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INSURANCE EXPERT WITNESS - Areas of Expertise

Structured Settlements
Structured Settlements are a unique and specific product used in the settlement of claims and lawsuits where there is either a large amount of money and/or a need for the management of funds. The basis of a structured settlement is contained in Section 104 (a)(2) of the IRC. They are simply a means for qualified settlements, usually in personal injury cases, whereby the recipient of a settlement receives their funds in a more flexible and tax advantaged way, rather than in a single lump sum settlement.

Often structured settlements will be used in cases involving minors and in those cases where there are catastrophic injuries requiring a lifetime of medical care. Another area of use is in those cases where the financial sophistication or ability of the recipient of funds is simply not sufficient to manage funds on their own. Examples of this type of case would be mental incompetence and drug addiction.

However, there is a developing market for structured settlements in cases other than personal injury including, business sales, divorce proceedings, employment cases, age and sex discrimination cases, toxic cleanup cases and other business applications.

When negotiating a structured settlement many aspects of the transaction must be considered. If there is a medical impairment involved there is probably a need for an age rating, which is simply the process of including the medical status of the recipient in the calculations for a lifetime benefit. The higher the age rating the lower the cost to provide a given amount of lifetime benefit. For example, if a claimant had a serious heart or pulmonary condition, they may have a life expectancy of 15 years less than that of an individual of the same age and gender without the impairment. These 15 years represent 180 monthly payments the carrier is not expecting to have to pay and thus they will provide an identical income for less money.

Some casualty carriers set a limit on the markets that can be used for a structured settlement. This can have the effect of limiting the claimant to markets that do not offer the most competitive rates for a given series of payments, costing the claimant potentially a great deal of money. This type of arrangement can also cause the attorney representing the claimant to be in a position of

With the passage of legislation, in most states there now exists a secondary market for the purchase of structured settlements for a discounted value of the future guaranteed payments. Great care must be taken when considering the sale of a structured settlement as offers can vary greatly depending on a number of factors including the current interest rate environment, the length of time the payments are scheduled to be paid and the principal buying the payments. Court approval is required for the purchase of a structured settlement.

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