Beyond Structured Settlements

Structured Settlements 2015 -2

Market Issues and Developments

The 2015 structured settlement marketplace could perhaps best be characterized as "changing the focus of our future" as industry leaders cooperated to create a positive future agenda to overcome, or move beyond, multiple challenges that continued to negatively impact both primary and secondary market performance metrics.

Industry challenges during 2015 included: 1) residual impact of the ELNY insolvency; 2) continuation of low interest rates; 3) unprecedented, negative secondary market publicity; and 4) an ongoing primary market generational transition.

Elements of the future agenda: 1) a shift in the traditional "protect and preserve" focus of the National Structured Settlement Trade Association (NSSTA) toward an expanded priority of identifying structured settlement growth opportunities; 2) increasing industry unity evidenced by improved communication and cooperation among NSSTA, the National Association of Settlement Purchasers (NASP) and the Society of Settlement Planners (SSP); 3) consumer protection amendments to multiple state structured settlement protection statutes; 4) expanding educational offerings with programs that specifically target judges as well as new industry participants; 5) public relations investments to help counteract negative industry publicity; and 6) further development and growth of a professional personal injury settlement planning market.

Primary Market Growth

In a recent S2KM interview, Michael Goodman, current NSSTA President, offered a personal estimate of $8 to $10 billion per year of annuity premium as the potential size of the U.S. structured settlement market.

The U.S. primary structured settlement market, however, has never approached that annual figure and, in fact, has experienced a significant decline since its peak of $6.2 billion in 2008. To better understand and reverse this decline, NSSTA has re-focused its priorities on expanding the use of structured settlements.

As a first step in 2014, in partnership with CLM Advisors, NSSTA 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 provided NSSTA members with marketing tools for discussions with the audiences surveyed.

During 2015 NSSTA organized an "Industry Growth Initiative" to effectuate Goodman's number one priority of "identifying growth opportunities for the structured settlement industry." This Initiative is focusing on three preliminary growth opportunities:

• Rejuvenate defense programs.
• Amend the Federal Employee Compensation Act (FECA).
• Convertible deferred lump sums.

Goodman has further supported NSSTA's growth priority with these related goals: 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.

Although NSSTA's renewed focus on industry growth has not yet noticeably improved primary market metrics, an important psychological and organizational foundation has been created which should enhance future performance.

Industry Unity

One significant factor which arguably has hurt the structured settlement industry has been the historic acrimony which has divided plaintiff and defense brokers as well as the primary and secondary markets and which has resulted in three professional associations (NSSTA, SSP and NASP) frequently at odds with each other.

In the words of former SSP President Neil Johnson: Lack of structured settlement industry unity has been "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. It always focuses attention on the negative, never on the positive."

During 2015, the leaders of NSSTA, SSP and NASP expanded prior educational dialogue which began in 2014 at NSSTA's Fall Educational Conference which served as a precursor for improved association relationships by featuring SSP President Neil Johnson and NASP President Patricia LaBorde as guest speakers.

SSP's 2015 Annual Conference included an unprecedented number of structured settlement association leaders as speakers and attendees including representatives of NSSTA and NASP.

During the NASP 2015 Annual Conference , Robin Shapiro moderated an historic "President's Panel" featuring LaBorde and Goodman during which they announced a collaborative NSSTA and NASP legislative strategy to add five consumer protection amendments to targeted state structured settlement protection statutes:

• No forum shopping.
• Payee required to attend hearing.
• Stricter application of approval requirements.
• Advanced notice of transfer.
• Required disclosure of prior transfers.

Personal Injury Settlement Planning

With the advent of plaintiff structured settlement brokers, continuing legislative and regulatory developments, plus an expanding array of settlement planning professionals, products and product providers, structured settlements are now viewed by many stakeholders as a subset of the larger and more complex personal injury settlement planning market.

Based upon studies by Towers Watson, S2KM has previously estimated that more than $170 billion of current annual United States tort costs (excluding workers compensation) represents payments to injury victims and their attorneys compared with a projected $5.4 billion of structured settlement premium (including workers compensation) for 2015.

S2KM has followed the development of personal injury settlement planning during 2015 by reporting on a number of professional conferences peripheral to the traditional structured settlement market:

• Stetson 2015 SNT Conference
• NAMSAP 2015 Winter Regional Conference
• SSP 2015 Annual Conference
  • Part 1
  • Part 2
• ASNP 2015 Annual Conference
• NAMSAP 2015 Annual Meeting

As NSSTA continues to evaluate options for growing its market, a new generation of leaders should more carefully analyze how to re-position their product as a fundamental component of post- Affordable Care Act personal injury settlement planning . This strategic adjustment requires a more comprehensive understanding of, and interaction with, other professional associations whose members also provide settlement planning products and services.

Secondary Structured Settlement Market

During her association's Annual Conference, NASP President Patricia LaBorde described 2015 as "a year of unimaginable successes and challenges". NASP's "challenges" included:

• Two blistering exposes of "worst case" secondary market business practices which appeared on the front pages of the Washington Post on August 25 and December 27;
• An estimated 7% decline in the number of secondary market transfers compared with 2014;
• A market "leader" (J.G. Wentworth, with an estimated 65-72% of the U.S. secondary structured settlement market) whose stock price has plummeted to $1.82 per share as of December 28, 2015 down from its historic high of $19.59 on February 28, 2014; and
• Judicial decisions such as In re: Rains, a Texas case enforcing a statutory "no-split" payment provision and establishing a new and extensive "best interest" precedent.

The successes included the proactive and collaborative legislative strategy developed by NASP and NSSTA to add five consumer protection amendments to targeted state structured settlement protection statutes. The first success resulted in amendments to the Illinois statute which LaBorde characterized as NASP's "biggest victory since the Model Act", because it overturned the result of the Brenston case and re-opened the Illinois secondary market,

Also during the NASP conference, Goodman and LaBorde jointly announced that Governor Scott Walker had signed, just prior to their panel discussion, Wisconsin's first Structured Settlement Protection Act - thereby becoming the 49th state (all except New Hampshire) to have enacted such protective legislation.

