The Society of Settlement Planners, Inc. just announced the agenda for its March 2007 Annual Meeting in Washington DC. For the most part it looks like an interesting program that Dick Risk is putting together.
However doesn’t it seem a bit odd that the Society of Settlement Planners, Inc.(SSP) is dedicating a whole session to the National Structured Settlement Trade Association’s Broker Relations Initiative. as if it’s an attempt to undermine the process? The NSSTA Broker Relations Initiative formally began in June 2006. Just over four months later the Society of Settlement Planners, Inc. (SSP) is planning for a "timely" presentation 4 months from now entitled "NSSTA Broker’s Relations Initiative: Will it Work?". Chuck Derenne, Premier Settlements, President and leader of the Society of Settlement Planners, Inc. (SSP) and a member of NSSTA has had some participation in the broker relations committee. John Bair, Forge Consulting, SSP and NSSTA, was listed as in my group, Building Bridges, and was a double no-show. Is he building bridges or launching the Hellfire’s again? None of the other 18 SSP Professional members participated. How credible can they be, or can this "hear ye hear ye, oh yay, oh yay" featured topic of their 4 months away annual meeting, be without being actively involved in the initiative? If Derenne is the leader of this organization how does he permit such a topic to be part of the agenda?
The Society of Settlement Planners, Inc.(SSP) is stagnant at 20 or so professional members, approximately 40% of whom are members of, or affiliated with, one company, Settlement Professionals, Inc., and as much of a smattering of others as you can get with 20 professional members. If the Society of Settlement Planners, Inc. (SSP) hopes to grow, it and its members should stick to the positive things like the introduction of the new Registered Settlement Planner designation and the "appearance" that it has rid itself of factoring company members (although a concept map delivered by SSP and NSSTA member Patrick Hindert of S2KM at the National Association of Settlement Purchasers suggests there is still active factoring involvement), and stay away from the battles and "chips on shoulders" of yesterday.
Society of Settlement Planners, Inc.’s President Chuck Derenne’s "Top 10 Ways Defense Saves Money Writing Your Structured Settlements." is an example of "Yesterday’s Chips on Shoulders". His allegations, which appear on the Premier Settlements web site, are similar those seen on certain other Society of Settlement Planners, Inc. (SSP) member websites and in their marketing materials. My comments appear in blue below each of Derenne’s 10 statements.
1. In-house annuity programs that are noncompetitive and huge profit centers (the biggest abuse)
SS4R While there are a handful of carriers who attempt to place business through, at times, non competitive in-house markets, it’s the exception rather than the rule. Naturally it’s all subject to negotiation. On the otherhand, if they are competitive, and client objectives are being met, where’s the problem?
2. Defense broker commission rebates and kickbacks (25-50% are common)
SS4R In my opinion, spreading this allegation, as if everyone is now doing it, is shameful, untrue and needlessly undermines consumer confidence. Here’s an excerpt from a letter posted on Derenne’s website which he suggests that plaintiff attorney’s use: "Any attempt of [insurer] to dictate the annuity company or broker, or any attempt to release the broker or otherwise control the structured settlement, would be an act of bad faith, attempting to link the settlement of this case to the interaction of a person who is not selected by the plaintiff and who does not represent the plaintiff but who has a long association with defendants and defendant insurers and who will not act independently to (a) advise the plaintiff on the best structured form, rates, tax issues and documentation and (b) will try to place the plaintiff’s annuity and/or rebate commissions with some insurance affiliate of the liability company. "
3. Post-settlement medical underwriting (tremendous savings here)
SS4R Without citing specific examples, what Derenne is suggesting is that defense agrees to a structured settlement at a certain cost and then, through post settlement underwriting, obtains a better rated age which it then uses to lower its cost, without disclosing same to plaintiff. In all my years of being a structured settlement broker I have heard allegations of but have yet to see this. If there is a concern, the way to guard against it is to simply require a structured settlement affidavit similar to the one posted on the 4structures.com website or Creative Capital’s Certificate of Reliability and Assurances (CORA). Many courts in the New York metropolitan area are now requiring them.
4. Daily-rate annuity pricing (could be substantial dollars saved here)
SS4R Derenne implies that defense represents one price and then goes to the market, gets a better price and doesn’t disclose. Use of a structured settlement affidavit or CORA is the solution.
5. Jumbo-case annuity discounts (there’s always room to sharpen a pencil for defense)
SS4R . Here Derenne is alleging that the annuity issuers are practicing price discrimination against a class of agents or brokers. Instead of blaming the defense why aren’t Derenne and his minions boycotting these "phantom" companies.Without naming names I’m quite sure that Derenne and others making a similar accusation are placing business with the same annuity issuers. And one more thing… as seasoned structured settlement brokers can attest there’s always room to sharpen a pencil for a broker who actually works for their client. Any outstanding concerns about annuity cost can be dealt with through a Structured Settlement Affidavit or CORA.
6. Last-minute switching of annuity carriers (why do they hide the company’s name until the end)
SS4R Derenne suggests that there is fraud, widespread fraud. Not true.
7. Inferior financially-rated annuity carriers (often the case with in-house programs)
SS4R I recently attended a mediation in which we simply stated a minimum rating that would be acceptable for an annuity issuer. Wasn’t a problem. At times it is the insurer who rejects the plaintiff’s choice of a lower rated annuity carrier (issuer).
8. Approved lists of annuity carriers (restricts free market competition)
SS4R Certainly the exception rather than the rule. Some SSP members promote the use of a qualified settlement fund to get around this when such situations arise.What plaintiff attorneys and plaintiffs may not know is that the use of such device in a single claimant case may actually result in an even greater restriction of annuity carriers as today very few annuity carriers will write structured settlement annuities in such cases.
9. Cash refund settlement options (Department of Justice loves to use these)
SS4R Very Very rare. I believe such reversionary vehicles are used when there is speculation about the need for, and quantum of, medical care. If the devices are used, is there a statutory requirement? Moreover, unlike losses paid by private sector insurance companies, since tax payer money is involved, and the medical reversionary trust is used to mitigate tax payer exposure after a liability is terminated, or upon death of the claimant, where’s the beef?
10. Cost savings fuel even more tort reform (need we say any more)
SS4R Marketing hyperbole. Derenne implies that insurance companies would actually take affirmative steps to bypass their own financial security to directly pay, the incremental
money saved by using structured settlements, to state and federal regulators who can advance tort reform.
While respecting the free right to express one’s views, members of the public, plaintiff attorneys, defense attorneys, judges, regulators and others interested or considering structured settlements need to know that the views expressed by the Society of Settlement Planners, Inc., a small group whose unique (SSP only) producer members represent less then 1.5% of an industry , and its President, Chuck Derenne, are not representative of the entire structured settlement industry.
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