Structured Settlements and Peter Drucker’s Business Principles

In its annual evaluation of America’s best-run publicly traded companies, the Wall Street Journal uses a measurement system based upon five business principles developed by the late management guru Peter F. Drucker, the founder of the Drucker Institute, to select its Top 250: 1) customer satisfaction; 2) employee engagement and development; 3) innovation; 4) social responsibility; and 5) financial strength.

The structured settlement industry should be proud that two of our publicly traded product providers made the Wall Street Journal’s Top 250: Prudential Financial Inc. (141) and Metlife (155). 


Evaluating the Structured Settlement Market


What if we evaluated the current structured settlement market based upon these five Drucker principles?

Financial strength” certainly should be considered a positive for structured settlements. Our industry has an incredibly positive overall historical record in meeting our financial obligations – and we continue to prioritize our future obligations. 

As an industry, our product providers are regulated by state insurance departments. The National Association of Insurance Commissioners (NAIC) utilizes a category of credit rating agencies called “nationally recognized statistical rating organizations” (NRSROs) to assess and assign credit risk. These categories range from NAIC 1 (exhibiting the highest credit quality) to NAIC 6 (in or near default). The NAIC has rated all nine National Structured Settlement Trade Association (NSSTA) product providers as NAIC 1.

As with each of Drucker’s principles, “employee engagement and development” can be considered on a company specific basis, but also in the context of our three national professional associations: NSSTA; the American Association of Settlement Consultants (AASC) and the Society of Settlement Planners (SSP).

Each of these associations has announced educational conferences for its members during 2022. In addition, NSSTA is redesigning its CSSC curriculum with the University of Texas as its new partner and expects its first shared program to occur next Fall in Austin.  SSP continues its online RSP certification program. And both NSSTA and AASC have launched ambitious Women’s organizations for their members.

Arguably, the entire focus of structured settlements can be considered “socially responsible.” However, more specific industry examples of industry “social responsibility” exist. These include NSSTA’s contributions to the American Association for People with Disabilities (AAPD) and SSP’s participation in the development of a 2021 study titled “Future Financial Planning for People with Disabilities” sponsored by the National Leadership Consortium on Developmental Disabilities at the University of Delaware.


Customer Satisfaction and Innovation


More problematic for the current structured settlement industry are Drucker’s final two principles: customer satisfaction and innovation.

In describing “customer satisfaction,” as a management principle, Peter Drucker has stated: “To satisfy the customer is the mission and purpose of every business.” There are many ways one can measure customer satisfaction – just as there are many ways to “explain” structured settlement premium results during 2020 and 2021. From an industry perspective, however, it is increasingly difficult to argue that customers remain satisfied with the traditional structured settlement annuity.

Logically, therefore, a management guru might focus her in depth analysis of the structured settlement industry on Peter Drucker’s remaining business principle: “innovation.” Here is what Drucker has said about innovation:

Every institution…must build into its day-to-day management four entrepreneurial activities that run in parallel: 

  • organized abandonment of products, services, processes, markets…that are no longer an optimal allocation of resources;
  • systematic, continuing improvement;
  • systematic and continuous exploitation…of its successes;
  • systematic innovation, that is, create the different tomorrow that makes obsolete and, to a large extent, replaces even the most successful products of today.”

Based upon the premium performance – not just during the past two years, but dating back at least to 2001 when the industry first achieved $6 billion of annual premium – how might a management consultant evaluate innovation within the structured settlement market? Consider the following: 

  1. The traditional single premium fixed annuity has continued to dominate sales for 40 years despite dramatic changes in market conditions. 
  2. The standard compensation model for agents has remained the same one-time up front four (4%) of premium. 
  3. Standard life company quoting software remains virtually the same as it was 20 years ago. 
  4. Structured settlements have barely penetrated the mass tort, non-qualified or deferred attorney fee markets. 
  5. Relatively few new agents or new product providers or new investors have entered the structured settlement market to provide competition, new ideas or new capital.

In contrast, Independent Life introduced one meaningful innovation into the structured settlement market during 2021: our duration-based compensation model. One related result: our premium increased by 38.1% during 2021 to $148.2 million compared with $107.3 million in 2020. 

Independent Life also announced in December 2021 that we would launch iStructure, an innovative uncapped structured settlement indexed annuity product, during the first quarter of 2022.  iStructure will feature multiple innovations and, we believe, will also result in important market innovations beginning in 2022.




Independent Life prioritizes all of Peter Drucker’s five business principles discussed in this article as critical to our continued long term business success. For the structured settlement market to achieve its potential, we encourage the rest of our industry to also prioritize all five principles. Independent Life further believes that continuing innovation, as well as superior customer service, is critical to maintaining customer satisfaction and sustaining premium growth.