During his subsequent "Legislative Report", NASP Lobbyist Jack Kelly identified Florida, Maryland and Virginia among priority states for joint future lobbying to improve structured settlement consumer protection.

Continuing its priority of interactive judicial education about the structured settlement transfer process, NASP's 2015 Annual Conference again featured a judicial panel addressing such topics as:

• Interpreting the best interest standard;
• Common mistakes at transfer hearings by attorneys, factoring companies and sellers;
• How to best present a transfer;
• How judges consider objections to transfers;
• What documentation judges want to see at transfer hearings;
• How to best protect the seller's privacy;
• Information judges are not seeing presented that should be;
• Significance of the origin (type of personal injury) to the judge's analysis;
• Impact of prior transfers on assessments.

NSSTA has likewise initiated its own judicial education program about structured settlement transfers.

For S2KM's summary of 2015 structured settlement market metrics, see this blog post.
For S2KM's prior year summaries of the structured settlement market, see the structured settlement wiki.

Structured Settlements 2015 - 1

Market Metrics

Although its new "Growth Initiative" has represented a well-publicized, number one priority of the National Structured Settlement Trade Association (NSSTA) during 2015, the results of this initiative have not yet produced a noteworthy impact on structured settlement annuity sales.

As reported by Melissa Evola Price, the United States structured settlement primary market has continued to slowly recover from its 2012 nadir during 2015 with first nine months annuity sales of $3.96 billion resulting from 18,635 cases - a premium increase of 3% compared to $3.86 billion resulting from 19,778 cases for the same period in 2014. The average per case annuity premium has increased to $212,703 from $195,305.

Based upon these results, 2015 annual structured settlement annuity sales can be expected to approximate $5.4 billion. The projected 2015 annual premium totals, however, will still fall substantially short of the historic 12 month industry high ($6.2 billion in 2008) after consistently averaging close to $6 billion annually from 2001-2007.

Recent Annual Structured Settlement Annuity Premium

• 2015 (third quarter) - $3.96 billion
• 2014 - $5.25 billion
• 2013 - $5.13 billion
• 2012 - $4.82 billion
• 2011 - $4.97 billion
• 2010 - $5.5 billion
• 2009 - $5.4 billion
• 2008 - $6.2 billion

Adding the 2015 Third Quarter results to historic U.S. structured settlement totals, S2KM estimates the following primary market metrics from 1976 thru September 2015:

• Total annuity premium: $148.7 billion.
• Total structured settlement cases: 847,200
• Average annuity premium: $175,600.

Nine month 2015 sales results (in millions) for individual structured settlement annuity providers (per Price's report) which are members of the National Structured Settlement Trade Association (NSSTA) plus the rounded increase (+) or decrease (-) from comparable 2014 results:

• Berkshire Hathaway: $974 MM (-12%)
• Pacific Life: $642 MM (+16%)
• MetLife: $592 MM (-13%)
• Prudential: $563 MM (+22%)
• Liberty Life: $422 MM (-2%)
• Amgen: $408 MM (+8%)
• New York Life: $298 MM (+45%)
• Mutual of Omaha: $65 MM (+63%)

Low Interest Rates

Many structured settlement industry participants attribute decreased sales to low interest rates. Market yields on U.S. Treasury securities at 30 year constant maturity peaked at 13.45 percent in 1981. Here are several historic average annual rates for 30 year Treasury securities (source: U.S. Department of the Treasury):

• 2015 (as of December 28) - 2.95%
• 2014 - 2.97%
• 2013 - 3.96%
• 2012 - 2.95%
• 2011 - 3.91%
• 2010 - 4.25%
• 2009 - 4.08%
• 2008 - 4.28%
• 2007 - 4.84%
• 2000 - 5.94%
• 1990 - 8.61%
• 1980 - 11.27%

Submarkets - Multiple noteworthy submarkets, each with significant structured settlement growth potential, are incorporated within the annuity production numbers set forth above. With the exception of non-qualified assignments funded with life insurance annuities sold by NSSTA members, S2KM is not aware of published metrics for these submarkets.

• Non-Qualified Assignments
  • Non-qualified assignments represent transfers of periodic payment obligations that do not meet the requirements of IRC section 130. They are generally used to defer taxable damage awards such as punitive damages as well as contingent attorney fees. Because they do not benefit from the favorable tax treatment of IRC 130, most non-qualified assignees are "off-shore" companies located in jurisdictions which do not tax the funds received by the assignee as income.
  • Two NSSTA-member annuity providers (Liberty Life and American General) currently offer and separately report non-qualified sales
  • Reported nine month 2015 non-qualified structured settlement sales by Liberty and Amgen totaled $159.0 million compared with $113.2 million in 2014 - a substantial increase which does not include non-qualified sales by a growing number of non-NSSTA member companies.
  • Release 58 of "Structured Settlements and Periodic Payment Judgments" (S2P2J) features an expanded analysis of the non-qualified market.
• Medicare Set-Asides
  • A Medicare set-aside (MSA) is an administrative and funding mechanism utilized in certain categories of settlements to protect Medicare's interests as "secondary payer" under the Medicare Secondary Payer (MSP) statute.
  • Although Federal law does not define MSAs, or mandate specific types of MSA funding mechanisms, CMS (the responsible federal agency) has established certain basic requirements for workers compensation MSAs (WCMSAs).
  • Under current CMS rules, structured settlement annuities have an inherent cost advantage over lump sum alternatives for funding WCMSAs resulting from the method CMS prescribes for calculating present values.
  • Although industry reporting does not currently separate MSA annuity sales, S2KM has previously estimated that eight (8%) percent of 2013 structured settlement premium and 24 percent of 2013 structured settlement annuities were attributable to WCMSAs.
  • Although no specific CMS rules or requirements currently exist for liability MSAs, one professional MSA administrator has informed S2KM that liability MSAs now represent 30% of his company's cases and the percent is growing.
• Special Needs Trusts
  • Established by Congress in 1993 as part of the Omnibus Budget and Reconciliation Act, Special Needs Trusts (SNTs) provide an authorized method for disabled individuals to hold an unlimited amount of assets in trust without disqualification for certain means-tested government benefits including Social Security Income and Medicaid.
  • When utilized as part of a personal injury settlement, SNTs are frequently funded with structured settlement annuities.
  • Similar to MSAs, industry reporting does not currently separately report SNT annuity sales.
  • Although an important strategic relationship clearly exists between structured settlement brokers and special needs attorneys, neither professional community have fully embraced the other for reasons explained in prior S2kM blog posts.
  • As a result, continuing opportunities exist to expand structured settlements funding of SNTs as well as other government benefit programs promoted by special needs attorneys such as the ABLE Act and the Affordable Care Act.

