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.

Structured Settlement 2016 Annuity Sales

Among many recent structured settlement industry developments, perhaps the most significant and impressive has been the continuation of sustained primary market annuity sales growth - especially in the context of various industry challenges. These challenges have included: 1) the aftermath of the ELNY insolvency; 2) continuation of historic low interest rates; 3) public exposure of unsavory secondary market business practices; and 4) a generational transition within the structured settlement industry.

Despite these challenges, primary market annuity sales (on a comparative basis with prior years) totaled $5.73 billion in 2016 (based upon 24,750 cases with an average case size of $231,478) according to industry estimates compiled and recently distributed by Melissa Price. 2016 sales totals compare favorably, and show a steady increase, compared with similar sales totals for these prior years::

• 2015 - $5.35 billion
• 2014 - $5.25 billion
• 2013 - $5.13 billion
• 2012 - $4.82 billion

For the first time, Ms Price's 2016 report included structured settlement annuity sales by USAA. Although USAA is a member of the National Structured Settlement Trade Association (NSSTA), it is S2KM's understanding that USAA is one of multiple "affiliated" life companies that limits its structured settlement sales to internal USAA claims only. Typically, because these companies don't compete for external business, they don't report their sales data.

Inclusive of USSA, 2016 structured settlement sales totaled $5.80 billion (based upon 25,201 cases with an average case size of $230,320. Even including USSA, the 2016 annual premium totals still fall short of the historic 12 month industry high ($6.2 billion in 2008) after consistently averaging close to $6 billion annually from 2001-2007.

It should also be noted, that while structured settlement premium has continued to increase since 2012, the number of structured cases has not noticeably increased - resulting in an ever-increasing average case size. This development may be explained by more structured settlement brokers transitioning to a settlement planning approach, which by definition targets larger cases. For example, Ringler, historically the largest U.S. structured settlement broker, has recently re-branded itself as "the largest settlement planning company in the nation."

Incorporating the USAA 2016 numbers, and adding the 2016 results to historic U.S. structured settlement totals, S2KM estimates the following primary market metrics from 1976 thru 2015:

• Total annuity premium: $156 billion.
• Total structured settlement cases: 879,000
• Average annuity premium: $177,474

Berkshire Hathaway continued its recent primary market leadership in 2016 by generating $1.504 billion of structured settlement annuity premium - a 15% percent increase from 2015. For the first time since 2011, two companies exceeded $1 billion in structured settlement annuity sales as Pacific Life increased its 2016 total to $1.186 billion from its year earlier total of $871MM - a 36% percent increase.

The U.S. structured settlement market now consists of nine NSSTA-member annuity providers who report their structured settlement annuity sales - down from more than 20 as recently as 2002. 2016 sales results (rounded in millions) for the seven other structured settlement annuity providers (per Ms Price's report) plus the rounded percentage increase (+) or decrease (-) from comparable 2015 results:

• MetLife: $815MM (+6%)
• Amgen: $688MM (+12%)
• Liberty Life: $513MM (-6%)
• New York Life: $487MM (+32%)
• Prudential: $399MM (-48%)
• Mutual of Omaha: $141MM (+44%)
• USAA: $72MM (first report)

Ms Price's 2016 compilation also reports an annual increase in annuity premium for non-qualified structured settlement assignments (from $190.3 million in 2015 to $199.2 million in 2016) as a portion of the overall structured settlement numbers. Non-qualified assignments represent transfers of periodic payment obligations that do not meet the requirements of IRC sections 130 and 104(a)(1) or (2) including deferred attorney fees.

From S2KM's perspective, several factors help to explain the sustained primary market sales growth:

• Increased Industry Unity - As former SSP President Neil Johnson pointed out in 2014, for many years, an historical lack of structured settlement industry unity created a drain - a drain on financial resources ... a drain on productivity ... a drain on our public image ... a drain on physical and emotional health. Lack of unity diverts attention from productive projects." Recent leaders of NSSTA, SSP and NASP have encouraged greater cooperation and focused their associations on more productive projects.
  • SSP - As an organization, SSP is no longer a political advocate for injury victims' rights. As Joe Tombs, its current President, stated in this recent S2KM interview: "A year ago, we decided to abandon taking 'political' positions.'' Instead, Tombs added: "1) SSP has substantially expanded its membership; 2) we have re-focused on professional settlement planning as our primary Mission and purpose; 3) we have pretty much put to bed the idea that we oppose NSSTA; and 4) we have developed a new set of Professional Practice Standards which we will introduce during our 2017 Annual Conference."
  • NSSTA - Although NSSTA continues to advocate for structured settlements, NSSTA has likewise undertaken its own initiatives toward achieving greater industry unification. As identified by former NSSTA President Michael Goodman in 2014, these initiatives have included: 1) a strong relationship with the AAJ; 2) improved dialogue with the SSP; 3) guest educational participation involving SSP and NASP representatives; 4) successful cooperation with NASP to enact revised structured settlement protection legislation in multiple states.
• Market Research - Among the structured settlement growth opportunities, expanded use by traditional stakeholders represents arguably the number 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). For S2KM's summary and analysis of these surveys, see:
  • Senior Claim Executives
  • Claim Professionals
  • Plaintiff Attorneys
• Transitional Goals- During NSSTA' 2015 Annual Meeting, Goodman announced a series of transitional growth-oriented goals for NSSTA and its members: 1) modifying NSSTA's traditional "protect and preserve" message to inspire primary market growth; 2) moving beyond "interest rate selling"; 3) moving beyond a focus on factoring; 4) identifying and pursuing new markets for structured settlement annuities; 5) adding one or more new life company providers; 6) engaging new, younger structured settlement brokers; 7) providing a new and improved training initiative.
• Growth Initiative Committee - To help support these goals, NSSTA's Board of Directors 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." The first Growth Initiatives to be selected and approved:
  • Rejuvenate Defense Programs (including casualty insurers, commercial insureds and TPAs) - Originally the prime movers for structured settlements, many defense insurers have reduced or completely abandoned their structured settlement programs citing a variety of reasons.
  • Amend the Federal Employee Compensation Act - FECA, which provides workers compensation like benefits for federal workers, currently does not permit structured settlements.
  • Convertible Deferred Lump Sums - As a sales response to "low interest rates", the Growth Committee proposed a new structured settlement feature. As envisioned, the convertible deferred lump sum would allow a structured settlement recipient to select a future lump sum that would automatically convert on its payment date into a series of predetermined periodic payments payable at whatever annuity rates offered at the time of conversion by the issuing life company.
  Under current President Len Blonder and current Growth Committee Chair Sean Coleman, the number of Growth Initiatives continues to expand with assistance from new NSSTA Communications and Marketing Director Abbey Hudson.
• Educational and Lobbying Support - To support its Growth Initiative, NSSTA has also expanded both its educational and certification programming as well as its strategic lobbying and lobbying partnerships. Educational Committee Co-Chairs Jordan Bossler and Nolan Robinson, CSSC Co-Chairs Karen Meyers and Patricia Fairhurst, and their respective committees, plus Compliance and Administrative Director Debbie Sink provide NSSTA with its strongest-ever group of educational resources. NSSTA Executive Director Eric Vaughn, who also serves as Vice Chair of the American Association for People with Disabilities (AAPD) and manages the Congressional Structured Settlement Caucus , has continued to expand NSSTA's lobbying outreach thru strategic relationships with national special needs attorney associations.

