured settlement benefits; 4) internal rates of returns; 5) industry developments and trends; 5) case specific advice including post-mortems and how claim handlers perform.
• Other recommendations: 1) expand Medicare services; 2) add online resources to price benefits; 3) obtain references from defense counsel.

S2KM COMMENTS: Industry developments and trends include complex and controversial issues which sometimes create potential conflicts of interests for NSSTA members with their clients. Examples relating to senior claims executives could include: lawsuits against defense brokers; fiduciary standards; single claimant QSFs; re-cycled structured settlements. True professionals will know when and how to address such issues to keep senior claims executives properly informed to protect and promote their own (senior claims executives')  company interests - before their clients learn about these issues, or receive more helpful advice, from competitors or other sources.

In subsequent blog posts, S2KM will summarize and evaluate Part 2 (claim professionals) and Part 3 (plaintiff attorneys) of NSSTA's recent three-part survey project.

S2KM summarized historic structured settlement surveys which preceded NSSTA's three-part survey project in this prior blog post.

NSSTA Marketing Surveys - Senior Claims Executives 2

The National Structured Settlement Trade Association (NSSTA) has established a new NSSTA "Industry Growth Initiative,"  "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement industry marketplace."

A recent three-part survey commissioned by NSSTA, and conducted by CLM Advisors, of NSSTA members' traditional sales targets (senior claims executives; claims professionals; plaintiff attorneys) offers valuable insights for NSSTA's Growth Initiative and therefore is the subject of an S2KM blog series. S2KM summarized NSSTA's survey of senior claims executives in this prior blog post.

When interpreting some of the key findings from NSSTA's survey of senior claims executives, it is useful to compare the findings from a separate 2011 study (titled: "National Litigation Management Study") commissioned by the Claims and Litigation Management (CLM) Alliance (formerly "the Council on Litigation Management"). CLM Alliance is the parent company of CLM Advisors, the company that conducted the three-part survey project for NSSTA.

Two findings from the 2011 CLM Alliance study are significant for structured settlements and for interpreting key findings from NSSTA's 2014 survey of senior claims executives.

• Based upon interviews with leading litigation management executives, the 2011 CLM Alliance study identified structured settlement as the "most penetrated external initiative" among 30 litigation-related service areas analyzed.

• Another "key finding" that emerged from the answers to the more than 160 questions covered in that 2011 CLM Alliance study: "litigation executives are not happy with the metrics and analytics available to them." Note: this finding was not limited to structured settlements.
  

An article in the Fall 2011 issue of CLM's "Litigation Management Magazine", discussing the 2011 CLM Alliance study, further describes a "shift in thinking" among litigation executives about metrics and analytics applicable to national service provider programs such as structured settlements:

"These programs are about much more than cost savings, although the savings can be substantial and can be in and of themselves a primary motivation to create these programs. To be truly successful, national service programs must be able to deliver the very metrics and analytics that participants said they are seeking: quality, performance, satisfaction levels. These are the metrics that a national service provider must be able to give to its clients in today's environment."

NSSTA's 2014 survey of senior claims executives confirmed continuing support among survey participants for structured settlements as well as their perception that structured settlement consultants add value to the liability insurance claims process. 100 per cent of the senior claims executives who participated in the survey, however, said their companies could do more to proactively use structured settlements:

Relative to metrics and analytics, NSSTA's survey found:

• Only 20 percent of the participants reported having any set of objectives around the use of structured settlements.
• A majority of the participants did not measure referral volume and only half measure the volume of successfully written structures.

Collaborating with individual property and casualty insurance companies (or associations such as the CLM Alliance) to identify, develop, improve, implement and measure structured settlement metrics and analytics, therefore, should represent one important marketing priority and program foundation for improving structured settlement sales.

Neither the CLM Alliance 2011 study nor NSSTA's 2014 survey recommend specific metrics or analytics to determine the effectiveness of, or to define "success" for, structured settlement programs.