How large is the potential U.S. annual structured settlement market?

Based on recent Towers Watson studies, S2KM has previously estimated that more than $170 billion of United States tort costs (excluding workers compensation) represented payments to injury victims and their attorneys during 2014. Within that framework, and in the context of an S2KM interview, NSSTA President Michael Goodman recently stated his own estimate of potential market size for the structured settlement industry to be $8 to $10 billion range per year.

Secondary Market

Unlike the primary structured settlement market, which has experienced modest annual sales increases since 2012, the secondary market appears to have regressed according to industry experts. As a point of reference, based on interviews with industry experts in 2012, S2KM estimated 2012 structured settlement secondary market activity to be:

• 12,000 secondary market transfers - with less than 120 contested by annuity owners and/or providers.
• $360 million of total secondary market purchases (money paid to transferors).
• $30,000 average individual transfer.

Following zero (0%) percent growth in 2013, the number of secondary market transfers appears to have declined as much as 15% during 2014 with another decrease of as much as 7% predicted in 2015, according to various industry sources.

This decline in secondary market transfers received further confirmation from:

• An exhibit to J.G. Wentworth's December 10, 2015 SEC Form 8-K which indicates a $48 million drop in structured settlement revenue for the first three quarters of 2015 compared with the same 2014 period ($764MM vs. $812 MM).
• J.G. Wentworth's current stock price - which closed on the New York Stock Exchange at $1.82 per share on December 28, 2015 down from its historic high of $19.59 on February 28, 2014.

Industry experts estimate J.G. Wentworth currently controls between 65-72% of the U.S. secondary structured settlement market.

Based upon the 2013-2015 transfer estimates indicated above, S2KM further updates its estimates of historic (1986-2015) structured settlement secondary market metrics as follows:

• 168,000 transfers - involving 84,000 structured settlement recipients.
• $5 billion - aggregate sums paid to transferor structured settlement recipients.
• $12.9 billion - aggregate periodic payments purchased by secondary market companies.

For S2KM's summary of 2015 structured settlement issues and developments, see this blog post.
For S2KM's prior year summaries of the structured settlement market, see the structured settlement wiki.

NSSTA 2015 Fall Conference

Although the National Structured Settlement Trade Association (NSSTA) did not promote a specific theme for its 2015 Fall Educational Conference, one of the speakers succinctly captured the program's overall purpose and accomplishment when he described NSSTA's new Industry Growth Initiative as "changing the focus of our future."

Industry Growth Initiative

NSSTA's website description of its Industry Growth Initiative highlights "a significant decline in production since its peak at $6.3 Billion in 2008" and asserts "we do an excellent job protecting our industry" before announcing that "this year we want all NSSTA members to focus their time, energy and resources on new opportunities to expand the use of structured settlements-to grow our industry."

NSSTA President Michael Goodman utilized his Opening Conference Comments in Phoenix (as well as a preconference interview with S2KM) to describe the status and organizational structure of the NSSTA Industry Growth Initiative.

"My first priority as President of NSSTA," Goodman stated, "is to identify growth opportunities for the structured settlement industry. First, we asked all NSSTA members to submit ideas for growth at [email protected]. . Second, I tried to put together a NSSTA Growth Committee consisting of a highly talented cross section of industry leaders with diverse perspectives. Third, the Committee evaluated all of the 28 (to date) NSSTA member growth proposals and selected three for NSSTA Board of Directors approval to develop immediate implementation plans with success metrics."

Goodman introduced the NSSTA Growth Committee members including co-Chairmen William Goodman, Sean Coleman, John McCulloch and John Arendt. Speaking for the Committee, Coleman enthused: "I love our change of focus. Historically, NSSTA has been reactive, dodging bullets. The Growth Initiative redirects our mindset and focus. It encourages us to become proactive. The Growth Committee has already surpassed by highest expectations."

Goodman and the Committee co-Chairmen identified the following three NSSTA Growth Initiatives already 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. Beginning with three target carriers, the Committee plans to analyze the causes, and ultimately revitalize the programs, to create new prototype defense program models. Note: NSSTA recently commissioned surveys of Senior Claims Executives; and front line Claims Professionals which S2KM summarized and evaluated in prior blog posts.
• Amend the Federal Employee Compensation Act (FECA) - FECA, which provides workers compensation like benefits for federal workers, currently does not permit structured settlements. With payouts totally approximately $4.5 billion per year, FECA represent an attractive potential market for structured settlements with administrative cost savings being one justification for a legislative amendment. Based upon preliminary interviews, the Growth Committee believes FECA stakeholders view structured settlements favorably. The Committee is gathering statistical data to support its proposal and building grassroots support.
• Convertible Deferred Lump Sums - As a sales response to "low interest rates", the Growth Committee is proposing 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. A Canadian broker attending the NSSTA conference stated that at least one Canadian life company already offers this structured settlement product feature. The Committee anticipates whichever annuity provider introduces this product feature in the U.S. will probably also seek an IRS private letter ruling.
• Note: NSSTA's Growth Committee identified a fourth preliminary initiative (Dissipation Study) - to confirm that injury victims squander lump sums. However, this initiative is currently on hold. For background, see this 2009 S2KM review of Jeremy Babener's legal research paper analyzing historic dissipation studies.

