by John Darer CLU ChFC MSSC CeFT RSP CLTC
If a structured settlement planner is representing a plaintiff or plaintiff lawyer where the defendant's insurer has an approved list of three structured settlement annuity issuers should the settlement planner restrict their search to those three companies for fear of raising the client's expectations?
An industry colleague recently posited that not only should I not quote any other company but the three companies in question but I should not even tell the attorney of this restriction and simply present the best available offer. I respectfully disagreed and opined that such behavior is a breach of the client's trust. Trust is an important factor in lasting client relationships, or any lasting relationship for that matter.
When a client retains you, their expectation is that you are looking out for their best interest. There should be a disclosure of a client's structured settlement options as well as a discussion of alternative options.
While others in the industry get their "knickers in a twist" about insurer approved lists I generally don't. In short, some are broad, logical ( for example confined to A+ or better A.M. Best rated companies) and don't pose much concern. Others are narrow and make little logical sense to the layman. Moreover they do not offer adequate diversification opportunities for cases with larger quantum and do little to foster the growth of structured settlements that the industry seeks. Nevertheless this is the land of the free and home of the brave. It is the insurer's right to make an offer. If an insurer felt it appropriate to make a low "meatball offer"wrapped in spaghetti it is as much their prerogative as a plaintiff making a demand that might require Sir Edmund HIllary and a team of sherpas to respond to.
In any case one can shop the market and in many cases can get one or more of the approved list companies to match or come close
Does it involve needless extra work? Yes. Is it a pain in the ass? Yes, when the extra work usually occurs on small cases that promise little reward. But it's the right thing to do. Clients must be kept informed.
This maxim applies to both sides of the equation.
Does a structured settlement broker for a carrier with a narrow approved list have the ethical responsibility to at least apprise his/her client if an annuity issuer not on its list (like AAA rated New York Life or Berkshire Hathaway) has a dramatically better number? I say that he or she does.
Remember that an insurer has a duty to its insured. The insurer's adjuster and counsel should have information that is germane to to serving that end.
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