by Structured Settlement Watchdog®
A life insurance agent or broker MAY NOT pay expenses associated with a qualified settlement fund in connection with the sale or potential sale of structured settlement annuities or any other insurance according to a September 24, 2007 opinion from a Senior Attorney at the New York State Insurance Department.
According to another opinion in the same letter, "an agent or broker MAY NOT advertise that the agent or broker makes contributions to a not-for-profit organization of concern and interest to potential purchasers of insurance or annuities, as such conduct constitutes an illegal inducement to purchase insurance that runs afoul of Insurance Law Section 4224. Nor may an agent or broker evade the prohibition set forth in the Insurance Law by enlisting the aid of the not-for-profit organization to do what the agent or broker. cannot do lawfully".
"If the latter arrangement were strictly an exchange of compensation for advertising services, the Department would regard the contributions as fees for permissible advertising and not donations to a not-for-profit. In that circumstance, the contribution would not constitute an inducement in violation of Insurance Law Section 4224".
Click to download the full opinion and analysis received by this author today. Thanks to Brenda M. Gibbs at The New York State Insurance Department for her response.
This opinion was sought as part of this author's goal to establish a best practices guide for structured settlement brokers and settlement planners. The opinion was sought in response to a print advertisement of a Buffalo based settlement planning firm, a copy of which was obtained by this author in February 2007.
Click below to download a copy of the ad along with highlights of the following statements made by a Buffalo New York structured settlement firm in the ad that seem to be in conflict with the New York Insurance Department opinion:
Download forgeconsultingad_plaintiff_exclusive1_with_contributions.pdf
- "We guarantee: No-Cost qualified settlement funds"
- " is proud to be the nation's largest non-law firm contributor to the American Trial lawyer Association*
- "John T. Bair President & CEO Robert L. Habush ATLA Endowment Board Member". Here's the ticket to that Download aaj_programbook_miami_bair_500k_habush_tie_to_nystla_exclusive_ad.log.pdf
The Buffalo structured settlement firm has established a level of notoriety for this sort of advertising:
MESSAGE: Structured Settlement Brokers and Settlement Planners may wish to support local or national trial lawyer associations but they and those they wish to support MUST be mindful of state insurance laws governing such conduct.
SOME QUESTIONS
- Has the Buffalo firm, which bills itself as the "Champion of the Qualified Settlement Fund", ever said it will do a qualified settlement fund but agreed to split commissions with you anyway? If you are a licensed insurance agent or broker and sign a contract or otherwise agree to split commissions with them and the Buffalo firm has sold a "no cost qualified settlement fund" are you or your firm directly or indirectly participating and profiting in the prohibited behavior?
- Is there any exposure to a plaintiff attorney for agreeing to use a "no cost qualified settlement fund" which contemplates that a structured settlement annuity or structured attorney fee annuity will be sold, now that the Office of General Counsel has spoken?
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