Using the NSSTA 2014 survey and the CLM 2011 study as points of reference, here are some questions structured settlement brokers might discuss with senior claims executives to develop such metrics and analytics:

• How do you define whether your structured settlement program is successful?
• What performance metrics help you evaluate the effectiveness of your structured settlement program?
• How effective are your metrics and analytics in measuring success?
• Which metric is most important?
• Which metric is most difficult to obtain or confirm?
• Do structured settlements increase or decrease your claims costs?
• How do you measure the impact of structured structured settlements on your claims costs?
• What is your structured settlement success ratio?
• What changes in your program would improve your structured settlement performance?

To transform these suggested introductory questions into a successful marketing and sales strategy, structured settlement brokers must be capable of effectively discussing structured settlement metrics and analytics. NSSTA could assist its members in doing so by offering educational programs designed to improve its members' abilities to identify, develop, implement and measure structured settlement metrics and analytics.

In a final blog post analyzing NSSTA's survey of senior claims executives, S2KM will consider the significance of additional survey findings on future defense-driven structured settlement market growth.

NSSTA Marketing Surveys - Senior Claims Executives 1

The National Structured Settlement Trade Association (NSSTA) has established a new NSSTA "Industry Growth Initiative,"  "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement industry marketplace."

NSSTA's new Growth Initiative appears to potentially address, and/or encompass, multiple growth-oriented goals NSSTA president Michael Goodman identified during NSSTA's 2015 Annual Meeting.

Rationale for a Growth Initiative: annual structured settlement premium reached its historic 12 month industry record of $6,226,578,725 in 2008 after consistently averaging close to $6 billion annually from 2001-2007. Annual premium totals dropped off sharply from 2009 (following the 2008 financial crisis) thru 2012 before showing modest improvements in 2013, 2014 and First Quarter 2015.

NSSTA's Growth Initiative also appears to build upon other recent NSSTA projects including a three-part structured settlement survey commissioned by NSSTA, and conducted by CLM Advisors, of NSSTA members' traditional sales targets: senior claims executives (Part 1); claims professionals (Part 2); and plaintiff attorneys (Part 3).

Although individual interpretations may differ, each of NSSTA's three surveys identified opportunities to expand the use of structured settlements and therefore each offers valuable insights for NSSTA's Growth Initiative.

For example: NSSTA's survey of senior claims executives confirmed continuing support among survey participants for structured settlements as well as their perception that structured settlement consultants add value to the liability insurance claims process.

Results of that survey, however, also suggest to S2KM that future defense-driven structured settlement market growth will require consultants to:

• Reformulate traditional structured settlement education programs applicable to property and casualty insurance clients; and
• Help these clients identify and produce better metrics and analytics: 1) to define the meaning of structured settlement "success"; and 2) to determine related program effectiveness.

To help "identify opportunities to expand the use of structured settlements", S2KM will offer its summary and analysis of NSSTA's three-part survey in a series of blog posts beginning with NSSTA's survey of property and casualty insurer senior claims executives. The remainder of this blog post summarizes findings from that survey. In two subsequent blog posts, S2KM will offer its interpretation of that survey's results.

NSSTA Survey of Senior Claims Executives - Summary

The purpose of NSSTA's survey of senior claims executives was "to generate ideas and a foundation for developing an effective marketing strategy for this industry segment."

The survey focused on answering two questions:

• "What do senior claim executives in the property casualty insurance segment perceive to be the primary values created by structured settlements and settlement consultants?"
• "In claims organizations which do not provide their own underwriting markets for structures, to what degree are there mechanisms in place for promoting, measuring, and managing structured settlements utilization?"

Survey participants were selected by CLM Advisors from ten leading insurance carriers "of varied size ... whose book of business and style of operation lends itself to the use of structured settlements" and who do not underwrite their own structured settlements.

Survey questions were organized within the following categories:

• General Trends
• Program Attributes
• Perceptions Around Value
• Reactions to Value Proposition Statements
• Forced True/False Choices
• Extracting Future Value

Although all of NSSTA's claims executives survey results provided useful feedback, some of the survey responses were predictable and unlikely to impact future structured settlement marketing. For examples:

• Most of the claims executives surveyed believed structured settlement utilization has not decreased during the past three years but has decreased during the past 10 years - and that lower interest rates are the primary factor.
• Almost all survey participants viewed their companies as having a "formal" structured settlement program either as an exclusive (one broker partner) or preferred (approved broker partner) program with varying internal stakeholder "ownership".
• The types of cases where survey participants viewed structured settlements as most effective: liability cases; minors cases; workers compensation cases; lifetime benefits; medical payments.