Factoring Update

Goodman also addressed the state of the structured settlement industry including a "factoring update". As part of this report, Goodman confirmed that NSSTA and the National Association of Settlement Purchasers (NASP) have agreed to cooperate legislatively in several states to seek the following consumer protection amendments for state structured settlement protection statutes:

• No forum shopping.
• Payee required to attend hearing.
• Stricter application of approval requirements.
• Advanced notice of transfer.
• Required disclosure of prior transfers.

Supporting this cooperative initiative, NSSTA has begun offering its members a new Judicial Education Training Seminar - taught in Phoenix by John McCulloch and Stephen Harris. Goodman also announced he will be a featured speaker at NASP's 2015 Annual Conference next week in Las Vegas - the first serving NSSTA President to do so. Perhaps anticipating his NASP appearance, and cognizant of the recent Washington Post article ("a perfect storm for factoring"), Goodman advised the NSSTA Conference attendees: "Factoring is not a zero sum game. What is bad for them is not always good for us."

Additional Conference Presentations

Many structured settlement participants believe control of the primary structured settlement market, and future market growth, have shifted from the defense to plaintiff attorneys and their injury victim clients. Although NSSTA has been slow to embrace plaintiff-focused personal injury settlement planning, NSSTA's Fall Conference included two presentation featuring plaintiff representatives:

• A Trial Lawyer Panel - moderated by Ryan Garrison with plaintiff attorneys Julio Zapata and Francisco Gutierrez; plus
• An introduction to the National Association of Trial Lawyers Executives (NATLE) by Gayle Bennett, Deputy Director of the New Mexico Trial Lawyers Association.

Both plaintiff presentations emphasized opportunities to expand the market for structured attorney fees. Both plaintiff attorneys expressed a preference for advisors who are "knowledgeable not just about structured settlements but also other investment vehicles."

In addition to the Judicial Education Training session mentioned above, three other NSSTA presentations addressed educational issues and programs:

• Best Practices for Structured Settlement Case Resolution - During her excellent review of structured settlement fundamentals, Betty Gregware expressed serious concern about the general quality of structured settlement documentation and the need to increase competence across the industry.
• Professional Broker Education - Gregware, Melissa Price and Debbie Sink introduced a new educational program NSSTA is developing primarily for individuals who are new to the structured settlement industry. They also provided an administrative overview of "NSSTA University" whereby NSSTA partners with members to secure CE credits for member-sponsored educational seminars for insurance claims departments or law firms.
• MSSC Paper Presentation - Mal Deener moderated a panel featuring Trish Fairhurst, Richard Carroll and other members of the first graduating class of NSSTA's new Masters Structured Settlement Consultant (MSSC) professional designation. Each MSSC graduate is required to submit a paper and these papers will be published on NSSTA's website. NSSTA will offer its next MSSC program beginning April 27, in conjunction with its Certified Structured Settlement Consultant (CSSC) program, at the University of Notre Dame

Separate from, but related to, NSSTA Growth Initiative, NSSTA's Board of Directors has appointed a Special Needs Attorney Task Force to develop strategic relationships with special needs attorney professional associations and to identify collaborative marketing opportunities with special needs attorneys more generally. NSSTA member Carola Davis and Special Needs Alliance attorney Patty Sitchler initiated a NSSTA presentation/discussion in Phoenix which hopefully will continue and expand to the benefit of both professional communities.

A critical factor, both challenge and opportunity, for growing the primary structured settlement market concerns succession planning. What new generation of distributors, or distribution channel(s), or business models, 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? NSSTA's Fall Conference featured two presentations addressing these issues:

• Succession Planning - Presenter Jim Early looked at the succession issue primarily from the point of view of the individual producer. Among his observations: "nepotism works in the structured settlement industry" and "a lack of capital has prevented the primary market from bringing in and training new people."
• Diversity Discussion - Angel Viera and Stacy McCall offered a convincing case for promoting greater diversity among new structured settlement professionals as a key component for future growth. Their presentation included and elicited several thought-provoking observations including: 1) "From a demographic perspective, our industry should mirror the people we serve" and 2) "Our industry suffers from a lack of diversity of thinking. Where do we find new voices and perspectives?"

Lifetime payments represent a valuable, optional structured settlement benefit which can be further enhanced from a pricing perspective when rated ages are applicable. Kevin Puckett and Ken Kiefer expounded on these important issues during their presentation about Mortality, Morbidity & Rated Ages.

NSSTA members Susan Clark and Robert Caples introduced Arnie Begler and Scott Henry, representing Pipitone Group, NSSTA's new public relations firm, and together they discussed NSSTA's Communications Program. Because journalists, as well as their readers, frequently confuse the primary and secondary structured settlement markets, Pipitone's "first test" was responding to the aforesaid Washington Post article. Pipitone's stated assignment is "to find the best communications practices and bring them to NSSTA" which will include designing a new NSSTA website. Among NSSTA's priorities, and Pipitone's challenges, will be attempting to reclaim the "structured settlement" brand inclusive of Google searches which currently are dominated by secondary market companies.

NSSTA Executive Director Eric Vaughn concluded NSSTA's Fall Conference with a Government Relations Update - his characteristically insightful and energizing overview of structured settlement legislative and regulatory activities. Among other accomplishments, Vaughn was recently named Vice Chairman of the American Association of People with Disabilities (AAPD).

Other recent NSSTA-related S2KM blog posts:

• Michael Goodman Interview
• NSSTA Marketing Surveys
  • Senior Claim Executives
  • Claim Professionals
  • Plaintiff Attorneys
• NSSTA 2015 Structures 202 Conference
• NSSTA 2015 Annual Conference

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.

Structured Settlement Primary Market Growth

The 2015 First Quarter Report of structured settlement annuity provider sales recently compiled and selectively distributed by Melissa Evola Price provided welcome news for the industry.

