Why Does My Company Want Me To Use Them?

To reduce overall claims expense.

Internal studies have repeatedly shown that structured settlements reduce both expense and indemnity dollars when used correctly on appropriate cases.

The largest percentage savings come from reduced internal expenses. The data shows that structured cases settle sooner, thus reducing defense and administrative costs significantly.

But structures can also help reduce claims severity. By harnessing the tax benefit available to claimants under IRC Section 104, insurers can boost the effective value of their settlement offers by as much as 30% in most cases without having to request an increase in settlement authority. You will hit claimants' minimum acceptable value with a structure long before you would have offering cash alone.

The combined savings in expense and indemnity can push into double-digit percentages, hence their popularity with senior management.

Companies with life insurer affiliates stand to benefit in a third way: if their sister company offers settlement annuities, funding structured cases "internally" (with their affiliate) captures the annuity profit as well.