Ms Price's reports do not provide information about the structured settlement secondary market. For S2KM's most recent estimates of secondary market metrics, see this prior blog post. Based upon industry sources, it is S2KM's understanding that structured settlement secondary market sales declined during 2016.

S2P2J Release 59

Despite historically low interest rates and negative PR (most recently this Washington Post Editorial) resulting from the unconscionable business practices by some secondary market companies, the primary structured settlement market continues to experience incremental growth since hitting an annual annuity premium nadir of $4.82 billion in 2012.

The "Growth Initiative" developed by the National Structured Settlement Trade Association (NSSTA), under the leadership of Presidents Michael Goodman and Len Blonder, has helped to sustain primary market growth by prioritizing specific objectives the first of which have included: 1) rejuvenate defense programs; 2) amend the Federal Employee Compensation Act; and 3) develop convertible deferred lump sum product options.

Other factors contributing to recent primary market growth ($5.3 billion of annuity sales in 2015):

• Increased industry unity - Advocated by the Presidents of NSSTA, the Society of Settlement Planners (SSP) and the National Association of Settlement Purchasers (NASP), these associations recently have taken significant steps to overcome their historic acrimony which had divided plaintiff and defense brokers as well as the primary and secondary markets.
• Legislative collaboration - One result of increased industry unity has been a proactive and collaborative legislative strategy by NSSTA and NASP to add consumer protection amendments to targeted state structured settlement protection statutes with preliminary success in Illinois, Wisconsin, Florida, Maryland and Virginia.
• Expanding education - NSSTA continues to expand and improve its educational offerings adding new programs such as Structures 202, the Masters Structured Settlement Consultant (MSSC) certification and Structured Settlement University. SSP recently sponsored a joint educational program with the Academy of Special Needs Planners (ASNP) providing attendees an opportunity to evaluate structured settlements within the larger, more complex personal injury settlement planning market.

Consistent with these growth initiatives, recent updates of "Structured Settlements and Periodic Payment Judgments" (S2P2J), including newly issued Release 59, highlight multiple opportunities to expand the structured settlement market, providing technical guidance and practice advice, in addition to describing related industry developments and issues.

Publisher Law Journal Press distributed hard copy supplements for S2P2J Release 59 earlier this month with online S2P2J subscribers receiving their update automatically and simultaneously. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

First published in 1986 and updated semi-annually, S2P2J is co-authored by Daniel W. Hindert,  Joseph J. Dehner, and Patrick J. Hindert (S2KM's Managing Director). Both NSSTA and SSP have utilized S2P2J as an educational resource for their certification programs.

Release 59 Highlights

"Release 59 for 'Structured Settlements and Periodic Payment Judgments' features analysis of the Wrongful Convictions Tax Relief Act of 2015. This new federal legislation, enacted December 18, 2015, creates an exclusion from gross income for civil damages, restitution, or other monetary awards that are received as compensation for wrongful incarceration. The Act includes an important one-year time-sensitive retroactivity provision.

"This Release also outlines recommendations to defense counsel for seeking court approval of settlements whenever parties have a duty to consider the provisions of the Medicare Secondary Payer Act (“MSP”). The advice is applicable whether or not the claimant has a legal disability that mandates such court approval or if doing so as a means to reduce risks of a finding of MSP noncompliance and its attendant possible sanctions.
"Noteworthy new case law in Release 59 includes:

• "An important 2015 decision by the U.S. Court of Appeals for the Third Circuit which includes in-depth analysis of 'safe harbor' annuity rules under the Deficit Reduction Act of 2005 when annuities are sought to be used to preserve Medicaid eligibility.
• "Review of new cases under state Structured Settlement Protection Acts ('SSPAs'), where courts have identified standard questions to assist judges in making the determination of whether a proposed transfer of future payment rights is in a given claimant’s 'best interest' as required for court approval under the SSPAs.

