Approved lists of life markets, the next pillar to collapse?

If the recent emails and conversations i'm having with other brokers around the industry are any indication, the approved lists maintained by property casualty companies of the life markets they will use to fund a structured settlement annuity are the next pillar of the old business model that might be under attack.

As anyone in the settlement profession knows, as well as most claims personnel, defense council and plaintiff attorneys, approved lists of life markets are a standard practice at most casualty companies. Also, as any plaintiff attorney or settlement planner can attest they are the single most despised practice left in our market as they very often bere no relation to the safety of companies, the best price or the other items of value they claim to provide. 

In case after case we see situations where companies not on the approved lists of major casualty firms have better rates, better pricing and tie in features such as stand alone structured legal fee's, yet the stubborn and blind refusal of the casualty market to hold to their list costs plaintiffs real money in benefits while forcing them into life markets that may not be in their best interest.

Given the recent rating down grades of major life markets such as Hartford and American General, along with lesser down grades of other firms from A++ to A+, the fallacy of saying approved lists protect anyone is obvious.

The general, and growing belief, in a key segment of the plaintiff bar is that these approved lists are nothing more then steering agreements between major life and property casualty companies that have been orchestrated for the benefit of the markets and not to provide protections to the recipients of the payments. There are currently small cases being pushed in two courts that I know of where attorney's have drawn a line in the sand over approved lists that excluded Prudential in one case and NY Life in another where the benefit streams were demonstrably superior for their clients.

If anyone has a rational and coherent argument why Hartford Life is still on some major P&C companies approved list but Prudential and NY Life are not, i'd sure like to hear it.

Comments

[Jack]

So having freedom of choice is a bad thing? We clamor about giving plaintiffs the right to choose a life company but the same freedom of choice doesn't apply to the defense? That's why it's called a negotiation. So if a defendant doesn't want Hartford (which is swirling the financial drain, tried to sell everything it had and is being propped up by TARP money) but they have the cheapest price (let's be honest here - that's the #1 criteria for plaintiff brokers), then they should be forced to take it? That seems a bit one sided, don't you think? I agree with you, it's silly to exclude quality companies like Hancok or NY Life, but it's equally silly to insist the defense have no standards on who they buy from.