Because of its significance for the structured settlement and personal injury settlement planning markets, The Chronicle is devoting a five-part series of articles to the most recent Structured Settlement Production Report published and distributed recently to industry participants by Melissa Price, Ringler’s Chief Strategy and Business Development Officer.
Part 1 and Part 2 of the series summarized portions of the Report data. Part 3 and Part 4, respectively, identified and discussed significant trends and disruptions/distractions which help to explain the 17-year regressive structured settlement sales cycle from 2002 thru 2018.
Having reviewed the key elements of the past 17-year regressive structured settlement sales cycle, this final article in The Chronicle series encourages NSSTA members to ask two fundamental questions: is NSSTA’s primary objective currently to improve and grow the market or to protect and preserve a business model? And are these two objectives in conflict?
In a Wall Street Journal interview published Saturday February 16, 2019, business guru Jim Collins (author of best-selling books “Built to Last” and “Good to Great”) asks two probing questions which seem applicable to NSSTA: “… why do some individuals and institutions have an easier time giving birth to new iterations of themselves[?] …. How do you decide if you want to grow? I think it is a choice.”
Historically, NSSTA and some of its members have often appeared more concerned with “protecting and preserving” a business model than “improving and growing” the structured settlement market. That business model has been described as a defense-controlled “Claim Management” Model as opposed to an evolving plaintiff-focused “Settlement Planning” Model.
Historical examples suggesting NSSTA and/or certain NSSTA members have resisted a “Settlement Planning” Model: 1) class action lawsuits (beginning with Weil); 2) reactions to Qualified Settlement Funds; 3) failure to feature educational programs exploring “settlement planning”; 4) a lobbying strategy that maintains “: “structured settlements enable injury victims to live free of reliance on government assistance.”
How large is the potential structured settlement market? Although not directly applicable, the most valuable market research for personal injury settlement planning Independent Life has identified has been the Annual Studies of United States Tort Costs published by Towers Watson (formerly Towers Perrin) from 1985-2011. These studies:
- Calculate tort costs resulting from five insured plus uninsured business lines: 1) commercial multi-peril; 2) medical malpractice; 3) product liability; 4) other liability; and 5) commercial auto.
- Exclude: 1) no-fault auto insurance; 2) property coverages; 3) workers compensation; 4) certain extraordinary (one time) costs.
- In 2002, Towers Watson also translated overall tort costs for 2001 into the following categories and percentages: 1) administrative costs (21%); 2) defense costs (14%); plaintiff attorneys (19%); economic loss (22%) and non-economic loss (24%). Towers Perrin discontinued this portion of its analysis in 2002. It was "devilishly difficult" according to Russ Sutter, a Towers Watson principal and actuary who directs their annual tort cost studies, "primarily because we lack reliable information from plaintiff attorneys". These percentages therefore represented Tower Watson's "best estimate" in 2002.
Based upon Towers Watson's most recent 2011 Annual Study and utilizing Tower Watson's 2002 "best estimate" of payout percentages, Independent Life estimates more than $170 billion of United States tort costs represented payments to injury victims and their attorneys during 2018 – not counting workers compensation or no-fault.
Why should NSSTA and its members study personal injury settlement planning as a potential strategy for the improvement, innovation and growth of the structured settlement market?
- Many NSSTA members are already marketing themselves as “settlement planners” and educating themselves about settlement planning issues.
- A settlement planning association (SSP) currently exists many of whose members are appointed to sell structured settlement annuity products.
- More enlightened claims professionals recognize that settlement planning has valuable defense structured settlement applications.
- The Towers Watson Annual Studies of U.S. Tort Cost identify a larger, as yet unmeasured potential settlement planning market for structured settlement annuities.
- More marketing studies are needed to better identify the potential for structured settlement annuities within the personal injury settlement planning market.
- NSSTA’s traditional roles relating to education and certification no longer match the structured settlement business as practiced by its members.
- Some of structured settlements most significant issues, opportunities and challenges fall outside traditional structured settlement boundaries and within the definition of settlement planning.
As a new NSSTA member, Independent Life believes the most promising and fundamental structured settlement growth strategy should focus on the existing defense foundation but also emphasize a "settlement planning" approach that integrates structured settlement annuities with government benefits and other financial products - with structured settlement annuities positioned as the core product.
This strategy is consistent with Independent Life’s Mission: “to provide trustworthy, competitive and innovative structured settlement products that professional consultants can easily integrate with other financial products and governmental benefits to produce optimum settlement planning solutions for personal injury victims and their families.”
Rather than dividing and restricting the structured settlement market, we believe that “personal injury settlement planning”, if properly studied and understood, can be and will be a unifying and growth-oriented business model that will benefit both plaintiffs and defendants.
As the only life company focusing exclusively on structured settlements, Independent Life is optimistic about the future. Our strategy for success includes support for “personal injury settlement planning” that benefits both plaintiffs and defendants. We also offer a “Payee Protection Plan” to help limit (and hopefully prevent) secondary market bad business practices involving any of our structured settlement annuity payees. Contact Independent Life to learn more about our company.