Previous S2P2J releases have highlighted and addressed the following recent structured settlement developments and primary market growth opportunities:

• Non-qualified assignment issues - including tax and security issues raised by off-shore assignment companies.
• Templates for: 1) approval of MSAs; and 2) disclosure of consultants' roles and compensation.
• Expanded coverage of Workers Compensation MSAs.
• Summary and discussion of recent PLR for indexed annuities and commutation riders.
• Summarized results of CLM Advisors surveys commissioned by NSSTA to determine the value claims executives, claims professionals and plaintiff attorneys place on structured settlements and structured settlement consultants.
• Introduction to ABLE Accounts.
• A new section to introduce and explain federal and international regulatory developments and entities resulting from the 2008 global financial crisis.
• Updated analysis of the changing role of and standards for plaintiff attorneys engaged in personal injury settlement planning and when negotiating structured settlements.
• Summary and analysis of recent U.S. Treasury Regulations for IRC 104(a)(2).
• Practice tips for minimizing the risk of an IRS settlement challenge.
• Updated summary of lessons learned from the Executive Life Insurance of New York (ELNY) insolvency.
• Periodic payment reinsurance as an alternative means of funding structured settlements.

For S2KM's most recent analysis of the structured settlement industry, see: "Structured Settlements 2015":

• Part 1 - Market Metrics
• Part 2 - Market Issues and Developments

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 2016 Structures 202 Conference

Hosted earlier this month in Las Vegas for the second consecutive year by the National Structured Settlement Trade Association (NSSTA), the Structures 202 conference represents an important addition to NSSTA's growing educational curriculum and also provides valuable strategic insights into some of the challenges and opportunities currently facing the structured settlement industry.

Primarily targeting "Next Generation" structured settlement participants, Structures 202 offers attendees a day and one half program explaining case management fundamentals and identifying business development opportunities. This educational offering replaces and expands upon NSSTA's previous Structures 101 program which was directed more narrowly toward structured settlement case analysts and administrators.

Most of the following 2016 presentations, and many of the 2016 speakers, replicated NSSTA's inaugural 2015 Structures 202 Conference:

Case Management Fundamentals

• Settlement Documents and Qualified Assignments - Toni Warbington
• Group Exercise - Review and Fixing Settlement Documents
• Payees and Best Practices - Betty Gregware
• Long Term Obligation Risk - Geoff Kissel and Ravi Vaswani
• Workers Compensation Documentation - David Korch
• Medical Underwriting - Ken Kiefer
• Structured Settlement Protection Act Update - Eric Vaughn
• Technology and Productivity - Nolan Robinson
• Post Issuance Services - Harry Coleman; Dan Goodmann; Patrick Kelly
• Resolving "Problem Cases" and Dealing with Foreign Nationals - Daniel Caldwell; Trish Fairhurst; and Amy Sisson
• QSF Best Practices - Christi Fried

Business Development Opportunities

• IRC Section 104(a) Grey Areas - Trish Fairhurst
• Working with Financial Planners - Michael Goodman
• MSA Professional Administration - Joe Anderson and Marques Torbert
• Quoting ACA Plans - Mike Zea

The primary topical differences from NSSTA's 2015 Structures 202 Conference:

• Medical Underwriting - NEW
• Working with Financial Planners - REPLACED "Comprehensive Settlement Designs"
• Special Needs Trusts - DROPPED
• Marketing Plaintiff Attorneys - DROPPED

Former NSSTA Presidents and current NSSTA Directors Mal Deener and Len Blonder also spoke this year about the history of NSSTA and the structured settlement industry. Blonder is scheduled to become NSSTA President for the third time when he succeeds current NSSTA President Michael Goodman in May during the NSSTA 2016 Annual Meeting.

S2KM Comments and Recommendations

Strategic Context for Structures 202

• Growth Initiative - From a strategic perspective, NSSTA's expanded educational program generally, and its Structures 202 program more specifically, can be viewed, and should be considered, as complementary to NSSTA's current "Growth Initiative" - as described in S2KM's review of the NSSTA 2015 Fall Conference. One way to measure growth is annual structured settlement annuity premium - which increased approximately 2% in 2015. Other possible growth measurements: annual increases in NSSTA membership and/or attendance at NSSTA conferences including Structures 202. Approximately 110 NSSTA members attended the 2016 Structures 202 Conference, including approximately 40 life company representatives and 60 broker representatives - compared with approximately 150 attendees in 2015.
• Generational Transition - Recent NSSTA conferences have highlighted the ongoing "Generational Transition" as a primary industry challenge. Related presentations have addressed the need for succession planning and greater diversity. Because Structures 202 targets NSSTA's "Next Generation" structured settlement participants, the following (not necessarily consistent) speaker comments from the NSSTA 2015 Fall Conference seem relevant when evaluating Structures 202:
  • "From a demographic perspective, our industry should mirror the people we serve."
  • "Our industry suffers from a lack of diversity of thinking. Where do we find new voices and perspectives?"
  • "A lack of capital has prevented the primary market from bringing in and training new people."
  • "Nepotism works in the structured settlement industry."
• Industry Unity -During 2015, the leaders of NSSTA, the National Association of Settlement Purchasers (NASP) and the Society of Settlement Planners (SSP) expanded their shared educational dialogue. NSSTA and NASP announced a collaborative legislative strategy to add five consumer protection amendments to targeted state structured settlement protection statutes. During the 2016 Structures 202 Conference, NSSTA Executive Director Eric Vaughn reported continuing state legislative progress in Florida, among other states. These actions help mitigate the historic acrimony which has divided plaintiff and defense structured settlement brokers, as well as the primary and secondary markets, and also has arguably hurt the structured settlement industry and limited primary market growth.
• Special Needs and Personal Injury Settlement Planning - Despite its strong public commitment to persons with disabilities, NSSTA has never fully committed itself to analyzing and/or marketing its structured settlement annuity product within the larger and more complex special needs planning and personal injury settlement planning markets. Among other results, and despite shared interests, limited collaborative membership and/or educational/lobbying interaction currently exists between NSSTA and professional associations such as the National Academy of Elder Law Attorneys (NAELA), the Special Needs Alliance (SNA), the Academy of Special Needs Planners (ASNP), the National Alliance of Medicare Set-Aside Professionals (NAMSAP) or the American Association of Nurse Life Care Planners (AANLCP).

