Introduction
In today’s climate of economic turbulence—characterized by inflation, geopolitical uncertainty, and volatility in both fixed income and equity markets —injured plaintiffs and their attorneys face immense pressure when deciding between cash only settlements and structured settlements. Recent headlines have amplified these anxieties: abrupt trade policies, inflation risks facing the Fed, and global instability have all contributed to a financial environment fraught with unpredictability. In such a moment, structured settlements offer something rare: long-term, tax-free financial certainty.
Now is an opportune time for plaintiff attorneys to recommend structured settlements because of the benefits to injured claimants – and to do so with the assistance of a professional settlement planner. Of course, the reliability of a structured settlement hinges not only on the product itself but also on the financial strength and integrity of the life insurance company backing it. In helping plaintiff attorneys meet their own professional responsibility to clients, plaintiff-focused settlement planners can guide plaintiff attorneys through insurer comparisons by introducing multiple rating company evaluations as well as other factors indicative of an annuity provider’s financial strength.
Market Volatility and the Renewed Case for Structured Settlements
The recent sell-off in equities and the volatility of bond yields underscore the vulnerabilities of receiving cash only settlements and having to invest them into traditional market-based investments. Plaintiffs who receive cash only settlements are subject to these same market swings—along with the ever-present risks of mismanagement, behavioral decision-making errors, and inflation erosion.
By contrast, structured settlements offer guaranteed, tax-free income over time. They protect claimants from market volatility and/or poor investment outcomes and preserve financial stability even in the face of macroeconomic chaos. LIMRA analysts and rating company researchers recently noted that market conditions are likely to drive a “flight to annuities” – especially products that incorporate downside protection, such as fixed-indexed and indexed-linked annuities.
Plaintiff attorneys and settlement planners who grasp these trends are in a strong position to advise clients that now is the ideal time to prioritize structured settlement options.
Executive Life: A Cautionary Tale
History offers a sobering reminder that high ratings are not guarantees. In the early 1990s, sister companies, Executive Life Insurance Company of California and Executive Life Insurance Company of New York (ELNY), were major players in the structured settlement market. Both were rated A+ by A.M. Best and received high ratings from Moody’s and S&P prior to their respective financial crises.
While Executive Life of California experienced severe financial distress and was placed into conservation, it did not enter formal insolvency proceedings, and its structured settlement payees ultimately received all of their payments. By contrast, Executive Life of New York (ELNY) did become insolvent, and many of its structured settlement payees suffered significant losses. ELNY’s insolvency, in particular, remains one of the most troubling failures in the history of the structured settlement industry.
Regulatory Reforms
These events catalyzed major regulatory reforms. In 2004, the Securities and Exchange Commission (SEC) implemented new oversight of rating agencies by formalizing the Nationally Recognized Statistical Rating Organization (NRSRO) framework. Simultaneously, the National Association of Insurance Commissioners (NAIC) introduced Risk-Based Capital (RBC) requirements to more accurately assess insurer solvency.
These reforms reshaped how life companies are evaluated, but many plaintiff attorneys remain unaware of their significance.
Understanding NRSROS
The SEC-designated NRSROs are intended to provide a more diverse view of insurer solvency than reliance upon any single rating agency. Today, ten rating agencies hold NRSRO status:
- Standard & Poor’s
- Moody’s Investors Service
- A.M. Best
- Fitch Ratings
- Morningstar, Inc.
- Kroll Bond Rating Agency (KBRA)
- Egan-Jones Ratings Company
- Dominion Bond Rating Service
- Japan Credit Rating Agency
- HR Ratings de Mexico
Attorneys should review ratings from multiple NRSROs to gain a broader, more accurate assessment of an insurer’s financial condition.
RBC – Another Key Measure of Insurer Strength
In the aftermath of the Executive Life failures, regulators recognized that traditional solvency metrics—especially those tied to credit ratings alone—were insufficient to protect annuitants. As a result, the NAIC developed the RBC framework to provide a more comprehensive, dynamic assessment of insurer solvency.
RBC ratios (the ratio of Total Adjusted Capital to Company Action Level RBC) evaluate a life insurer’s capital adequacy based on the specific risks it assumes, including underwriting, investment, and operational risks. This granular approach allows regulators to distinguish between companies that are merely capitalized and those that are prudently managed.
