Structured Settlements Offer Financial Security in Good and Bad Times

 

The Dec. 4, 2009 article by David Higgins ("Recession's Effect on
Settlement and Fees") was loose with its facts and illogical in its
conclusions.
 
For starters, the author simplifies the very complex subject of economics.
How can he know what the future holds? If he does, then that puts him

above the likes of Paul Volcker and Warren Buffett. Of special note,

particularly in light of Higgins' assurances that inflation will rise, was the

economic community's collective failure to predict our current "Great

Recession."
 
Second, his recommendation that people should rethink structuring
their settlements and their attorney fees simply because interest
rates are "at historical [sic] lows" completely misses the mark and is
ingratiatingly misleading. Some things just make sense regardless of
economic realities and it's doubtful that guaranteed, tax-advantaged
future income tailored to an injury victim's (or an attorney's) specific
living needs will ever fall out of favor.
 
Third, let's put today's rates in context. Long-term interest rates have
been at or below 4 percent for 71 out of the last 135 years (Irrational
Exuberance, Princeton, 2005). That means since the late 19th century,
interest rates have been about where they are now for more than 50
percent of the time. The last time rates were at current levels for longer
than a year was 1924. They remained there for 35 years.
 
Finally, Higgins neglected to reference his primary connection to the
structured settlement industry these days: He sells his services to
clients who, for a variety of reasons, need or wish to establish a qualified
settlement fund (QSF) when settling their lawsuit. While a QSF can
be a necessary and useful tool in some situations, quite often it merely
adds an unnecessary (and often costly) layer to the settlement process.
In nearly 20 years of providing structured settlement products and
services to clients across the country, I have seen very few situations
where a plaintiff would have been financially better served by choosing
to establish a QSF.
 
There's no doubt that careful thought must be given to a client's
overall situation before deciding on which settlement option is right
for them. But an unbalanced article that uses fear to discount the
proven and universally accepted value of a properly crafted structured
settlement plan does a disservice to all attorneys and the clients who
trust them to negotiate fair settlements. Structured settlements offer
financial security in good times and in bad. Attorneys and their clients
who reject them out of hand based solely on assumptions about the
future may wish to heed Benjamin Franklin's maxim: "One today is worth
two tomorrows."
 
Dan Finn, CPCU, CSSC
President, Finn Financial Group
Newport Beach

In the first quarter of 2009, fixed annuity sales grew by 74% over the same period in 2008 according to LIMRA International, Inc. (Thomas, Trevor. "Fixed Annuity Sales Surge," National Underwriter, May 29, 2009).