Hartford subpoenaed by state AG over structured settlement practices.

Big news for our industry, yet buried in the back pages and only pointed out by one of our readers here on the Industry rumors and gossip page.

Hartford Insurance Group was subpoenaed as part of an investigation into their structured settlement practices.

Obviously the implications of this are profound in that this is the first state AG or regulatory agency to closely look at an inhouse structure program, and their findings and opinions on this could permanently alter the practice of in house structured settlement programs at casualty markets here in the US. This investigation is part of the larger case looking into the reinsurance issues and group annuity sales investigations already on going, and as described in the article Hartford is cooperating fully with all agencies.

Regardless of the outcome for Hartford, who I think has as good a rationale for their business model as anyone in the business, this will almost certainly bring to a permanent halt the long standing industry practices of approved broker, approved company lists, and certainly curtail commission sharing or rebating between the entities. The regulatory and legal risk is now too high given the Macomber v Travelers case, and the ever increasing scrutiny of our industry practices.

We will follow this closely for you and try to get the people from Hartford to come on and give us an update from their perspective.

Comments

[Jack]

Some thoughts...how about a new blog on where the industry is going...the Delta website posted a letter from a fired up broker asking for a call to action to develop some new products not unlike the Met variable (but without the problems). AIG is hinting to us brokers on the east coast at a non-qualified product in 2006, but nothing beyond that in recent times other than the new product for business sales out of Allstate. I see no spark, no innovation...we have the same vanilla annuity we've had for 20 years. Compare us with the boys and girls at the big financial service brokerages who get a new product from one of the life markets on monthly basis (just saw the specs on a new variable from former industry player Aegon), the same life markets in our business. Why, I ask, can they churn out new equity indexed and variable products, but nothing new on the structured settlement side? There are some good natured attempts, like the free Mass Mutual term policy, but that's underwhelming. I give them points for trying, but we need something more.

And on the topic of blogs, what about association issues...I hear a lot of talk about asbestos...about new committees...about med mal...maybe NSSTA could put a blog here?

For guests, how about Rick Bishop to talk about Cal.bill 410? Paul Lesti on what the goals of the SSP are? Dick Risk on 468B's? Randy Dyer on what the goals of NSSTA are? Maybe Halpern (if he's gutsy enough) on why he claims the life markets are shaky and his trust is the only way to go (he's got a big following with the trial lawyers in the east).

[The Settlement Channel]

Jack,

Great points and you are reading my mind. We are going to be rolling out a lot of shows, and interviews, on just these very topics right here on the channel. The bottom line is that in this industry information and discussion leans either toward bland, trade association speak, or on the other end, rampant rumors and border line slander on the other end of the spectrum.

We are going to be doing a series of live and recorded interviews with many of the founders of our business, those with issues such as you state above, as well as build up the blog page to handle more traffice and discussion on these.

I love the ideas. contact me with more.