Sedgwick Answers Questions About Structured Settlements

Transcription

1 Sedgwick Answers Questions About Structured Settlements

2 structured settlements questions about structured settlements Structured settlements have been bringing insurers and employers a better way to handle high-cost claims settlements for decades. A structured settlement provides the injured party with steady and predictable tax-free income over time rather than a lump sum payment. Structures are designed to encourage expeditious settlement and minimize the costs involved in personal injury, wrongful death and workers compensation claims. But creating the right approach to structured settlements isn t always easy. Claimants don t understand how they work; some attorneys may fight such proposals; and insurers and employers often believe that perhaps just settling and paying the lump sum may be the simplest approach. It s not. By involving our specialists in the settlement process, innovative options to meeting the future financial needs of the injured party can be presented at a reasonable cost. When created by experienced experts, there are also significant savings and long-term liability benefits for payers. But...there is both an art and a science to structured settlements. So if you ve got questions, we ve got answers. Why select Sedgwick s structured settlement services? As one of the largest providers of structured settlements, Sedgwick offers clients a coordinated approach to structured settlements. We have a staff of more than 50 seasoned professionals with more than 600 years of combined experience. Our team has successfully closed more than 50,000 structured settlements over the past 30 years. In 2010 alone, our structure sales represented more than $1 billion in benefits to injured annuitants. This achievement gives us one of the most extensive dedicated settlement databases in the industry and brings our clients unparalleled insights into the strategies that create optimal results.

3 structured settlements / p. 2 questions about structured settlements We offer a full range of settlement solutions, including: Convenient, cost-effective single-source integrated claims solutions A full suite of powerful claim settlement tools Unique expertise in consultative approaches to resolving claims Local jurisdictional insights and knowledge through our national presence A wide range of settlement options Integrated claims solution strategies to lower costs and enhance administrative efficiencies In addition, the Sedgwick team is available to assist in post-settlement services. We review all settlement agreements and work with attorneys to ensure the appropriate structured settlement language is included in the documents to guarantee tax-free status of the settlements. If needed, we prepare documents for our clients, saving internal staff time and giving a worldclass, single-source resource for all settlement needs. Our strong relationships with leading life insurers enable us to facilitate the completion of all paperwork so benefit payments can begin promptly. Plus, we aid in the administration of files by updating address changes, addressing any problems with payments and handling all inquiries, adjustments and questions that may occur. There are many companies providing structured settlements today. What makes Sedgwick s settlements different? There s more than just one product, service or area that sets us apart, including our technology, knowledge of other settlement services such as MSAs, experienced team and overall strategic approach. Other factors that make us unique include: Experience We have participated in thousands of structured settlements for personal injury, wrongful death, medical malpractice, workers compensation, Jones Act and Longshore, FELA, environmental, condemnation and divorce cases. And in this industry, experience matters. You want a team that has depth of experience and specific jurisdictional knowledge to provide the guidance needed to create a successful settlement. Local knowledge Our experts are located coast-tocoast, giving us important contacts and knowledge about local jurisdictions and resources. This collective knowledge helps us identify the right resources, collaborate with local attorneys and settle claims quickly. A focus on the end game Our job is not to incorporate a structured settlement into every claim, it s to ensure every one of our clients claims is settled quickly, is in compliance with all state and federal laws, is fair to all parties and that it ultimately reduces costs. With this in mind, we provide our structured settlement services at no cost to our clients. What is the value of an integrated approach to structured settlements vs. unbundling through a specialty vendor? Each of our services is designed to provide cost-effective, quality-based solutions to further the ultimate goal in claims adjudication managing the overall cost of the claim and the speed of resolution. We are the leading company offering this level of comprehensive service and integration in our approach to settling claims. We strive to be proactive and to identify only those

4 structured settlements / p. 3 questions about structured settlements claims that could most benefit from a structured settlement. We have the tools and historical database needed to analyze loss evaluation. We can analyze damages and project into the future to establish reserves. These insights help us ensure that clients get the best possible resolution to settling claims. How do structured settlements impact Medicare set-aside accounts (MSAs)? Using structured settlements as a tool in the funding of Medicare set-aside accounts is a key strategy for cost containment. The Sedgwick Medicare compliance model offers a fully integrated settlement approach. Our structured settlement and MSA teams work together to determine when it is cost-effective to fund an MSA with a structured settlement, and proactively work to further reduce funding costs through the use of rated ages while ensuring strict adherence to all Centers for Medicare and Medicaid Services (CMS) guidelines and the avoidance of penalties and fines. What makes Sedgwick s settlement technology unique? The Settlement Processing Information Network (SPIN) is our structured settlement diary-based file management system. It offers integrated modules to facilitate document creation, review and storage, accounting functions, quoting, license administration and more for comprehensive management of our clients cases. This system also allows us to: Accurately track case history and progress Compile statistical data and generate reports Stay organized and focused to resolve cases quickly and efficiently The quoting module allows us to quickly interface with various life companies to provide competitive up-tothe-minute structured settlement quotes in as little as one hour. Our diary system allows us to easily track case progress, generate follow-up contacts and facilitate a final settlement. SPIN also incorporates a data processing function through which we can create customized reports to meet your specific case tracking needs, keeping you up-to-date on all referrals, sources of those referrals and overall case status. Once a case is settled, we are able to provide turnaround of settlement documents and efficiently coordinate their progress through final execution and contract issuance often within the same day. How does the typical settlement process work? Once a claim has been identified as a potential candidate for a structure, we urge our clients to bring us into the case at the earliest opportunity. Our staff consultants are experienced professionals who can provide innovative settlement options to facilitate the negotiation process. At no cost to our clients, we provide on-site consultation, attend settlement conferences, generate proposals and investment comparisons, assist with setup for medical trusts, and answer questions about the financial security of insurance companies. Our services extend through the duration of the negotiations and we are able to revise and create new plans as necessary. What are the benefits of a structured settlement to insurers and self-insureds? A structured settlement utilizing a reduced life expectancy, or rated age, can offer the insurer or self-insured a significantly reduced cost for providing the claimant an equitable, yet secure, lifetime income stream. This is true even when the cause of the reduced life expectancy is