Structured settlement 2015 first quarter annuity premium of $1,332,047,252 increased by more than $230 million (21%) compared with the 2014 first quarter annuity premium of $1,101,839,529. This 2015 first quarter total is the largest since 2009 when reporting companies produced $1,418,930,180 of structured settlement annuity premium.

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 and 2014.

Note: Melissa Evola Price's quarterly structured settlement report 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.

The improved 2015 first quarter structured settlement sales appear to result, in significant part, from a purposeful, renewed marketing focus by the National Structured Settlement Trade Association (NSSTA) and its members including:

• Marketing Boot Camp - NSSTA transfigured its 2013 Fall Educational Conference into a "Marketing Boot Camp" - "designed to help every member who attends learn how to increase the number of referrals they get from their clients and how to develop new clients."
• Structures 202 - NSSTA revised its prior Structures 101 educational program (primarily for case managers) in 2015 to attract and assist "Next Generation" structured settlement participants who are new to the market and rapidly replacing the pioneering generation of professionals who created the structured settlement industry in the 1970s and 1980s.
• NSSTA University - During its Fall 2014 Conference, NSSTA 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.
• MSSC - Complementing and extending its Certified Structured Settlement Consultant (CSSC) Professional Certification Program, NSSTA has added a new Master's Certificate in Structured Settlement Consulting (MSSC). NSSTA recognized and honored the most recent graduates of both programs during its 2015 Annual Meeting.
• New Market Surveys - In partnership with CLM Advisors, NSSTA's Marketing Committee commissioned a three part survey project during 2014 to provide its members with valuable marketing tools for discussions with the audiences surveyed. These surveys have now been completed: Part 1 (senior claims executives); Part 2 (claims professionals); Part 3 (plaintiff attorneys).
• Prudential Survey - Complementing NSSTA's new market surveys, NSSTA member and structured settlement provider Prudential recently published the results of its 2013 survey of 400 claimants who had entered into a settlement of a physical injury or workers’ compensation claim of at least $100,000.

In addition to these marketing initiatives, NSSTA finally appears to be encouraging some degree of structured settlement "industry unity".  NSSTA President Michael Goodman highlighted the following recent "NSSTA successes" during NSSTA's 2015 Annual Meeting:

• A strong relationship with the American Association for Justice (AAJ);
• Improved dialogue with the Society of Settlement Planners (SSP);
• Guest educational participation involving SSP and National Association of Settlement Purchasers (NASP) representatives;
• Successful cooperation with NASP to enact revised structured settlement protection legislation in Illinois.

Do the positive 2015 first quarter results anticipate further growth in the structured settlement primary market? And, if so, what resources and strategies will be required?

S2KM will address these questions in subsequent blog posts based in part on the results of the most recent structured settlement market surveys sponsored by NSSTA and Prudential.

For S2KM's most recent structured settlement primary market reports, see:

• Structured Settlements 2014 - Primary Market
• Structured Settlement Update - 2014 Annuity Sales

Misguided Recommendations

In a recent article titled "Time for Congress to Reform Structured Settlements", published April 20, 2015 in the Congress Blog, attorney Richard Risk alleges "Congress’ noble goal of supporting accident victims has been upended by the current system in which insurers and their consultants often deceptively rig structured settlements against accident victims."

To "clean up" the primary structured settlement market, Risk recommends that Congress or the Consumer Financial Protection Bureau (CFPB) should take action against "abusive practices" in the structured settlement industry and, "at a minimum", these reforms should include:

1. "Ensure victims have better access to their own structure consultants."
2. "Require diversification in large cases."
3. "Demand better disclosure from the defense."

Even assuming Risk's prognosis is correct, his proposed governmental solution is not - at least not for injury victims who are represented by legal counsel. Each of the three "reforms" Risk highlights falls squarely within the fiduciary role and responsibilities of plaintiff attorneys which encompass settlement planning and negotiation as well as litigation.

In the past, many plaintiff attorneys have relied on defendants and their advisors to make structured settlement proposals and to provide expertise regarding structured settlements. This practice was and continues to be a mistake and could be considered professional malpractice.

Plaintiff attorneys should never rely exclusively on the defense for structured settlement advice. Defense attorneys, structured settlement brokers and other consultants working on the defense side are not engaged to work for the plaintiff or to advise the plaintiff’s attorney. Defense settlement objectives are to secure a full release for all defendants and related parties at a reasonable cost.

A broad range of professionals, including structured settlement consultants, currently provides settlement planning related services to plaintiffs and their attorneys. Most structured settlement consultants belong to one of two primary market structured settlement associations: the National Structured Settlement Trade Association (NSSTA) or the Society of Settlement Planners (SSP).

NSSTA and SSP share a divisive political history which may explain, in part, the indirect critique of NSSTA (whose members are meeting this week in Washington, D.C.) that envelops the article by Risk, an SSP member. Whether intentional or not, Risk's article appears to represent a step backward from recent attempts by leaders of both associations to unify the primary structured settlement market.

During the NSSTA Fall 2014 Conference, for example, SSP President Neil Johnson outlined a "Blueprint for Industry Unification" which he and NSSTA President Kevin Silo continued to discuss at the SSP 2015 Annual Conference in a repeat performance of their "Presidents' Panel". Johnson's appeal for unity characterized "industry disarray" as a "threat to our future." Labeling diversity "good" and disparity "bad", he called for a united front before the public.

In Johnson's words: lack of structured settlement industry unity is "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. It always focuses attention on the negative, never on the positive. Lack of industry unity shows no partiality or favoritism for either NSSTA or SSP."

Many structured settlement professionals increasingly recognize the need to acknowledge and address structured settlement industry problems - including the need to improve primary and secondary business practices and standards. Relatively few industry participants, however, are likely to support Risk's proposal for federal legislation and/or regulation to attempt to force defendants to fulfill the fiduciary responsibilities plaintiff attorneys owe to their own clients.

A better solution, in S2KM's opinion, would encompass a combination of structured settlement industry self-regulation and improved education of plaintiff attorneys (and consultants themselves) about the client benefits and professional responsibilities associated with structured settlements in the context of personal injury settlement planning. This solution represents both an opportunity and a challenge for a new generation of structured settlement leaders.

