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The STRUCTURED SETTLEMENTS 4REAL® Blog is a highly regarded source for structured settlement news, information, and commentary, led by structured settlement and settlement planning subect mater expert John Darer CLU ChFC MSSC CeFT RSP CLTC. With two decades of operation, the blog and 4structures.com are recognized as comprehensive resources, offering detailed guides and specialized insights. Established in 2005, the blog caters to a broad audience, including legal professionals, injured individuals, families, and various stakeholders, providing reviews and opinions on settlement planning. John Darer, President of 4structures.com LLC, is a seasoned structured settlement expert with over 40 years of financial services experience and 31 years specializing in structured settlements. Based in Stamford, CT, he is a Certified Financial Transitionist and Registered Settlement Planner, holding insurance licenses in 45 states and the District of Columbia. John Darer is dedicated to transparency and advocacy, he emphasizes the importance of engaging trained and licensed professionals for settlement planning, offering valuable insights through his investigative journalism and professional commentary.
Periods with sub 4% discount rate favor New York plaintiffs willing to go the distance
Periods when there is a low interest rate environment favors New York plaintiffs willing to try strong liability cases due to a 30 year old statutory growth rate juxtaposed against low interest rates that are under 4%.
When the 4% statutory growth rate under New York’s Article 50-B statute, set in 1986, exceeded the 10 year bond by 2.63% as they did in July 2016.
Long term damage awards which used to afford a significant discount when the statute was established in 1986 no longer do with the net discount rate closing in on -2%. A negative 2% discount rate is a growth rate of 2%.
What does a Rate Inversion mean in a Present Value Calculation?
Assume $1,000,000 net future pain & suffering (after accounting for the first $250,000 in future damages under Article 50-B)
Instead of a discount, with a net growth rate of 2.63% for 10 years the present value adds $26,000 plus per year for 10 years to the verdict number.
When calculating the present value of other elements of damages like future medicals and future lost earnings, you could be adding close to $20,000 annually per $1,000,000 to the verdict, for the number of years awarded by the jury
Then interest gets added onto that at 9% (less if state or city government)
