One of the fastest developing business areas in the insurance industry is in structured settlement companies. The backbone of the business is the settlement funding companies that provide both the funding sources and services for this business. The companies in this industry provide the funds paid out in the annuity as well as assist in the settlement of any liabilities stemming from fault or negligence.
Because of the inherent trust aspect of this business, not all companies can perform these services publicly and commercially. These settlement funding companies need to have specific qualities set forth under law and regulation in order to be granted the privilege of operating as a settlement funding company.
The Requisites of Good Settlement Funding Companies
a) The company must have a sterling reputation. This reputation of the settlement funding companies must be obtained after it has been operating in the market for some time. This is done through a simple online due diligence search to determine how the public perceives the company’s services and operations. The presence of may negative posts or comments on the services, payouts and other services would only put others on guard before contracting them to perform the delicate task for your benefit.
b) The company must not have a conflict of interest in your case. A conflict of interest arises when the settlement funding company would have to protect its interests or another’s instead of the recipient’s very own. This is seen if the company has previous relations with the opposing counsels or parties involved in your case. Because of this, the proper and just valuation of payouts may not be properly reached if a conflict of interest is present.
c) The company must have diversified portfolio. This means that the financial funding sources of the company are not centered on a few but are spread out in the market. This would ensure that no epic failures in finances occur and instead the interest payout sources are secured in the long run.
d) The company must be professional in its dealings. The company must not only have a sterling reputation, its professionalism should speak for the services it provides. These include proper and prompt responses, delivery of services as scheduled and easy customer service access. This is important as settlement funding companies are not just finance companies, they are service oriented companies.
When all these above qualities are found, the next step is in looking at the services it provides for settlement funding. These must either be any one of the following or both, depending on its capacity.
- The method of buying and holding. In this method, the payor would be required to purchase insurance in the form of an annuity or life insurance from a reputable insurer. The insurer would then do the periodic payments in fulfillment of its indicated services.
- The method of assignment. In this method, the payor assigns the liability of payment to a third party, who would then do the periodic payout. The third party would then be required to either engage an annuity or pay out of pocket to fulfill the obligations under the agreement.
There is a need for a bit of investigation and review when engaging the services of a settlement funding company. Finding out the best one for your needs would only make this long term commitment safe and reliable in the long run. To learn more read our post about how structured settlement companies work.