Settlement brokers drafting settlement documents. Are you guys nuts?

I just had the wonderful experience of dealing with a claims manager on a case where I was essentially castigated for my firms lack of willingness to draft a settlement agreement and release, as well as fill out the qualified assignment forms, and then forward them to the claims organization for signatures by all interested parties.

Can I ask everyone in the structured settlement business a very simple question about the long standing practice of settlement brokers caving into claims organizations demands to draft settlement documents?

Are you all out of your minds?

Lets think this through everyone. I am a licensed INSURANCE AGENT in the states in which I do business as a structured settlement AGENT. We are NOT brokers people, we are AGENTS! That means we are bound by the law of agency. Go back to the days when you were studying your life insurance licensing books to get your license and remember what the law of agency is all about. You are working for the LIFE INSURANCE COMPANY in this transaction and your duty as an agent is to them under 100 year old laws regarding agency.

We are not in the business of drafting settlement documents, releases and modifying assignment forms and language for lazy or careless claims organizations or trial lawyers who are learning how to get these done. Our jobs as AGENTS are as follows:

1. Make sure the case is properly quoted using company software and illustrations that conform with all state insurance laws regarding disclosure and communication with insured.

2. Make sure all applications are filled out completely and truthfully and that all underwriting material and other facts that might expose the life company to risk are fully disclosed in our roles as field underwriters and agents.

3. Make sure that all supporting documents, such as settlement agreements, qualified assignments, addendum, court orders and authorizations are collected, executed and promptly delivered to the life company for underwriting and review.

4. Make sure all premium checks are properly drafted, funded on dates and schedules outlined in the binding annuity quote and transported to the proper location for deposit.

I don't see anything in there that says the AGENTS should be drafting settlement documents, writing addendums and modifying qualified assignments just because some claims organization has, and i'm quoting here, " done it this way for 22 years and every broker I talked to writes and prepares settlement documents." I won't embarrass the three major annuity firms that he mentioned in our back and forth, but if he is truthful in his representations, then his firm has for the last 22 years had structured settlement brokers writing up settlement agreements and releases for their insureds.

Can anyone say, "practicing law with out a license?"

I'll repeat it again, are you guy out of your minds?

It is the attorneys job, either defense or plaintiff, to draft, review and circulate all settlement agreements and releases. Part of that necessarily includes the use of a standard form UQA or QUA&R on most every case, a BLANK copy of which should be provided by the broker or brokers in that case. After those documents are prepared and circulated, then and only then, should the settlement broker or agent review it as a field underwriter for the life company to insure that it APPEARS to conform with all relevant wording regarding the structured settlement language ONLY. It is then sent on to the life company and assignment company for final review and signatures.

How any firm in our industry would take the risk of drafting, modifying or preparing in total a settlement agreement and release, with attached UQA and addendum is utterly beyond me. Unless you are an attorney and are engaged by either the plaintiff or defendant you have absolutely no business what so ever creating documents that expose you to financial ruin if they aren't properly handled! We aren't lawyers guys so stop pretending we are.

As I said to this rather upset claims guy, who by the way tried to "fire me" from the case even though he didn't engage my services due to my refusal to prepare the settlement agreement, " just because it's a long standing practice in our industry doesn't make it right". Doing the wrong thing for 25 years on the premise that it speeds up the claims process doesn't mean we should be doing this. It's sloppy, careless and possibly against the law.

Am I alone on this one or are the rest of you just plowing along acting as attorneys with out a license and figuring as long as no one complains it's not an issue? 

Posted on October 26, 2007 .