McCain v. Obama on Tort Reform
Q & A for Lawyer's Clients about Structured Settlements and the AIG Problem

Lawyers and structured settlements: what should a lawyer do for clients in the AIG crisis?

As I sat watching the AIG crisis unfold yesterday, I immediately started to think about the many structured settlements (annuities) that I have recommended over the years to my clients.  Structures provide a great way to allow large sums of money to gain interest (tax free) for injured clients.

I'm starting this blog entry to serve as a clearing house for information for personal injury lawyers seeking information to inform their clients about any risks now associated with using a structure.  I should also say that there may not be any significant risk, but at this point I can't find any definitive source that has analyzed the risks and benefits of structures in the economic and insurance crisis we may be facing.

I'll be updating this link as I find sources of information.  If you have come here seeking information and have a helpful link, please post it in the comments section and we'll add to the data base.

11:09 AM September 16, 2008

Update:  11:35 am

Looks like some of the folks who broker structures are starting to jump on the vacuum of information for lawyers in this situation. John Darer at 4Structures has written an article this morning on the subject.  He also gave me a call to discuss this. LINK to STORY  John says, in part:

First, the AIG core insurance business (life, health, annuities) is not what has caused the impairment.  AIG is a leader in many lines of insurance worldwide.The company operates globally on multiple silo business model. The toxic assets are confined to a single business unit.
Insurers must set claims reserves and actuary certification of asset liability matching is required by New York and most other states.
At the time of this writing there has been no announcement of  bankruptcy, but please note that Insurance regulators work to protect the interest of structured settlement annuitants. There is precedent. In re: Monarch Life bankruptcy creditors were not able to get at the structured settlement assets, even in the absence of secured creditor protections common in today's structured settlements. Executive Life annuitants are still getting paid and that impairment happened in 1991.
So what this says to me is that the insurers are set up in such a way that if the bad debts begin to destroy certain aspects of the business, other sectors will still stand.
John also discussed Qualified Assignments and how they add a second lawyer of protection.  You can find a list of Annuity Companies and where they do their Qualified Assignments here.

As i understand it, a qualified assignment and insurance agreement makes the client a secured creditor in the annuity contract.  This would give priority in bankruptcy, I assume. (checking on that).

11:59 AM UPDATE

My friend Bryan Milner who is affiliated with Millennium Settlements has sent me an email and is working on an article for his website at the moment.  I'll update later when he is finished with his post.

He pointed out that all of his products sold in NC have the protection of the NC Life & Health Guarantee Association, which is essentially the equivalent of the FDIC for insurance in NC.  From their website: 

The North Carolina Life & Health Insurance Guaranty Association is a statutory entity created in 1974 when the North Carolina legislature enacted the first version of the North Carolina Life & Health Insurance Guaranty Association Act (a link to the Act can be found in the Additional Info section). The guaranty association is comprised of all insurers licensed to sell life insurance, accident and health insurance, and annuities in the state of North Carolina. In the event that a member insurer is found to be insolvent and is ordered to be liquidated by a court, the Guaranty Association Act enables the guaranty association to provide protection (up to the limits spelled out in the Act) to North Carolina residents who are holders of life and health insurance policies and individual annuities with the insolvent insurer. It also provides coverage for certificate holders of direct group policies or contracts and for unallocated annuity contracts.

So what sort of coverage does the Guarantee Association have?

If your insurance company fails, the maximum amount of protection provided by the North Carolina guaranty association for each individual is $300,000 no matter how many policies you bought from your company. The maximum coverage for an unallocated annuity is $5,000,000 per contract owner.

And of course, the Guarantee Association only kicks in if the insurer is licensed in NC.  How do you find out if they are?

How can I find out if my company is licensed in North Carolina?
Call the North Carolina Insurance Department at 800.546.5664. The department maintains complete and current records of all insurance companies licensed to do business in the state.

UPDATE 1:52 pm

CNN hasa  pretty good Q&A on AIG and why it affects a lot of folks.  It is certainly a "don't panic" post, but seems to reflect the information posted above about how assets are held and also how Guarantee Associations can step in if the insurer fails.

CNN 5 Things you Need to Know About AIG

Q:  I have insurance through AIG. How worried should I be about the problems at the company?

At least in the short term, you probably don't need to be worried at all. The problems are with the AIG holding company, not the individual insurance company subsidiaries that you do business with, according to a source with New York State's insurance regulator.

Even if AIG's holding company is forced to file for bankruptcy court protection, there's a good chance that the subsidiaries will continue to operate normally with no disruption in claims payments. That has happened in the case of other insurance holding companies bankruptcies in the past, such as Conseco

UPDATE Sept 17, 2008 1:30 pm

Well, looks like I bought myself some AIG.  And so did you, and you and you.  We all own AIG now since the Federal Government now owns 80% of AIG.  They are calling it a "bridge loan" but every "bridge loan" I've ever heard of did not have the lender taking over the company.  And it looks like "we" have replaced the CEO of AIG with the former CEO of Allstate.  Yikes.

Anyhow, some updates on what to do with structured settlements.  My frined and structure expert, Brian Milner, worked his fingers to the bone yesterday putting together some documents to address the AIG Issues.  You can find them at    Millenium AIG Q&A   & Protection for AIG Customers

Bryan has included some really good infomation in there.  I also sent him a Q & A late last night that I think my clients will be asking me.  As soon as he gets all of it answered, I'll post the response.