Case Management Curriculum

• With two exceptions, all of this year's Case Management presentations repeated presentations made at the inaugural 2015 NSSTA Structures 202 Conference - although some of the speakers were different. The two exceptions: 1) the Medical Underwriting presentation was new; 2) the Structured Settlement Protection Act Update replaced last year's Structured Settlement Litigation and Factoring Issues.
• Overall, these presentations were excellent and represent NSSTA and structured settlement industry core competencies and best practices. The issues for NSSTA are: 1) whether repeating core elements of Structures 202 will attract new and/or repeat attendees - especially given NSSTA's decision to prospectively feature some Structures 202 presentations on its website; 2) what additional case management fundamentals, if any, should Structures 202 address; and/or 3) should NSSTA rotate and spend more time on fewer issues annually. For example, although the Group Exercise (Review and Fixing Settlement Documents) represented an excellent program feature it would have benefited from more allocated time.
• Additional observations: the selected case management topics 1) omitted key issues that would interest "Next Generation" structured settlement participants such as "needs analysis" and factoring; 2) were not presented sequentially as they actually occur in case management; and 3) could be improved from a learning perspective with the addition of one or more visual maps - process maps, concept maps, etc.

Business Development Curriculum

• Structures 202 evolved from Structures 101 which focused exclusively on case management issues. As one result, the Structures 202 Business Development presentations are less well-defined and/or developed.
• To date, for example, NSSTA's Structures 202 Business Development curriculum has not provided "New Generation" attendees with any overview of the current or potential structured settlement market.
• Among other objectives, such an overview could: 1) identify important structured settlement submarkets; 2) highlight current NSSTA "Growth Initiative" priorities; 3) discuss business opportunities and challenges created by recent legislation; 4) analyze the personal injury settlement planning market; and 5) promote the structured settlement annuity as a core strategic product within the personal injury settlement planning market.

Structures 202 and Industry Growth

• NSSTA's Structures 202 already represents an important component of a developing educational curriculum for structured settlement and personal injury settlement professionals. To help generate industry growth, NSSTA should consider marketing Structures 202 beyond current NSSTA members to include: 1) prospective NSSTA members and potential "Next Generation" structured settlement participants; 2) non-NSSTA personal injury settlement planning professionals interested in learning more about NSSTA and structured settlements.
• Otherwise, assuming NSSTA: 1) continues to repeat annually core elements of its Structures 202 curriculum; and 2) continues to restrict attendance to current NSSTA members; Structures 202 will likely (inevitably) have a declining audience - unless NSSTA has an alternative or complementary strategy for increasing its membership.
• As one alternative, NSSTA could simply open Structures 202 to non-NSSTA members (targeting, for example: financial planners, special needs attorneys, life care planners; annuity providers; trust companies) who, if sufficiently interested, could then apply for NSSTA membership. One negative political consideration for NSSTA with open attendance might be an anticipated and unwanted flood of secondary market attendees.
• As an alternative, NSSTA could open Structures 202 attendance selectively to members of other specific professional associations whose members engage in personal injury settlement planning - and/or invite those professional associations to serve as one-time co-sponsors. Among the advantages of this alternative: it would encourage NSSTA and the Structures 202 program to analyze how structured settlement professionals and their work product increasingly interact with other settlement planning professionals and their work product. Two of this year's Structures 202 Business Development presentations ("Working with Financial Planners" and "MSA Professional Administration") addressed these types of evolving professional interaction issues and opportunities.
• During various stages of its history NSSTA has selectively "vetted" various types of professionals and product providers, thereby preventing them from joining NSSTA and/or attending its educational programs. Opening Structures 202 attendance to a broader audience could help NSSTA diversify its institutional thinking as well as expand the structured settlement market.

For S2KM reports of prior educational conferences sponsored by NSSTA and other professional associations whose members participate in personal injury settlement planning, see the structured settlement wiki .

NSSTA 2014 Fall Educational Conference

Although David Ringler was unable to attend the National Structured Settlement Trade Association (NSSTA) 2014 Fall Educational Conference October 29-30 in La Jolla, California, he had an apparent impact. Ringler, NSSTA's first president, previously re-stated his original vision for NSSTA during NSSTA's 25th anniversary celebration in 2011:

"Although we do need to constantly be on the watch for legislative change, I still believe having a place where everyone and anyone can sit down with each other and discuss the issues and viewpoints regardless of beliefs is the most important reason for NSSTA. I have called it a common “talk table”, although I agree that is not exactly a very elegant term. If we can continue this tradition, there is no problem we cannot overcome."

Many industry participants, including some NSSTA members, have questioned whether NSSTA has lost sight of this original purpose and tradition. For the past several years, NSSTA's leadership has superimposed a political litmus test for membership, as well as for topics and speakers at its educational conferences. As one result, structured settlement industry participants with alternative issues, viewpoints, beliefs and educational interests have founded two other national structured settlement associations: the National Association of Settlement Purchasers (NASP) in 1996 and the Society of Settlement Planners (SSP) in 2000.

NASP and SSP Participation

Perhaps responding to Ringler's clarion call, NSSTA opened its members-only educational program in La Jolla by inviting NASP President Patricia LaBorde and SSP President Neil Johnson to speak.

