In today's news we find word that Hartford Financial is in serious talks to sell it's Hartford Life subsidiary to Sun Life of Canada so as to insulate it's profitable property casualty business from the impact of the recently announced down grades of Hartford Life.
This follows on the heels of recent talks to sell the unit to Met Life that obviously broke down.
The impact of Hartford Life's apparently inevitable sale to the structured settlement industry can't be understated. As anyone who knows our profession is aware, the "in house" life programs of Allstate, Hartford, AIG, Liberty Mutual and other multi-line insurance groups have long been the core foundation of the premium written each year. The business generated by these in house programs is considerable and was the engine that built most of the major structured settlement agencies that exist today.
As we watch AIG's struggles, the potential sale of Hartford Life and other industry twists and turns, it becomes abundantly clear that the settlement industry is about to see a major shift in our business model away from one that was dominated by in house programs to one that will be driven more and more by the desires and needs of the end consumer, that being the injury victim and their lawyer.
I've had many debates over the last six months with my friends and associates in the property casualty claims departments over what the new model will eventually look like as life markets are untethered from the property casualty companies, if for instance AIG sells their life markets, Hartford sells their or other firms make similar decisions over the coming months and years. Some think the claims/structured settlement division will survive and have a place in the process, something I think has some merit but I question whether that will in fact occur. Only time will tell if they can continue to provide a value for their firms as a whole.
What I do know is that the demand for what the structured settlement offers has never been greater, and with increased safety needs, market turmoil and high tax rates, the structured settlement is and will continue to be the product of choice for a significant percentage of all personal injury claims. What is going to happen though is that if the claims community stops being strong proponents of the concept due to some diminished financial incentives we are going to see over time a resulting increase in the number of plaintiff and planner oriented firms that work directly with the end consumer to encourage the use of this tool.
It's not going to happen over night, but I predict the shift has begun and these rating down grades will only increase the speed of that inevitable process.