by John Darer CLU ChFC MSSC CeFT RSP CLTC
John Darer Reviews Colorado House Bill 23-1303, an Act Concerning Protections in the Event of Insurance Company Failure, passed and signed into law by Colorado Governor Jared Shutz Polis on May 15, 2023
While such occurrences are rare, investors in other people’s structured settlement payments should know, before they invest, about the potentially devastating consequences to their investment in the event such an insolvency occurs. Colorado residents who have acquired structured settlement payment rights as an investment will now feel less confident about the prospects for their investment in the event of insolvency of the underlying annuity issuer.
“Colorado Rocky Mountain N-Aye”
Specifies that the act does NOT provide coverage to a person that acquires rights to receive, or to a payee or beneficiary that transgfers its rights in, a structured settlement factoring transaction,a s defined in federal alws, regardless of when the transaction occurred
“(XX) STRUCTURED SETTLEMENT ANNUITY BENEFITS TO WHICH A
10 PAYEE OR BENEFICIARY HAS TRANSFERRED THE PAYEE’S OR BENEFICIARY’S
11 RIGHTS IN A STRUCTURED SETTLEMENT FACTORING TRANSACTION, AS
12 DEFINED IN 26U.S.C. SEC. 5891 (c)(3)(A), REGARDLESS OF WHETHER THE
13 TRANSACTION OCCURRED BEFORE, ON, OR AFTER THE EFFECTIVE DATE OF
14 26 U.S.C. SEC. 5891 (c)(3)(A)“
Yield Seeking Investors May Have Been Drawn in by an Uninformed or Dishonest Sales Pitch by Those They Trusted
To be crystal clear, I’m not speaking about legitimate structured settlements that were established for a plaintiff at the conclusion of their lawsuit. I am speaking of investments in other people’s structured settlement payments rights, which are known as structured settlement receivables.
The Dishonest Sales Pitches involved the Mischaracterization or Misrepresentation of Receivables as Annuities
Although somewhat less prevalent today, acquired structured settlement payment rights were heavily and marketed to investors as annuities, secondary market annuities, SMAS, SMIAS and so on, even though acquired structured settlement payment rights were not annuities as defined under the laws of many states. They are actually structured settlement receivables and what is signed when the purchase is amde is a ” Receivables Purchase Agreement” or ” RPA”. But it wasn’t just nameless, faceless “guys on TV” or aliens from outer space, it may have been settlement planners, financial advisors, CPAs or peddlers of “alternative investments”.
Settlement Planners and other financial advisers who participated in this activity may find they have no Errors & Ommissions Coverage in the event things go sideways
Some settlement planners were involved in such activity, for which there likely would be no errors & omissions coverage in the event of insolvency. The scary thing for some of them is that not only will the settlement planners’ clients not have a remedy in Colorado if/when the bill is signed into law, and the majority of states which have already adopted the 2017 Revisions to the Life & Health Guaranty Associations Model Acti (#520), but the subject settlement planners may not have coverage under their errors & omissions insurance Time for investors to start asking questions of those settlement planners and advisors and revise expectations.
What is an annuity under Colorado Insurance Law?
An annuity is a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums you have paid to the insurance company. Annuities are often purchased for future retirement income. Life Insurance & Annuities | DORA Division of Insurance (colorado.gov)
🔥How States Define Annuities and Why SMA Is Improper September 23, 2026🔥
The Majority of US States Have Already Adopted the Model Act
Including the Killer Retro Provisions that affect Investors in Structured Settlement Receivables.
Including people advised to buy structured settlement receivables investments during periods when interest rates were lower
Related Reading
Other John Darer Reviews about Structured Settlement Receivables and the possibility of no safety net for investors in receivables, brought into sharper focus by the SuttonPark Nightmare in 2024-2026
Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary: Risks of Investing in Payment Rights October 1, 2012
Are Structured Settlement Receivables Investments Covered by State Guaranty Funds? (4structures.com) August 1, 2020
Last updated October 25, 2026