For more detailed analysis about the role and responsibilities of plaintiff attorneys in structured settlements, see chapter 5 of "Structured Settlements and Periodic Payment Judgments" (S2P2J).

SSP 2015 Annual Conference - 2

The Society of Settlement Planners (SSP) hosted its 2015 Annual Conference last week in Las Vegas with an unprecedented number of structured settlement association leaders as speakers and attendees including representatives from the National Structured Settlement Trade Association (NSSTA) and the National Association of Settlement Purchasers (NASP). For a list of SSP speakers and topics, see this prior S2KM blog post.

In his keynote address, SSP President Neil Johnson re-affirmed SSP's traditional commitment to "open dialogue" of industry issues with a mandate for "healthy, respectful discussion of all industry issues, controversial or not - rejecting the the temptation to sweep the uncomfortable under the carpet."

While seeking to engage all perspectives to identify shared permanent interests and discuss industry problems and issues, Johnson acknowledged and accepted that conference attendees would not agree on all issues - and they did not.

Some of the issues discussed:

• The need for structured settlement industry unity - encompassing education and, in some situations, political lobbying.
• How NSSTA and NASP are collaborating to improve state structured settlement protection statutes.
• Improving public relations by first acknowledging and addressing structured settlement primary and secondary market problems.
• The uniqueness of the structured settlement product and the need for better primary market self-regulation.
• The impact of "fiduciary standards" on settlement planning and the future of structured settlements.
• Collaborative primary/secondary market strategies for addressing "the darker side of factoring".
• Settlement planning as an important and distinctive growth strategy for structured settlements.
• Differentiating settlement planners from single-product plaintiff structured settlement brokers.
• Financial planners - a competitive threat or the next generation of structured settlement consultants and settlement planners?
• The inevitability and risks of "off-shore" settlement planning products in a globalized world.
• Lessons learned from the Executive Life debacle for claimants and their attorneys and advisors.
• How settlement planners and structured settlement consultants misuse life care planners and life care plans.
• The Social Security Administration's recent hostility toward special needs trusts (SNTs) and what it means for structured settlements.
• How and why settlement planners must learn to take control of the Medicare set-aside (MSA) process.
• The explosion of multi-claimant QSFs - a missed market for structured settlements?

None of these issues were resolved in Las Vegas. What did occur was a healthy exchange of ideas among leaders of historic structured settlement adversaries (NSSTA, SSP and NASP) with active participation from leaders of other settlement planning associations. The result: a unique industry gathering as much like a diplomatic conference as an educational event.

With NSSTA's President, Executive Director, and several members of its Board of Directors in attendance, whether and how NSSTA (as well as NASP) and its members will respond remains uncertain. NSSTA helped to initiate a more open industry dialogue during its own Fall 2014 Educational Conference by inviting SSP President Johnson and NASP President Patricia LaBorde to appear as featured speakers.

Structured Settlement Industry Unification

During the NSSTA Fall 2014 conference, Johnson outlined a "Blueprint for Industry Unification" which he and NSSTA President Kevin Silo continued to discuss in Las Vegas in a repeat performance of their "Presidents' Panel". Johnson's appeal for unity characterized "industry disarray" as a "threat to our future." Labeling diversity "good" and disparity "bad", he called for a united front before the public.

In Johnson's words: Lack of structured settlement industry unity is "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. It always focuses attention on the negative, never on the positive. Lack of industry unity shows no partiality or favoritism for either NSSTA or SSP."

Both Johnson and Silo expressed optimism, however, about the future of structured settlements - especially in the context of generational transition. Johnson, in particular, highlighted potential opportunities amidst his self-described industry disparity, including a strengthened resolve and commitment for improvement and growth. According to Johnson and other settlement planners, the structured settlement industry needs a wakeup call - a fresh look and reevaluation that includes, but extends beyond, NSSTA's "protect and preserve" orientation.

Here are the core components of Johnson's proposed "solution" for structured settlement industry unity:

• Recognizing and accepting product and professional diversity.
• Identifying and pursuing permanent shared interests without necessarily agreeing on all issues.
• Engaging all perspectives to discuss industry problems and issues.
• Promoting and practicing settlement planning with the structured settlement annuity as a core strategic product.

The Future of SSP

Throughout its 15 year history, SSP has punched beyond its weight class. Born out of a troublesome recognition that the structured settlement playing field was seriously tilted to the disadvantage of plaintiffs and their advisors, SSP has helped bring respect and professionalism to the plaintiff side of the table by emphasizing "settlement planning", not "settlement selling".

Recognizing the strategic role of structured settlements, settlement planning nonetheless seeks the "best interest" of its injury victim clients and includes multiple products and multiple experts.

Despite these accomplishments, and perhaps because of them, SSP's future as an association is uncertain. NSSTA has more plaintiff structured settlement brokers than SSP and has been more successful in adding a new generation of members.

Other, well-organized, non-structured settlement professionals, such as special needs attorneys and life care planners, increasingly focus their marketing, educational programs and work product on settlement planning using SNTs and MSAs as their gateway.

As was evident in Las Vegas, however, SSP continues to raise the educational bar for an entire industry of settlement professionals. Settlement planning remains an evolving profession - largely unregulated with few industry standards. The ultimate role and growth potential for structured settlements within the settlement planning market have not yet been determined.

SSP's ability to organize an educational conference where an unprecedented cross-section of industry leaders engaged in civil discussions about strategic industry issues suggests SSP has an important continuing role within both the structured settlement and settlement planning markets.

For S2KM reporting about prior structured settlement and settlement planning conferences, see the structured settlement wiki.

SSP 2015 Annual Conference - 1

The U.S. structured settlement industry consists of three national professional associations - the National Structured Settlement Trade Association (NSSTA), the Society of Settlement Planners (SSP) and the National Association of Settlement Purchasers (NASP) - whose political differences frequently obscure their shared existential interests and, until recently, have restricted their opportunities for mutually-beneficial collaborative education.

