Structured Settlements 4Real®Blog 2026

by John Darer CLU ChFC CSSC RSP

The ELNY Liquidation website at ELNY.org (which is oddly meta-tagged the “Client Settlement Site”) appears to have been updated on February 21, 2012. One of my readers even referred to it as more optimistic sounding. It seems that the Commonly Asked Questions section of the ELNY website has been expanded. A couple of sections are worthy of comment and I will so after presenting them to you first. These are taken directly from ELNY.org website as it appeared on February 21, 2012 9:32pm CST

First this section explains why some contracts may not be covered by a Guaranty Association

8. Are all ELNY contracts covered by a Guaranty Association?

No. For example, certain contracts may be ineligible for coverage because the relevant party (either the owner or the payee of the ELNY annuity) resides in a state where ELNY was not licensed to do business as a life insurance company. The Guaranty Association coverage in every state is funded by assessments of licensed insurance companies. If an insurer was not licensed in a state, the law does not provide for the Guaranty Associations to cover such an insurer’s contract owners, payees or beneficiaries. However, such contracts ineligible for coverage by a Guaranty Association will receive enhanced benefit payments as “Uncovered” contracts in the manner described in Part III below and in the Restructuring Agreement. (emphasis added)

Comments

• Implicit in the statement is that some ELNY annuitants were sold on the benefits despite residing in states where ELNY was not licensed. Say the hot rate is available outside of New York , but not to your state’s residents. Do you take the train to Philly or hop on the Path to Jersey City? It is not prudent, based on this example, to proceed down that track and risk the possibility that the statutory protections may not be available.
• A possible reason for any tension between life insurers and the secondary and tertiary market for structured settlements is obvious with the statement ” The Guaranty Association in every state is funded by assessments of licensed insurance companies.

9. Why are some contract owners, payees and beneficiaries covered by a Guaranty Association not getting the full amount of money they are owed?

Like the FDIC, the amount of protection available to each contract owner, payee or beneficiary is capped by state law. Under the proposed Restructuring Agreement, the participating Guaranty Associations will provide the maximum coverage allowable by law but cannot exceed the limits spelled out in the relevant state law.

Comments

Wow, no no I mean WOW! The powers that be are actually comparing state insurance guaranty fund protection to the FDIC, at least so far as benefit caps.

If only it were like the FDIC:

1. Assessments would be backed by a line of credit from Uncle Sam. Until March 2009, FDIC only had a $30B credit line which was dramatically increased thereafter.
2. There would be a sign in every store front and agent’s or broker’s office emblazoned with “FDIC”, “SIPC” and a putative insurance equivalent. Awkward silences, side lips and deft exhibits of speaking to the right of one’s outstretched fingers, to prevent people to the left of them from seeing, in insurance sales presentations would disappear.
3. Perhaps Fed involvement in business practices regulation would result in a positive shift in the status quo so that licensed insurance agents and brokers are not effectively shafted by the inequity of state insurance regulators who appear to have ignored the practices of certain sellers of structured settlement payment rights to investors who call factored cash flows “annuities”, who use the term “our fixed annuities” to compare them to real annuities and other investments and flout advertising prohibitions on advertising the guaranty associations, I spoke to a political candidate in my state about this the other day. With all due respect legislators and regulators, it’s a frickin’ joke. I’m not blasting the product, just how it is allowed to be sold.
4. Then of course one could consider insurance insolvency schemes that would be on par with Canada, UK, Australia and others who have national insolvency schemes.

The Ides of March Are Nigh