LaBorde was featured on a Secondary Market Panel, moderated by John McCulloch, which also included Stephen Harris and Patrick Hindert as panelists. McCulloch's questions targeted primary market concerns such as the prevalence of secondary market transfers, consequences of transfer company advertising and secondary market discount rates. The resulting discussion captured the audience's undivided attention and hopefully will result in expanded educational dialogue between NSSTA and NASP to include shared political and business interests.

Johnson and current NSSTA President Kevin Silo jointly addressed "Industry Challenges", a panel discussion moderated by NSSTA President-elect Michael Goodman. Repeating portions of his SSP 2014 keynote speech, Johnson proposed the following solutions for achieving industry unity: 1) recognizing and accepting product diversity; 2) focusing on client and customer service; 3) identifying and pursuing permanent shared interests without necessarily agreeing on all issues; 4) engaging all perspectives to discuss industry problems and issues; 5) improving relationships among stakeholder groups; 6) promoting and practicing settlement planning not settlement selling.

Generational Change and Challenges

NSSTA and the primary structured settlement market face multiple challenges (see below) - perhaps none greater than succession. What new generation of distributors, or distribution channel(s), will emerge (and when) to replace and build upon the accomplishments of the pioneering generation (now in their 60s and 70s) who originated the structured settlement market in the late 1970s?

In addition to generating more than $140 billion of annuity premium, the legacy of NSSTA's retiring generation includes enactment of the existing structured settlement legislative framework: current IRC sections 104(a)(1) and (2) and 130 plus multiple state periodic payment of judgment statutes and (with NASP) enactment of IRC 5891 and the state protection statutes. More recently, however, NSSTA's aging leadership has focused on defense - with "protect and preserve" its principle mantra.

NSSTA attempted to addressed this generational succession issue at its Fall conference by juxtaposing panels featuring past NSSTA Presidents and "Next Generation" brokers. The impression that emerged: NSSTA and the primary market have reached an historic crossroads - with multiple stakeholders, issues and options, but no clear future direction.

Whatever next generation of NSSTA leaders emerges will face several challenges:

• Stagnant growth - Since achieving $6 billion of annual annuity sales in 2001, structured settlement premium growth has stagnated with 2013 sales totaling $5.1 billion.
• Polarized market(s) - NSSTA's leaders have been unable, and/or unwilling, to unify the structured settlement market(s) around such shared interests as: primary market growth; preservation of existing legislation; and consumer protection - which prioritizes maintaining promised periodic payments.
• Alternative business models - Can alternative structured settlement models (traditional defense vs. emerging plaintiff) continue to co-exist and collaborate?
• Complexity - Structured settlements represent a strategic product within the larger and more complex personal injury settlement planning (settlement planning) market.
• Product features - Will Pacific Life's recent private letter ruling encourage structured settlement annuity providers to expand their product offerings to include "equity-indexed" annuities and "hardship conversions"?
• Competition. Within the settlement planning market, the growth and leadership of other product and service providers has increasingly exceeded the growth and leadership of structured settlement participants.
• Success factors. To expand sales within the evolving settlement planning market, NSSTA's leaders must re-think and re-engineer historical success factors - backgrounds and skill sets; educational programs; business models; product enhancements; sales and marketing strategies.

KNOWLEDGE MANAGEMENT

The settlement planning market is knowledge-intense and increasingly Internet-based. To continue, and increase, their historical success within the evolving settlement planning market, NSSTA and its members must improve their knowledge management capabilities. One preliminary step is to identify and evaluate existing strategic knowledge. NSSTA and its members possess three primary types of strategic knowledge:

• Product knowledge - The "Tax Posse", the ACA summary, and even the Non-traditional Products presentation at NSSTA's Fall conference represent good examples of NSSTA's product knowledge. Perhaps more important, and more valuable, than explicit product knowledge, NSSTA members possess tacit (intuitive, experiential) knowledge of how structured settlements work. In the context of the secondary market, however, NSSTA member knowledge of its own product is arguably much weaker, and, therefore, incomplete and less valuable.
• Relationship knowledge - Much of NSSTA's Fall conference related to, and re-enforced, NSSTA's and NSSTA members' settlement planning relationship knowledge about and with: 1) plaintiff attorneys; 2) insurance associations; 3) insurance claims adjustors; 4) national consumer associations; 5) U.S. Congressional members; 6) MSA administrators; 7) SSP; and 8) NASP. In settlement planning, as in life more generally, it is not what you know but who you know that counts the most.
• Market knowledge - Compared with other settlement planning market segments, NSSTA (and NASP) appear to have developed and maintained more accurate market metrics including quarterly and annual premium and cases in total and for each member product provider. To further expand structured settlements into the settlement planning market, NSSTA and its members might begin to track additional metrics. For examples: what percentage of structured settlements are utilized to fund MSAs, SNTs and settlement trusts more generally. Which categories of structured settlement recipients are most likely to sell payment rights and why?

MARKETING INITIATIVES

NSSTA conference speakers introduced multiple new marketing initiatives including:

• "NSSTA University" - NSSTA's Debbie Sink announced a new "NSSTA University" service whereby NSSTA will partner with any member to secure CE credits for member-sponsored educational seminars or insurance claims departments or law firms.
• CLM Survey Part II - In partnership with CLM Advisors, NSSTA's Marketing Committee summarized CLM Survey Part II (claims adjustors) of an eventual three part survey project. Part I surveyed claims executives. Part III will survey plaintiff attorneys. These surveys provide NSSTA members with valuable marketing tools for discussions with the audiences surveyed.