NSSTA's 2014 Fall Educational Conference highlighted the issues of "generational change and challenges" and served as a precursor for improved association relationships by featuring SSP President Neil Johnson and NASP President Patricia LaBorde as guest speakers.

The SSP 2015 Annual Conference, to be held March 29-31 in Las Vegas will substantially expand this new educational chapter of industry dialogue by hosting an unprecedented number of association leaders as speakers. Among the highlights will be a repeat engagement of NSSTA's 2014 "Presidents' Panel" featuring current NSSTA President Kevin Silo and SSP President Johnson. Titled "Collaboration for the Greater Good", and moderated by Patrick Hindert, this panel promises to "doubledown" on solutions for achieving industry unity.

Additional association leaders scheduled to speak at the SSP Conference:

• Eric Vaughn - NSSTA's Executive Director is expected to emphasize the shared interests of all structured settlement professionals including plaintiff and defense representatives as well primary and secondary market participants. These shared interests being the protection and preservation of IRC sections 104(a)(2) and 130 plus the future growth of the primary market.
• Earl Nesbitt - NASP's Executive Director will be joined by Rhonda Bentzen, SSP 2015 Conference Chairperson and secondary market expert, to follow-up SSP's groundbreaking 2014 secondary market panel which first opened educational dialogue between primary and secondary structured settlement professional associations.
• Jack Kelly - NASP's lobbyist, who also spoke at last year's SSP conference, will provide his perspective on political changes taking place in Washington D.C. and how they might impact structured settlements.
• Kevin Urbatsch - The National Director of the Academy of Special Needs Planners (ASNP) recently introduced and helped organize ASNP 12-part "Settlement Planning" webinar series. In Las Vegas, Urbatsch will address recent attacks by the Social Security Administration on litigation-generated special needs trusts.
• Wendie Howland - Editor of the American Association of Nurse Life Care Planning (AANLCP) Journal, Ms. Howland will discuss settlement planning from a life care planning perspective. She will highlight the increasing role of life care planners in allocating damages for Medicare set-asides (MSAs) and as a result of the Affordable Care Act. In addition, she will advise structured settlement consultants and settlement planners how to better utilize life care plans to improve their own work product.

Additional SSP speakers and topics:

• Joseph Dehner - A prominent international attorney and co-author of the legal textbook "Structured Settlements and Periodic Payments", Dehner will discuss "Off-Shore Funding Companies" and their increasing role in the structured settlement market.
• Joseph DiGangi, Shannon Fitzgerald and Phillip Kruse - this panel of experts, moderated by Patrick Hindert, will analyze the application of "fiduciary standards" to settlement planning and settlement planners. Their presentation will feature a case study, review SSP's Standards of Practice, discuss NAIC Model Regulations, consider the 2006 Saltzburg/Chemerinsky memos, and suggest best practices.
• Edward Stone - A legal representative for many Executive Life of New York short-fall victims who continues to seek restitution for his clients, Stone will offer his opinion as to whether some settlement planners remain at risk in the ongoing ELNY litigation.
• Joseph Tombs - A lawyer, certified financial planner and former SSP President who helped organize SSP's Registered Settlement Planner (RSP) certification program, Tombs will outline his recommended process for developing a settlement plan.
• Jack Meligan - Also a former SSP President as well as a recognized settlement planning expert, Meligan will provide an MSA update with his perspective on how MSAs fit into settlement planning.
• Jeremy Babener - A prodigious structured settlement author and industry tax expert who also serves as Chairman of SSP's Legal Committee, Babener will introduce SSP's new website and discuss new SSP Legal Committee initiatives.
• Bryn Poland - A leading Qualified Settlement Fund (QSF) expert, who has served as attorney, trustee and/or administrator for numerous QSFs, Ms Poland will explain how and why the multi-claimant QSF market is growing rapidly despite the single claimant pullback within the structured settlement market.

For S2KM's reporting about prior structured settlement and settlement planning professional conferences, see the structured settlement wiki.

Structured Settlement Update - 2014 Annuity Sales

Structured settlement primary market annuity sales increased by $115,881,836 (approximately 2%) to $5,250,262,691 in 2014 compared with $5,134,380,855 in 2013 according to industry estimates compiled and recently distributed by Melissa Evola Price. Total 2014 structured settlement cases also increased to 26,572 from 26,533 a year earlier for an average case premium of $197,586.

The 2014 annual premium totals, however, still fall substantially short of the historic 12 month industry high ($6,226,578,725 in 2008) after consistently averaging close to $6 billion annually from 2001-2007.

Adding these 2014 results to historic U.S. structured settlement totals, S2KM estimates the following primary market metrics from 1976 thru 2014:

• Total annuity premium: $144.75 billion.
• Total structured settlement cases: 828,600
• Average annuity premium: $174,700.

Berkshire Hathaway, which re-entered the structured settlement market in 2011 following a multi-year hiatus, continued its recent primary market leadership in 2014 by generating $1.424 billion of structured settlement annuity premium (28% of the industry total) during 2014. Evola Price's report did not indicate how much of Berkshire Hathaway's premium was attributable to reinsurance and/or non-qualified structured settlement sales.

The U.S. structured settlement market now consists of eight annuity providers which are members of the National Structured Settlement Trade Association (NSSTA). 2014 sales results (rounded in millions) for the seven other structured settlement annuity providers (per Evola Price's report) plus the rounded percentage increase (+) or decrease (-) from comparable 2013 results:

• MetLife: $868 MM (+20%)
• Pacific Life: $773 MM (-9%)
• Prudential: $712 MM (+30%)
• Liberty Life $608 MM (+9%)
• Amgen: $477 MM (-19%)
• New York Life: $312 MM (+13%)
• Mutual of Omaha: $46 MM (-47%)

Evola Price's 2014 compilation also reports an annual increase in annuity premium for non-qualified structured settlement assignments (from $164.9 million in 2013 to $182.3 million in 2014) 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.

