The Structured Settlement Market
The Structured Settlement Industry incorporates several different business segments made up of many different companies. The follow is a brief overview of the Structured Settlement industry and the function of each segment.
- Primary Structured Settlement Market
"The Primary Structured Settlement market refers to the market in creating and placing structured settlements in connection with the settlement of a lawsuit or claim. This market is made up of insurance companies that issue structured settlement annuities and brokers or advisors who advise or act as broker for plaintiffs, defendants and insurance companies. Structured Settlement Brokers work with the parties in a personal injury lawsuit that are considering a structured settlement. The brokers coordinate with the attorneys and obtain quotes from the insurance companies issuing structured settlement annuities. The brokers attempt to find a structured settlement annuity that will address the future need of the recipient.
- Insurance Company
Insurance companies have multiple roles in regard to structured settlements. They are often the defendant in a lawsuit, more often they are providing insurance coverage to one of their customers who has been sued. If a case is settled with a structured settlement the insurance company will either purchase or issue an annuity that will pay the settlement recipient for the predetermined number of years. Settlement terms can range widely, paying recipient for as many as 10 - 40 years or for the remainder of the recipient’s life.
- Annuity
The insurance company through a qualified assignee purchases an annuity that will fund the payments made to the settlement recipient. The payments that come from the annuity may be tax free depending if certain standards are satisfied at the time of settlement.
- Secondary Structured Settlement Market
The secondary structured settlement market helps recipients that are in need of funds. If a settlement recipient has a need for a larger sum of cash then their payments are providing they can sell some or all of their future payments for a lump sum cash payment. This flexibility is not available from the original settlement and must be handled through a “factoring” company that purchases future payments for cash.