Other selected survey responses, as categorized and summarized below by S2KM, provide greater informational value for subsequent S2KM interpretation and analysis.

Structured Settlement Program Metrics

• 100 per cent of the survey participants said their companies could do more to proactively use structured settlements.
• Only 20 percent of the survey participants reported having any set of objectives around the use of structured settlements.
• A majority of the survey participants do not measure referral volume and only half measure the volume of successfully written structures.

Structured Settlement Value Propositions

• The strongest value propositions for using structured settlements, as viewed by the survey participants: 1) addressing future medical expenses; 2) "needs-based" negotiation; 3) addressing future lost wages; 4) adds no additional work.
• Although still in agreement, survey participants viewed two traditional structured settlement value propositions less strongly: 1) lower claims payouts; and 2) earlier claims resolution.
• Survey participants disagreed with the following structured settlement value propositions: 1) achieve earlier settlements; 2) benefit to society; 3) 35 per cent savings on MSAs; 4) equally effective on smaller and larger claims.

Structured Settlement Consultants

• 90 per cent of the survey participants believed consultants do a good job of describing their value.
• Survey participants viewed consultants' primary value proposition related to their knowledge of, and ability to sell, structured settlements.
• Two thirds of the survey participants believed that consultants skills have stayed the same, while the other one third said the skills have improved, when compared to 10 years ago.
• 90 percent believed involvement of a structured settlement consultant made a case more likely to settle.
• Survey participants, on average, believed their companies utilized structured settlement consultants in only 66 percent of appropriate cases.
• Two thirds of the survey participants believed that front line claims professionals in their organizations shared their perspective on a consultants' value.

Additional Marketing Feedback

• Survey participants would value more educational and informational services from structured settlement consultants on such topics as: 1) their facilitation roles; 2) MSA requirements; 3) structured settlement benefits; 4) internal rates of returns; 5) industry developments and trends; 5) case specific advice including post-mortems and how claim handlers perform.
• Other recommendations: 1) expand Medicare services; 2) add online resources to price benefits; 3) obtain references from defense counsel.

S2KM will analyze selective findings from NSSTA's survey of senior claims executives in two subsequent blog posts.

S2KM summarized historic structured settlement surveys which preceded NSSTA's three-part survey project in this prior blog post.

Structured Settlement Surveys - 2

The National Structured Settlement Trade Association (NSSTA), in partnership with CLM Advisors, has recently completed a three-part structured settlement survey project of senior claims executives (Part 1), claims professionals (Part 2) and plaintiff attorneys (Part 3) the results of which provide NSSTA members with marketing tools for discussions with the audiences surveyed.

Complementing NSSTA's surveys, NSSTA member and structured settlement provider Prudential recently published the results of its own 2013 survey of 400 claimants who had entered into a settlement of a physical injury or workers’ compensation claim of at least $100,000 from 2003 to 2013.

Considered together, these four surveys provide valuable insights into how key stakeholders currently view the structured settlement market. They also provide a point of reference for, and comparison with, other structured settlement market surveys several of which have been completed or updated since S2KM published this previous blog post in November 2008.

What follows are brief summaries of prior structured settlement surveys. In subsequent blog posts, S2KM will review and evaluate the most recent NSSTA and Prudential surveys.