Generally, companies with RBC ratios above 200% are viewed as financially strong, while lower thresholds trigger heightened regulatory oversight, including mandatory corrective actions. Top rated companies usually maintain RBC ratios above 400%. Independent Life, for example, currently has an RBC ratio of 600% and we seek to maintain it permanently over 450%.
Although some NAIC officials have suggested restricting public access to RBC data, these ratios remain a critical due diligence tool—especially for attorneys and settlement planners guiding plaintiffs through insurer evaluations. When used in conjunction with NRSRO ratings, RBC offers a second layer of insight that is grounded in regulatory capital sufficiency, not just rating agency opinions.
In today’s unpredictable financial environment, attorneys and settlement planners cannot afford to overlook RBC when recommending structured settlement annuity providers. This key measure helps safeguard clients against the types of hidden vulnerabilities that once brought down Executive Life—and provides an objective basis for selecting insurers with genuine long-term strength.
The Role of the Plaintiff Attorney: Due Diligence as Duty
Advising on structured settlements carries more than strategic weight—it is a fiduciary responsibility. Plaintiff attorneys should ask:
- Who is contractually obligated to make payments?
- Is the obligor a regulated insurance entity?
- How is the structured settlement financed?
- What is the financial condition of the life insurer?
- What security interests or guarantees exist?
These questions are fundamental in assessing the risk of non-payment. They reflect not only prudence but legal responsibility, particularly when recommending structured settlement arrangements over cash only settlements.
In fulfilling this duty, plaintiff attorneys can and should seek the advice of qualified settlement planners. These professionals bring specialized knowledge of annuity markets, product design, and financial security—knowledge that complements legal counsel. Importantly, when engaged by the plaintiff’s legal team, settlement planners share the same fiduciary duty and loyalty to the injured party. Their involvement ensures that recommendations are not only technically sound but fully aligned with the client’s long-term interests.
Independent Life: A New Model for Transparency and Trust
Independent Life Insurance Company (Independent Life) stands apart in the industry as the only life insurer primarily focused on structured settlements. It is not distracted by competing business lines or legacy liabilities. This focused mission has enabled Independent Life to build innovative products like iStructure – an indexed-lined annuity designed specifically to meet the individualized needs of injury victims and their families.
Importantly, Independent Life is rated A- by KBRA and A by Egan-Jones, offering dual NRSRO validation of its financial strength. In addition, Independent Life is reinsured by A+ AM Best-rated Hannover Life Reassurance of America. Its commitment to transparency includes publishing educational materials, engaging with professional associations, and maintaining strong RBC ratios as discussed above.
The Payee Protection Policy: Ethical Leadership in Action
Perhaps no initiative better demonstrates Independent Life’s commitment to plaintiffs than our Payee Protection Policy. This industry-first (and only) policy proactively protects structured settlement recipients from predatory factoring practices. It includes:
- Alerting original consultants when transfer petitions are filed
- Re-engaging consultants with payees
- Opposing transfer prices that are predatory
This policy empowers plaintiffs and aligns with the attorney’s role in long-term plaintiff advocacy. It also shows how a life insurer can become an ethical partner, not merely a product vendor.
Conclusion: Choosing Certainty in an Uncertain World
In today’s volatile financial environment, structured settlements offer more than guaranteed income—they offer peace of mind. Backed by strong statutory protections and informed by two decades of post-crisis reform, structured settlements now benefit from enhanced transparency tools like NRSRO ratings and RBC metrics. These tools allow plaintiff attorneys and settlement planners to evaluate insurers with a level of insight unavailable in the past.
Independent Life exemplifies how a modern, specialized life insurer can meet these heightened expectations. With dual NRSRO ratings, robust RBC ratios, and reinsurance by a top-rated global reinsurer, Independent Life reflects a model of financial resilience. Just as important, its mission-driven approach and industry-first Payee Protection Policy demonstrate that ethical alignment and financial security are not mutually exclusive.
For plaintiff attorneys and settlement planners committed to protecting their clients’ long-term interests, the message is clear: now is the time to embrace structured settlements, to apply rigorous due diligence, and to partner with companies like Independent Life that are built for this purpose.
