Back in May, David Lewis at Stone Street Capital asks the following question on the Stone Street blog:
"Should I be Concerned About My Insurance Company Making My Annuity Payments?"
He then gives this answer:
"The financial downturn has hit insurance companies, but you should not panic or take any action that you might regret. Insurance companies are regulated by State authorities and annuities are backed up by state guarantee funds. So you should feel safe. There have been no insurance company missed payments on structured settlement annuities during the current financial crisis that we are aware of".
The lack of regulation of factoring companies by state insurance departments apparently permits unlicensed factoring companies to discuss structured settlement consumer protections while licensed agents cannot.
The incongruity is glaring!
One state insurance department even felt uncomfortable with a passive web page posted by an insurance agent with links to each state guaranty association and phone numbers specifically designed to defray calls FROM the agent. The reason for the prohibition in advertising is that regulators do not want consumers buying insurance products from inferior companies .
State regulators may want to rethink their strategy not to require licensing of factoring companies. As it stands now among the only people who can "legally" answer the questions of consumers concerning the state guaranty funds are the cash now pushers, or state insurance departments. The irony is that the motive behind the prohibition on disclosure is consumer protection (to avoid being solicited to buy into a weakened insurer based on the consumer protection) and the business of the factoring company is to get people to transfer their rights to receive the stable insurance investment (annuity) that they have made. Also worth noting is that some such companies may be operating in your state without even an authorization to transact business by your Secretary of State.
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