UPDATE Sept 18, 2008 10:00 am

Bryan has come through on the Q&A for me.  This particular thread is getting pretty long, so I'm going to post it in a new thread which can be found at: Q & A for Lawyer's Clients about Structured Settlements and the AIG Problem.

www.NicholsTrialLaw.com 1.800.906.5984

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

John Darer

Chris, the qualified assignment release and pledge agreement is the form of qualified assignment used where secured creditor status is desired. A simple qualified assignment or qualified assignment and release won;t do the trick. Further it's important to check the UCC in their state as a UCC filing may be needed.

Hardison Wood

Good work Chris. New posts are up.

On Lehman: https://www.ncproductlaw.com/2008/09/articles/financial-armageddon/

On AIG:
https://www.ncproductlaw.com/2008/09/articles/aig-the-apocalypse/

Forgive the religious language. It's my ancient schooling getting the best of me.

Fixed Annuities

Your post was very informative for me. I'm a freelance writer, writing on different texts and articles for my clients. I also run my own blog to promote my services

Sarah

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Sarah

https://blanket.ws

Golfkurs platzreife

Would you like to sit in the near or even distant future, their handicap test, we can in good conscience recommend the Golf Academy GmbH Gut Ising am Chiemsee Bavaria. Here are weekly rates offered to the attainment of handicap. In small groups of up to six people you can have fun and earn in just five days, the ability to pass the handicap test. Passing the test is guaranteed!

Air Ambulance Services

Provides quality air ambulance services and medical care for your emergency air ambulance travel needs.

Golfreisen

Good advice does not always expensive. On this website you will find all the information and helpful tips and tricks for the game of golf.

Financial Spread Betting

UK company providing online financial spread betting services.

Andy Roberts

It has been a hard job to find such informative and important tags from net. I went through your post, which made me update about online marketing products. I've been concerned with these all, since so long and doing work for my friend to promote his online business.

structured settlement lump sum buyer

Chris,

Thanks for the interesting article and keeping it updated. On a side note, it's unfortunate what the State of North Carolina has done with their Structured Settlement Protection Act. As a structured settlement purchaser it is impossible to complete a structured settlement factoring transaction in the state because of the updated laws.

Some structured settlement brokers and attorneys are pleased with this, but at the end of the day it makes a structure a weaker product because if the annuitant needs cash, there is no way to cash out such a product in the State of North Carolina any more.

Just my two cents.

noexamlifeinsurance9.webnode.com

This could be your very best option if you: Don't have the occasion or desire to get a medical exam Require life insurance speedily to secure a loan for your business Don't have any serious medical ailments Demand $499,000 or less in coverage Are looking for an easy and economical solution to ensure your family potential cheap no exam life insurance for seniors (noexamlifeinsurance9.webnode.com) You can bbuy up to $25,000, if you are berween thhe agbes of 50 & 80. Ignore health-related tests or long programs to have the life span insurance you need and want. We promise you won’t be rejected for LegacySM Liife (not available in every states.) You immediately qualify if you’re involving the ages of 50 annd 80! Use your earnings to pay for your health-related payments, burial costs and to provide extra satisfaction to yyou personally and your loved ones. Youu may get up to $25,000 of protection Wile you become older rates won’t boost Thhis is permanent life insurance it is possible to keep your whole life Basic app - your acknowledgement is quaranteed Limited benefit for first two years (death benefit is limited to 110-watt of payments paid in first 2 years) Simple lifestyle insurance For coverage quantities bwlow $100,000, you can excpect basic issue period life insurance, without any medical quiiz and same-day authorization. To-day you should buy thus coverage right over the phone. term life insurance no medical exam questions Level-term life insurance Forr insurance amounts $100,000+, we offer term life plans with premiiums guaranteed not to increase for the length of the term. It is possible to appply by telephone or on-line for this coverage today. Observe cost-effective phrase life insurance can be-start here by having an immediate offer. (Q) How ged do I have to become to get existence insurance? (A) 18 years of age to use (Q) Simply how much protection coupd I buy online? (A) You could possibly buy around $250,000 (Q) How am I going too receive my policy? (A) Your coverage is likely to be delivered to you from the insurance carrier (Q) Exist age restrictions? (A) Our plans are available for all those ages 18-64 (Q) Can I obtain existence insurance online if I smoke? (A) Yes no medical exam term life insurance quotes (Q) How long does the appliance process just take? (A) Typically 15-minutes or less (Q) Just how long does iit decide to ttry acquire my policy? (A) Underwriting will be different oon an individual schedhle (Q) Do I have to take perfect health to purchase online? (A) No, but additional information could possibly be nrcessary to receive insurance plan (Q) Willl my value alter over time? (A) No, charges may remain mounted through the level-term amount of the coveraage (Q) What's an inheritor? (A) The person you decide to receive the quantity of payment provided in the event of one's death no exam life insurance quotes Your search is finished, If you should be searching for rapid, easy, affordable Healt insurance quotes! With one easy click we ccan match you wifh Medical insurance policies from well known companies. All you have to do is review charges and pick which company is the greatest for you! We have picked top-tier spouses with prices availabpe in your neighborhood. Shop and assess via our bodies, and get the company and Medical health insurance policy that matches your needs. Get reaey for the future now using the thorough Medial health insurance policy imformation you'll need. Finish our quote package above, apply for your free insurance quotesand leave with excellent prices, you're able to manage. Our bodies makes it simple.

Barbara

This is basically the Sports tours truth your folks doesn't want one to find out about

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Your Information

(Name is required. Email address will not be displayed with the comment.)