DennisBeaverOctober 19, 2018 • By Dennis Beaver

Later this month, Newport Beach Pacific Life will host a fabulous six-day event halfway around the world for the U.S. structured settlement industry.

According to the invitation, the gathering at the Four Seasons Maldives isn’t a junket but rather “an educational setting” to “exchange ideas on how to promote” annuity sales to accident survivors. Attendees are encouraged to bring a guest.

Since the Four Seasons advertises pristine, white sand beaches and turquoise waters, I suspect that settlement planners will do more than discuss insurance.

Pacific Life will also host U.S. structured settlement planners and their guests at a four-day gathering at the Four Seasons in Dubai, later this year.

Pushed toward a Pacific Life structured settlement annuity?

These trips raise a disturbing possibility: Will structured settlement planners push accident victims to certain companies even if others offer better or less expensive options?

If someone in your family has a structured settlement annuity from Pacific Life purchased in 2015 or after, can you be sure that your lawyer’s recommendation to go with them wasn’t influenced by a broker just itching to go on one of these trips?

Here are a few interesting numbers. Industry data from The Life Insurance and Market Research Association reveals that Pacific Life’s structured annuity sales dropped nearly 10 percent between 2013 and 2014.

But starting in 2015, when it announced a week-long industry gathering at the Four Seasons in Bora Bora, its sales surged from about $770 million in 2014 to nearly $1.2 billion in 2017, even as the overall structured annuity market was flat.

Lawyers expect settlement brokers to be fiduciaries for the client

Accident victim lawyers I know expect and view structured settlement brokers as acting in a fiduciary capacity for their clients and develop trusting relations with these people. Yes, brokers are paid fairly standard commission by the insurance companies who issue structured settlements, and that’s normal.

But if I knew that advice to influence my client to select a certain insurer had any connection with one of these incredible trips, it would be the last time I would ever use that broker.

While “Saturday Night Live” and Congress at times have a lot in common, one of the best things our representatives in Washington ever did for injury victims took place in 1983 when the tax code was changed to encourage structured settlements. This allowed an opportunity to put some or all of the settlement into an annuity that provides long-term financial support, completely exempt from both federal and state taxes.

Often clients must be persuaded to accept a structured settlement

Lawyers are fiduciaries, watching out for their client’s best interests with settlement funds and it is usually a challenge to persuade clients to consider protecting their future with a structured settlement.

Plaintiffs typically like the idea of taking as much cash as possible, which is generally the world’s worst decision. Hand most people several hundred thousand dollars and in less than three years it’s all gone; these people are likely to go on public assistance. However, a structured settlement can prevent such an awful outcome.

Time for the feds to take a look at these incentives

Congress has the power, and many would argue, the duty to investigate these incentives and the possible negative impact on accident victims.

Structured settlements protect the security of innocent people. That’s why both Congress and the structured settlement industry must pay attention to these troubling problems that are beginning to harm the industry’s reputation. Insurance incentive programs threaten to undermine confidence in structured settlements generally.

Congress needs to shine a powerful light on this situation. It may cause temporary pain in the industry but it will bolster long-term confidence in a program that has unmatched potential to help those in need.

Pacific Life’s response? – Where can this all lead?

So, what does Pacific Life have to say?

I left two voice mails and sent an email to Pacific’s man in charge of structured settlements, Geoff Kissel. He referred me to Steven Chesterman in their Communication Department, who emailed, “Wanted to let you know I received your message and we have no comment for your story.”

Finally, I would not be surprised to see these successful efforts to supercharge their structured settlement business result in class action litigation. In my legal opinion, thousands of annuitants could argue they were victims of a monumental consumer fraud and conflict of interest.

Because that’s what it smells of. And even if simply by appearance only, the harm done to the reputation of the structured settlement industry is significant.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.