TOPICS AND SPEAKERS

• Introduction and Welcome - Eric Vaughn.
• Industry Challenges - Michael Goodman (Moderator), Kevin Silo, Neil Johnson.
• Next Gen Brokers - Louis Masry (Moderator), Kristen Chess, Ryan Garrison, Tony Robinson.
• Financial Issues for People with Disabilities - Sally Greenberg and Mark Perriello.
• AAJ Treasurer Elect - Elise Sanguinetti.
• MSA Professional Administration - Tom Adams (Moderator), Marques Torbert, Joe Anderson.
• Affordable Care Act - Jordan Bossler.
• Past NSSTA Presidents - Moderators (Kevin Silo; Eric Vaughn); Jeff Bowers, Len Blonder, Joe Costello, Mal Deener, Dan Durbin, Randy Dyer, Dan Finn, Patrick Hindert, John Machir, Henry Strong.
• Factoring Panel - John McCulloch (Moderator), Stephen Harris, Patrick Hindert, Patricia LaBorde.
• Non-Traditional Products - Erin Muller (Moderator), John Arendt, Ryan Jandreau, Jeff Reinhold, Chris Shumate, Ravi Vaswani.
• American Insurance Association - Peter Foley.
• CLM Survey Part II - Taylor Smith, Susan Clark, Jeff Livingston.
• Tax Posse - John McCulloch, Timothy O'Driscoll, Tom Ronce.
• NSSTA CE News - Erin Muller and Debbie Sink.

Congratulations to NSSTA and conference chairperson Erin Muller for re-establishing NSSTA's tradition of educational programs featuring speakers with multiple viewpoints on industry issues "regardless of beliefs". David Ringler and other structured settlement pioneers should feel gratified - and hopeful for NSSTA's future success.

For S2KM's reports about prior NSSTA educational conferences, see the structured settlement wiki.

Need for Reform?

In a companion article to the National Underwriter's recent comprehensive analysis of the Executive Life of New York (ELNY) Liquidation ("The Complete ELNY Saga"), writer Warren Hersch asks: "is the structured settlement process in need of reform"?

The Hersch article highlights a "potpourri" of structured settlement issues:

• Business practices - including disclosure and suitability issues
• Structured settlement regulation - or lack thereof
• Industry lobbying
• Industry education
• Broker compensation
• Structured settlement transfers
• IRC 468B qualified settlement funds
• Declining annuity sales
• Increasing case complexity - including annuity/trust blended products
• An evolving settlement planning profession
• Responsibilities of plaintiff attorneys
• Financial strength of annuity providers

In addition to industry criticism, the article features diverse individual perspectives demonstrating a foundation for industry consensus:

• Len Blonder
  • “No other option today can match the structure’s mix of tax-free income and guaranteed security.”
  • "A casualty company should ... be allowed to vet their own representatives of choice.”
  • "Plaintiffs are free to hire any financial professional from among the tens of thousands that are available to them."
• Joseph Dehner
  • "A personal injury attorney for claimants who isn’t even considering a structured settlement in high damage cases is bordering on malpractice."
  • “Structured settlements have become both more flexible and complicated because of the advanced planning that now accompanies these transactions.”
  • "Continuing low interest rates on the fixed annuities used to satisfy settlement claims [is] the key factor" in explaining the recent declines in structured settlement annuity sales.
• Jeremy Babener
  • “The qualified settlement fund (QSF) allows for a significant increase in the amount of time that payees have to make necessary determinations.”
  • "But for the single plaintiff, use of the vehicle comes with uncertainty. That’s because it is unclear whether a single plaintiff is treated for tax purposes as receiving funds deposited into a QSF."
• Timothy Morbach: “More should be done to recognize that the field of settlement planning is highly specialized and that [claimants] should make efforts to retain separate and qualified financial and legal counsel with respect to the strategies they wish to implement.”
• Charles Schell: “If the plaintiff's attorney engages a settlement planner, then .... , more likely than not, the product or plan recommended will be suitable.”
• Peter Gallanis: "The rate of insolvencies among life and health insurers, now at an all-time low, are but a fraction of the hundreds of failures within the commercial and investment banking and thrift sectors during the financial crisis."
• Eric Vaughn: "IRC Section 5891 has effectively prevented many abuses ... that commonly occurred in prior decades."

Perhaps this National Underwriter article will help motivate the structured settlement industry to undertake its own strategic analysis about whether and how to reform the structured settlement process. Immediate existential challenges certainly exist. In addition to the ELNY liquidation, these challenges include:

• Declining primary market annuity premium
• Historically low interest rates
• Potential reforms to the tax code and the tort system
• Implementation and impact of Dodd-Frank and the Affordable Care Act
• Transitioning business skills, relationships and processes to the Internet.

Assuming Charles Darwin was correct: It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.

The primary strategic issues for the structured settlement industry are whether, when, how and to what degree it will become "responsive to change"?

Can industry leaders:

• Be honest ? - Acknowledge the problems. Study the changes. Abandon political correctness. Question traditional assumptions, business models and business practices.
• Be inclusive ? - David Ringler, NSSTA's first president, re-stated NSSTA's original vision during NSSTA's 2011 annual conference: "I still believe having a place where everyone and anyone can sit down with each other and discuss the issues and viewpoints regardless of beliefs is the most important reason for NSSTA. ... If we can continue this tradition, there is no problem we cannot overcome."
• Be open ? - The late James Corman insisted promoters of structured settlements were "on the side of the angels". Does that statement remain true today? To regain public trust, empower stakeholders and expand the customer base, structured settlement strategic planning needs to re-emerge from behind closed doors. Important industry issues need to be articulated and discussed openly.
• Listen to customers ? - The profiles of ELNY structured settlement victims featured in "The Complete ELNY Saga" provide a valuable introduction. Prior market surveys should be re-visited, updated and expanded. The traditional "one and done" structured settlement customer model needs to be re-evaluated.
• Engage critics ? - and challenge/encourage critics to be part of an industry solution by incorporating their relevant issues and best ideas into a strategic thinking process? These critics include legal and financial professionals who view the structured settlement product and market as core components of a larger and more complex settlement planning industry.