5 structured settlements / p. 4 questions about structured settlements unrelated to the incident that gave rise to the claim. We will carefully review each claim to ensure the most favorable rated age and pricing with the most competitive annuity rates from the highest-quality life insurance companies. Here s where both art and science come into play. Negotiations should center on the injured party s needs assessment rather than the cost of the structured settlement package. This helps to focus attention on the array of settlement possibilities and away from subjective cash demands and offers. Seasoned negotiators find that offering a settlement package that includes a structure improves their chances of settling a claim, even if the structure itself is ultimately rejected. How do you work with internal claims departments? We believe one of our primary jobs is to bring efficiencies to internal claims programs so they can focus on other priorities. We offer a centralized claims intake area that allows us to better collaborate and coordinate with claims examiners and brokers. Examiners can access our website for initial intake, to create reports, track claims and set reserves. Our database has the capability to provide any settlement information clients need. Insights into the progress of settlements are always just a click away. How much money can a structured settlement save? That depends on a wide range of factors. Overall, we have found that structured settlements can save a significant percent over the actual lifetime of the claim. What about your team s experience? We have more than 50 experienced and credentialed settlement brokers delivering the expertise needed to help our clients quickly and accurately settle claims. Where are you located? Now that Selective Settlements and Galaher Settlements are part of Sedgwick, the industry leader in claims and productivity management, we have the broadest coverage area in the nation with settlement brokers in virtually every major U.S. city. What type of companies do you use to underwrite settlements? As one of the leading structured settlement companies in the country, we only use the highest-rated life insurance underwriters in the US. Additionally, we receive monthly ratings reports to continually track the strength of our underwriters. This best practice ensures that our settlements are more readily accepted by the courts and also provides our clients long-term liquidity assurances. Sedgwick settlement service secure, savvy, synergistic solutions Integrated approach that focuses solely on helping our clients develop optimal claims settlement strategies Coast-to-coast jurisdictional knowledge and insights Single point of contact for our clients, creating ease of administration and cost efficiencies The most comprehensive claims database in the nation, giving us important insights and historical data to settle claims quickly and accurately Instant access to in-depth online reporting and status Contact the Sedgwick Structured Settlement team for more information on our settlement services structures@sedgwickcms.com

6 structured settlements / p. 5 Structured Settlement Illustration: Example 1 Scenario: The claimant was injured in an automobile accident. The following payment stream was set up to provide supplemental income for work loss and payments for future knee surgeries and physical therapy. In addition, money was allocated to provide a large lump sum payment for retirement. Proposed benefits $100,000 $500 Cash payment at settlement, inclusive of attorney fees and immediate cash needs to claimant Payable monthly, guaranteed for 20 years, beginning one month from purchase date $15,000 Guaranteed lump sum payment at age 21 $20,000 Guaranteed lump sum payment at age 25 $25,000 Guaranteed lump sum payment at age 30 $35,000 Guaranteed lump sum payment at age 35 $50,000 Guaranteed lump sum payment at age 40 $75,000 Guaranteed lump sum payment at age 45 $100,000 Guaranteed lump sum payment at age 50 $115,000 Guaranteed lump sum payment at age 55 Tax-free guaranteed benefits: $655,000 Total cost including cash: $302,993

7 structured settlements / p. 6 Structured Settlement Illustration: Example 2 Scenario: The claimant was injured at a community swimming pool. The accident left him with severe brain damage and partial paralysis. These benefits provide him with payments for lifetime medical support, including an assisted living program and physical therapy. FOR: a male claimant AGE: 35 RATED AGE: 54 Proposed benefits $150,000 $1,500 Cash payment at settlement, inclusive of attorney fees and immediate cash needs to claimant Payable monthly, guaranteed for 20 years and life thereafter, compounding at 3% annually, beginning one month from purchase date Tax-free guaranteed benefits: $633,667 Tax-free life expected benefits: $1,752,871 Total cost including cash: $585,427

8 structured settlements / p. 7 Structured Settlement Illustration: Example 3 Scenario: The claimants are the widow and children of a man fatally injured by contact with a power line. The original award was for $4 million. During the appeal process, this structure was offered and accepted. The structure provided supplemental financial security for the family and ensured educational funds for the children. Proposed benefits $ 300,000 Cash payment at settlement, inclusive of attorney fees and immediate cash needs to claimant For Claimant s Wife (Age 42): Income Supplement $ 2,500 Payable monthly, guaranteed for 30 years, beginning one month from purchase date For Son (Age 5): College Fund $ 20,000 Payable annually, guaranteed for 4 years, beginning at age 18 For Daughter (Age 2): College Fund $ 20,000 Payable annually, guaranteed for 4 years, beginning at age 18 Tax-free guaranteed benefits: $1,887,262 Total cost including cash: $1,044,