For many settlement planners and structured settlement annuity providers, the dominant storylines of the past two years have been COVID-19 (COVID), low interest rates and plummeting structured settlement annuity sales.
In 2019, based on industry reports, $6.47 billion of annuities were purchased to fund 26,486 structured settlement cases, for an average per case premium of $244,228.. The 2019 total topped the prior annual record set in 2008 of $6.2 billion.
In 2020, during the first year of COVID’s impact, total annual structured settlement premium dropped decisively to $4.9 billion. Then, in 2021, structured settlement annuity billion fell again to a reported $4.23 billion of annuities – the lowest industry total since 1999.
Post-COVID Industry Changes
Coinciding with this historic premium downturn has been considerable industry change. Some of this change has been dramatic. For example, the formation of a new national professional association, the American Association of Settlement Consultants (AASC) to complement and, in some ways to compete with, existing professional associations: the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP).
Some of the changes represent continuing, perhaps accelerating, trends. For example, factoring abuses as highlighted in a recent series of articles in the Minneapolis Star Tribune. And the transition of structured settlements from its defense-controlled “claim management” origins to a larger, more complex and plaintiff-focused settlement planning framework.
Some of the changes have been competitive with the introduction of new structured settlement products, including “market-based” products and indexed annuities products as well as new compensation programs including “duration based” compensation as well as commissions greater than the traditional 4%.
Having successfully “protected and preserved” IRC 130 and 104 for 40 years and completed the enactment of a state-by-state anti-factoring statutory scheme, NSSTA (perhaps with assistance from AASC and other associations) is now looking to expand structured settlements legislatively including, for examples, “direct funding” of ABLE accounts and preferred and expanded structured settlement funding for Medicare Set-Asides (MSAs).
Also, during the COVID pandemic, which hopefully is receding if not yet over, various industry associations, companies and individual leaders have provided an unprecedented offering of educational conferences, webinars, podcasts and books which, among other accomplishments, have helped to identify new markets, new opportunities, new issues and new challenges for structured settlements.
As structured settlement and settlement professionals begin to emerge from the depths of their COVID economic depression into a transformative, more complex settlement planning market, they will increasingly need immediate answers to their clients’ questions and advice for new stakeholder issues.
Where will they find it?
Structured Settlement Reference Guide
Next month, publisher Law Journal Press will distribute Release 71 for “Structured Settlements and Periodic Payment Judgments”, the authoritative, up-to-date, reference guide for structured settlement and settlement planning professionals. Online subscribers will receive their update simultaneously with no additional subscription charge.
Release 71 represents the fourth semi-annual update of this textbook since the start of COVID pandemic and continues to track both major market developments and transitional industry changes.
Co-authored by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert, the book’s online version 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, “Structured Settlements and Periodic Payment Judgments” consists of 16 chapters with extensive footnotes and Appendix documents to help readers understand historical developments and context as well as current issues and to also fashion settlements and judgments utilizing periodic payments.
Both NSSTA and SSP utilize the book as an educational resource for their certification programs.
Highlights from Release 71:
- A substantially updated section on the ABLE Act and ABLE accounts addressing the final IRS ABLE Regulations, the most recent ABLE POMS and providing more detailed analysis of the structured settlement “direct payment” issue.
- Expanded discussion and analysis of employment related cases which may include both tax exempt and non-tax exempt damages. Both types of damages can potentially be paid with periodic payments with the non-tax exempt damages being paid separately using a non-qualified assignment to achieve tax deferral.
- Updated sections discussing the NAIC’s Suitability in Annuity Transactions Model Regulation to take account of the important “best interest” changes the NAIC adopted in 2020. Although structure settlements appear to be exempt under both the 2011 and the 2020 versions of this NAIC Model Regulation, the book explains why and how they can still impact structured settlement stakeholders.
- A substantially updated section on Medicare Set-Asides addressing changes potentially impacting structured settlements resulting from the most recent CMS WCMSA Reference Guides.
- A sequential listing of legislative and other significant structured settlement historical developments which the authors update with every new Release. This listing provides readers with both an historical perspective and a quick reference to recent industry events.
- Integrated references to the 2021 study the 2021 study titled “Future Financial Planning for People with Disabilities, What’s Working and What’s Not,” sponsored by the National Leadership Consortium on Developmental Disabilities associated with the University of Delaware.
“Structured Settlements and Periodic Payment Judgments” represents a unique and essential everyday reference guide for structured settlement and settlement planning professionals. Updated Release 71 will be available next month in both online and hardcopy formats. Every member of NSSTA, SSP and AASC should own and regularly utilize a current copy.