For related S2KM reporting and analysis, see the structured settlement wiki:

• Re-thinking Structured Settlements
• Growing the Market
• Business Standards and Practices
• Settlement Planning
• Structured Settlements and Knowledge Management

SSP and NSSTA 2010 Annual Meetings - 9

The Society of Settlement Planners (SSP) and the National Structured Settlement Trade Association (NSSTA) should be congratulated - especially immediate past-Presidents Joseph Tombs and Daniel Durbin - for excellent 2010 annual meetings.

S2KM's complete coverage of the SSP and NSSTA 2010 annual meetings is available on S2KM's structured settlement wiki.

Continuing post-meeting S2KM commentary:

• Both the SSP and NSSTA 2010 meetings occurred in Washington, D.C. at nearby hotels during the same week - May 2-7.
• Attendance at both the SSP and NSSTA meetings was good (not great) - despite the economic downturn in structured settlements.
• Approximately 10 persons attended portions of both the SSP and NSSTA meetings.
• The scheduling conflicts between SSP and NSSTA occurred primarily on the morning of May 4 - which created difficult choices for persons attending both conferences.
• Unless otherwise indicated, S2KM's comments are limited to educational programs Patrick Hindert, S2KM's Managing Director, personally attended.
• For pre-program educational listings (topics and speakers) for both the SSP and NSSTA meetings, see this prior S2KM blog post.
• S2KM opted to attend NSSTA meetings on May 4 and missed valuable SSP presentations including two Medicare set-aside arrangement (MSA) panels organized by Jason Lazarus, SSP's new President for 2010-2011.
• Both SSP and NSSTA prioritized MSAs in 2010 with four MSA educational programs - three by SSP.
• Douglas Brand, a featured SSP speaker about MSAs, has also served as the key NSSTA Director in developing NSSTA's government benefits committee and educational program.
• Joseph Tombs, SSP's 2009-2010 President, and Director of SSP's settlement planning certification program, continued SSP's educational series about "Minors Settlements" initiated by Texas attorney Phillip McCrury during the SSP 2009 annual meeting.
• As positive hallmarks of their SSP and NSSTA presidencies, both Tombs and Durbin successfully played to their personal and association strengths. For Tombs, learning, improvement, and industry growth. For Durbin, public policy, lobbying, protect and preserve during industry transition.
• As SSP President, Joseph Tombs continued and elevated SSP's excellent educational programs, including the Registered Settlement Planner Program,which Tombs developed and manages in partnership with SSP and Texas Tech University.
• Jason Lazarus, a respected knowledge leader within multiple settlement consulting communities, succeeds Tombs as SSP's President.
• SSP's educational and political strategies continue to espouse "improve and grow" - for both the structured settlement and settlement planning industries.
• Daniel Durbin led NSSTA's leadership transition from Joseph Ricci to Eric Vaughn and Peter Arnold. During this transition, NSSTA sharpened and expanded its political focus and delivered on its promise to "protect and preserve" IRC sections 130 and 104(a)(2).
• Michael Kelly succeeds Durbin as NSSTA's 2010-11 President and will be joined on the NSSTA Board of Directors by five newly (re) - elected Directors - Joseph Barnet; Len Blonder; Randy Dyer; James Ebel; and John Machir.
• Karen Meyers continues her industry role as director of NSSTA's Certified Structured Settlement Consultant (CSSC) program in partnership with the University of Notre Dame.
• Among retiring NSSTA Directors, S2KM's Managing Director Patrick Hindert, a NSSTA member, has interacted primarily with former NSSTA Directors Joseph Shannon and Douglas Brand.
• Both Shannon and Brand (and all retiring NSSTA Directors) deserve industry thanks:
  
  • Shannon served as liaison between NSSTA's Board of Directors and NSSTA's legal committee.
  • Brand served as liaison between NSSTA's Board of Directors and NSSTA's government benefit committee.
• The SSP and NSSTA 2010 annual meetings highlighted the need for new Internet-based structured settlement educational strategies and resources.
• The combined SSP and NSSTA structured settlement learning experience was overwhelming. Incredibly rich structured settlement knowledge was crammed into less than 5 days without any announced (to date) knowledge capture and/or post-conference knowledge distribution.
• Except for NSSTA references to the new NSSTA website, neither SSP nor NSSTA offered any Internet educational ideas or discussions at their 2010 annual meetings.

Post-conference leadership questions:

• How will SSP's and NSSTA's new leaders respond to industry changes, challenges and opportunities?
• Who are the young (under age 40) structured settlement industry leaders?
• When and how will SSP and NSSTA transition their educational strategies to embrace the Internet?
• What shared interests exist between SSP and NSSTA to improve and grow the structured settlement industry?

SSP and NSSTA 2010 Annual Meetings - 3

Among several headlines resulting from the SSP and NSSTA 2010 Annual Meetings, "leadership changes" is most important.

The National Structured Settlement Trade Association (NSSTA) re-introduced its lobbyist, Eric Vaughn, as NSSTA's new Executive Director effective July 1, 2010. Vaughn follows Joseph Ricci of Smith Bucklin who succeeded Randy Dyer in 2008. NSSTA also named Peter Arnold, formerly NSSTA's marketing consultant, as Associate Executive Director. Hogan & Hartson (now Hogan Lovells) continues as NSSTA's legal counsel with Craig Ulman and John Stanton serving as primary legal advisers.