• NSSTA 2006: Survey of Plaintiff Attorneys and Structured Settlement Recipients - This NSSTA-sponsored survey was titled: "A Study of the Structured Settlement Process Conducted on behalf of the National Structured Settlement Trade Association" and 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. It consisted of attorneys involved in structured settlements (43 telephone surveys) and structured settlement recipients (1275 telephone and Internet surveys). Among the reported results:
  • 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 included structured settlements.
  • When asked: "Whom do you prefer to use for purposes of financial planning for your clients?" , surveyed attorneys responded: trust company/department - 30%; Financial planner - 28%; Structured settlement consultant - 23%; No response - 19%.
• American General 2007: Survey about Structured Settlement Public Awareness - Sponsored by AIG American General and conducted by Esearch.com, Inc. in September 2007, this 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. 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. AIG's conclusion: the structured settlement industry needs to better educate Americans about structured settlements.
• J.G. Wentworth 2008: Survey of Structured Settlement Recipients - The survey consisted of 115 structured settlement recipients who had previously sold payment rights to J.G. Wentworth. The survey questions addressed both primary and secondary market issues, focusing upon the reasons the respondents: 1) first agreed to a structured settlement; and 2) then subsequently sold (transferred) some or all of their structured settlement payment rights. S2KM's prior reporting about the survey's primary market questions, responses plus related S2KM comments appears here. S2KM's prior reporting about the survey's secondary market questions, responses plus related S2KM comments appears here.
• Jeremy Babener 2009: Dissipation Legal Research Paper - Titled "Justifying the Structured Settlement Tax Subsidy: The Use of Lump Sum Settlements," this paper examines and challenges the myth of the squandering injury victim. In it, Babener refutes the existence of any published study supporting the statistic that "90% of lump sum recipients dissipate their recoveries within five years" and identifies 12 existing dissipation studies relevant to structured settlements that reach a contradictory conclusion: injury victims have no greater propensity to dissipate money than non-injury victims.
• Towers Watson 2011: "Update of U.S. Tort Cost Trends" - The 2011 update represents the 15th study of U.S. tort costs, and the most recently published, by Towers Watson. Note: a Tower Watson representative has informed S2KM it has no current plans to publish further updates. The 2011 study reported $264.6 billion of 2010 U.S. tort costs and excluded: 1) no-fault auto insurance; 2) property coverages; 3) workers compensation; 4) certain extraordinary (one time) costs. Tower Watson's 2002 study had previously 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) economic loss - 22%; and 5) non-economic loss - 24%. Based on the 2011 study and utilizing Tower Watson's 2002 "best estimate" of payout percentages, S2KM has estimated that since 2011 more than $170 billion of United States tort costs annually have represented payments to injury victims and their attorneys.
• Claims & Litigation Management Alliance (CLM) 2011: "National Litigation Management Study" - This survey of litigation management executives analyzed 30 litigation-related service areas including structured settlements. Commissioned by CLM (formerly the Council on Litigation Management ) and conducted by Revere Advisory, it identified structured settlement as the "most penetrated external initiative" among 30 litigation-related service areas analyzed based upon interviews with leading litigation management executives. CLM membership includes: corporations, insurance companies, government agencies, defense attorneys and law firms plus individuals "who participate in litigation and the management thereof (Corporate Counsel; Risk, Claims and Litigation Managers; Adjusters and Service Providers etc.)."
• Daniel Durbin 2013: Survey of Structured Settlement Brokers - Durbin, a former NSSTA President and Senior Structured Settlement Sales Manager with Allstate Life, conducted an informal survey with a group of leading structured settlement brokers to obtain their input and evaluate their interest in representing a potential new structured settlement product provider. Durbin identified himself as part of an investor group of individuals including insurance executives who see underdeveloped opportunities in the structured settlement primary market. Although Durbin has not published the results of his survey, he has presented to several industry groups and stated that the survey showed the interest is high as long as the new firm is financially strong with competitive rates.
• Melissa Evola Price 2002-2015: Quarterly Reports of NSSTA Member Structured Settlement Annuity Provider Sales - Melissa Evola Price's quarterly structured settlement report, selectively distributed to NSSTA members, is now copyrighted by her company, Structured Financial Associates, Inc. (SFA). Price and SFA have granted S2KM permission to publish selected portions of her report on both S2KM's blog ("Beyond Structured Settlements") and the structured settlement wiki. Her reports include historical data from 1975-2001 which is sourced with permission from "Structured Settlements and Periodic Payment Judgments" (S2P2J).  Evola Price most recently reported 2015 first quarter structured settlement annuity premium of $1,332,047,252, an increase of more than $230 million (21%) compared with the 2014 first quarter structured settlement annuity premium of $1,101,839,529.