Although Evola Price's report does not indicate the percentage of structured settlement premium and/or annuities attributable to workers compensation Medicare set-aside (WCMSA) cases, WCMSAs have become an increasingly important submarket for structured settlements. S2KM has previously estimated that as much as eight (8%) percent of recent structured settlement premium and 24 percent of recent structured settlement annuities are attributable to WCMSAs.

Evola Price's reports do not provide information about the structured settlement secondary market. Based upon interviews with secondary market experts in 2012, S2KM previously estimated 2012 structured settlement secondary market activity to be:

• 12,000 secondary market transfers - with less than 120 contested by annuity owners and/or providers.
• $360 million of total secondary market purchases (money paid to transferors).
• $30,000 average individual transfer.

Industry opinions differ as to secondary market sales growth during 2013 and 2014 ranging from no growth to 7% growth per year.

Accepting those 2012 secondary market estimates and assuming level secondary market sales during 2013 and 2014, S2KM estimates historical 1986-2014 structured settlement secondary market metrics as follows:

• Approximately 160,000 structured settlement transfers have occurred since 1986;
• Involving approximately 80,000 recipients - many of whom have made multiple transfers;
• With approximately $5.1 billion PV in aggregate sums paid to those recipients.
• For an average of approximately $32,000 per transfer.

For related S2KM reporting about structured settlement 2014 developments, see:

• Primary market
• Secondary market
• Settlement planning
• ELNY and Reliance

S2P2J Release 57 Highlights

The United States structured settlement market has been in existence for more than 35 years and continues to expand its scope, complexity and importance within the context of personal injury settlement planning.

Since it was first published in 1986, "Structured Settlements and Periodic Payment Judgments" (S2P2J), has provided structured settlement stakeholders with an authoritative reference guide, consisting of 16 chapters with extensive footnotes and Appendix documents, to help them understand issues and fashion settlements and judgments utilizing periodic payments. Both the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP) have utilized S2P2J as an educational resource for their certification programs.

Co-authored and updated semi-annually by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert, S2P2J now features an online version as well as the traditional hardcopy. Online S2P2J includes a search feature and download capability as well as link features to access individual book sections, appendices, footnotes, cases and statutes.

Publisher Law Journal Press anticipates a March 2015 distribution date for hardcopy supplements for S2P2J Release 57 with online S2P2J subcribers receiving their update simultaneously with no additional subscription charge. Competent professionals confronted by structured settlement issues should have access to an up-to-date copy (or the online version) of this indispensable source book.

Release 57 Highlights - Release 57 will feature new, updated and/or expanded sections addressing the following structured settlement topics:

• WCMSAs - Release 57 re-positions and expands S2P2J's extensive summary of the new CMS rules for workers compensation Medicare set-asides, the fastest growing segment of the structured settlement primary market. Regulatory rules for liability MSAs remain essentially unchanged following the withdrawl by CMS on August 8, 2014 of it the liability MSA-related NPRM it had earlier submitted to the Office of Management and Budget.
• Indexed Annuities - PLR 143928-13 highlights the potential importance of indexed annuities and annuity riders as structured settlement funding alternatives. Release 57 features a new section explaining indexed annuities, differentiating variable annuities and summarizing the related PLR.
• Commutation Riders - PLR 143928-13 also provided favorable tax treatment for a commutation rider pursuant to a Notice of Hardship Conversion as a potential alternative to factoring transactions. This PLR justified an expansion in Release 57 of S2P2J's current section discussing commutations.
• Non-qualified Assignments - Most non-qualified assignments depend upon off-shore assignment companies which raise tax and security issues for participants. Release 57 expands S2P2P's analysis of non-qualified assignments to address these issues.
• CLM Advisors Surveys - Release 57 summarizes results from two surveys commissioned by NSSTA to determine the value claims executives and adjustors place on structured settlements and structured settlement consultants. The results and related metrics are generally favorable and arguably provide a valuable marketing blueprint for defense brokers.
• ABLE Accounts - Release 57 features a new section describing ABLE Accounts, a tax-preferenced funding option authorized by the Achieving a Better Life Experience Act (ABLE Act) of 2014. Although some structured settlement consultants view ABLE Accounts as a competitive product, others see opportunities to fund ABLE accounts using structured settlements.
• Insurance Regulation - States historically have regulated insurance in the United States. As a result of the 2008 global financial crisis, however, new federal and international insurance regulatory agencies now exist which are targeting some of the largest structured settlement annuity providers among other financial and insurance companies. Release 57 adds a new section to introduce and explain these new regulatory developments and entities.
• ELNY and Reliance - The recent ELNY and Reliance liquidations have each impacted thousands of structured settlement recipients. Although judicial solutions have been fashioned, litigation continues - as least involving some ELNY shortfall payees. Release 57 updates S2P2J's extensive coverage of the ELNY and Reliance liquidations.
• Role of Plaintiff Attorneys - As structure settlements and personal injury settlement planning have become more complex, and plaintiff attorneys increasingly require the services of other settlement planning professionals, plaintiff attorneys should continue to perform certain essential structured settlement and settlement planning roles. Release 57 identifies and discusses those roles and provides additional related advice for plaintiff attorneys.
• Secondary Market Update - The continuing expansion of the secondary market has generated controversy and litigation as well as legislative reform and changing business practices. S2P2J continues to track these developments in expanding chapter 16 titled "Transfers of Structured Settlement Payment Rights". Release 57 highlights include "anti-assignment" issues in Illinois originating with the Brenston case and the market "chaos" some secondary market participant see occurring as the result of the Washington Square v. RSL Funding case.
• IRC 104(a)(2) Treasury Regulations - Recent U.S. Treasury Regulations for IRC 104(a)(2) relating to the exclusion from gross income for amounts received on account of personal physical injuries or physical sickness make two primary changes to the current regulations which Release 57 summarizes in the context of S2P2J more extensive analysis in Chapter 2 of "Taxation of Damages Received by the Claimant".

For related S2KM blog reporting about structured settlement 2014 developments, see:

• Primary market
• Secondary market
• Settlement planning
• ELNY and Reliance