NSSTA elected five new members to its Board of Directors and introduced Michael Kelly as NSSTA's new President. The newly-elected NSSTA Directors are:

• Joseph Barnett
• Len Blonder
• Randy Dyer
• James Ebel
• John Machir

The Society of Settlement Planners (SSP) named Jason Lazarus as its President for 2010-2011 and Charles Schell as Vice President.

For additional S2KM reporting about SSP and NSSTA, see S2KM's structured settlement wiki and these earlier 2010 S2KM blog posts: 

• SSP and NSSTA 2010 Annual Meetings - 1 - for a complete list of speakers and topics;
• SSP and NSSTA 2010 Annual Meetings - 2 - for a preliminary S2KM strategic orientation.

NSSTA 2009 Annual Meeting - 1

To borrow a baseball analogy from Len Blonder, the National Structured Settlement Trade Association (NSSTA) "hit a home run" (or rather a series of home runs) during its 2009 Annual Meeting in Washington, D.C. April 28-May 1.

Blonder's comments to NSSTA attendees about "federal and state issues", which occurred near the end of an exceptional NSSTA program, served as a belated key note address for the entire NSSTA program.

Blonder was one of three NSSTA past-Presidents, along with Henry Strong and Chris Diamantis, whom NSSTA, and new NSSTA President Daniel Durbin, honored during its meeting.

Blonder, a two-time NSSTA President who continues to co-chair NSSTA's Legislation and Regulation Committee, spoke passionately about baseball and structured settlements. Blonder traced his involvement in structured settlements to the late 1970s when he helped organize a pre-NSSTA political coalition which formulated, and eventually helped to enact, the original structured settlement tax legislation in 1982.

With support from Blonder and its Legislation and Regulation Committee, NSSTA announced and introduced a new "D.C. two-step" political strategy: move one-step backward before moving two or more steps forward.

NSSTA's backward step:

• Re-focus on "protecting, preserving and promoting" structured settlement laws already enacted in the United States Internal Revenue Code and 47 state structured settlement protection statutes;
• Consolidate and transition NSSTA's administrative, financial and political strengths.

NSSTA's forward steps:

• Continue enhanced education about Medicaid and Medicare as cornerstones for growing the structured settlement market;
• Continue to define NSSTA's Internet strategy and online voice.

NSSTA's strengths were displayed during the 2009 Annual Meeting.

• Joseph Ricci, NSSTA's new Executive Director, summarized improvements in NSSTA governance.
• NSSTA announced:
  
  • New NSSTA voting bylaws;
  • Election of new Directors Betty Gregware and Daniel Finn; plus
  • A new NSSTA Channel on YouTube.
• NSSTA's program featured presentations from:
  • NSSTA lobbyist Eric Vaughn;
  • NSSTA marketing consultant Peter Arnold; and
  • NSSTA General Counsel Hogan & Hartson partner Craig Ulman.
• In addition to his "Washington Report" Vaughn organized an impressive delegation of congressional speakers for NSSTA:
  
  • Senator Richard Durbin (D) from Illinois;
  • Senator Charles Grassley (R) from Iowa;
  • Congressman Charles Rangle (D) from New York;
  • Congressman James Langevin (D) from Rhode Island;
  • Congressman Joseph Crowley (D) from New York;
  • Congressman Dave Camp (R) from Michigan;
  • Congressman Brian Higgins (D) from New York;
  • Congresswoman Allyson Schwartz (D) from Pennsylvania;
  • Congressman Joseph Courtney (D) from Connecticut;
  • Plus the Chiefs of Staff for four congressmen.

Among the political speakers, Senator Durbin, uncle of NSSTA President Daniel Durbin, was the most focused on structured settlement issues. Senator Durbin promised to:

• Support IRC sections 104(a)(2) and 130;
• Address structured settlement secondary market advertising as part of his proposed Financial Product Safety Commission.

Ricci, Vaughn and NSSTAPAC Chairman Brad Cantwell complemented NSSTA congressional presentations with a NSSTAPAC status report.

In addition to the congressional speakers, NSSTA's educational program featured exceptional structured settlement and settlement planning presentations:

• Industry Update and Looking Forward - Transitioning NSSTA Presidents Chris Diamantis and Dan Durbin offered their strategic analyses;
• "All Things Considered" - NSSTA's legal committee has upgraded the quality and scope of its educational contributions:
  
  • Michael Miller summarized Spencer v. Hartford;
  • Ilana Hanau spoke about the Fresno County factoring cases;
  • Craig Ulman re-introduced "Exemption of Structured Settlement Payments" as a sales and marketing enhancement to help grow structured settlements.
• Medicare and Medicaid - NSSTA's government benefits committee sponsored two panel discussions.
  
  • Roy Franco, Mark Popolizio, David Korch and Rafael Gonzalez spoke about Medicare and structured settlements;
  • John McCulloch, Timothy O'Driscoll and Dennis Mc Andrews spoke about Medicaid and structured settlements.

• 35W Bridge Collapse - Jerry Lothrop summarized structured settlement results and lessons learned from the Minnesota August 1, 2007 bridge collapse.
• Financial Strength Ratings - William Pargeans of A.M. Best emphasized strong fixed annuity sales trends despite low interest rates;
• Ethics - Mike Jones continued a revitalized NSSTA priority:
  • Asking the NSSTA audience: "why be ethical?" and
  • Challenging the NSSTA audience to identify and support ethical leaders within the structured settlement industry.

Congratulations to NSSTA for an outstanding 2009 annual meeting in Washington, D.C. Future S2KM blog posts will offer commentary.

For S2KM reports about prior NSSTA meetings, see S2KM's structured settlement wiki.