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The Accident Still Happened, Now What?

You have several budgets to manage but probably none so variable and difficult as your
insurance-risk management program. Your loss-prevention programs are state of the art.
You hired competent internal or third-party administrator adjusters. Still, accidents will happen.

Managing claims that occur means reducing the cash outlay, delivering fair and well-designed settlements to injured parties, and reducing insurance premiums going forward. The preparation and expertise of the team in charge of protecting an entity’s interests and creating innovative solutions during the settlement process can be the difference between a debilitating adverse judgement or a successful resolution that works in the best interests of all parties.

Those responsible for risk management will always seek to secure the most comprehensive and economical insurance coverage. Best practices include hiring qualified coverage consultants and claims professionals. Importantly, the best programs consider another professional as integral to their team, especially when navigating the resolution of complicated claims—a reputable and experienced settlement consultant.

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Settlement consultants are objective advisors that provide creative solutions at the settlement table and work as a resource for risk managers, claims adjusters, attorneys and mediators—all at zero cost to the insured company or insurance carrier. While there are many products and services that a settlement consultant will bring to the resolution process, the key product is a tax-free structured settlement annuity.

At its core, a structured settlement is a specialized annuity that is both tax-free and guaranteed under U.S. Tax Code § 104. It is available to those who have suffered bodily harm in an accident or in any workers compensation claim. Only select, top-rated life insurance companies underwrite structured settlement annuities, so they provide the highest level of security available in any financial instrument.

Structured settlements are customized to meet the needs of the claimant and provide a
cost-efficient solution for the defendants in a claim. They both increase the present value of their settlement, offer via tax-free interest accumulation, and ensure that the funds will be properly preserved for the injured parties. Structured settlements were originally developed in the 1970s, to preserve settlement funds for babies who suffered birth defects from the Thalidomide scandal. Today, they are an ideal solution for any injured party that needs their settlement proceeds to last. They also provide financial security for folks who cannot return to work, suffer cognitive difficulties, permanent disability, or simply would otherwise have trouble managing large sums of money responsibly.

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Often when settling a claim, there is some upfront cash to be used to address immediate needs such as medical liens, specialized mobility equipment, or modifying a home to accommodate a disabled person. The money that remains can then be invested in a structured annuity to fund future medical care and living expenses. Structures have the unique ability to ensure claimants will always have access to much needed income and offers protection against those influences that may attempt to inappropriately “invest” the claimant’s money.

School districts, transportation companies and municipalities face a wide range of unfortunate incidents across the country in an increasingly litigious environment. This can include auto accidents, premises liability claims, school shootings, instances of abuse and assault, and many others. Structured settlements provide a path toward responsible dispute resolution. Many companies, school districts and municipalities have large deductibles or self-insured retentions. In other words, they have skin in the game. It is in their best interests to settle claims as quickly and as cost efficiently as possible. Prolonged legal battles come with hefty legal costs and increased risk of adverse judgements. In a post-COVID world, where budgets are constrained and every dollar counts, bringing as many creative solutions as possible to the settlement table is critical.

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The offer of a structured settlement annuity is often the factor that breaks the logjam in a mediation.

In addition to structured annuities, settlement consultants provide options to set up Special Needs Trusts for claimants who need to preserve government benefits and Qualified Settlement Funds to appropriately distribute settlement monies to parties in a multi-claimant suit. For employees that have been injured on the job, they provide workers compensation annuity plans to cost effectively settle claims and fund Medicare compliant medical funds. They are a Swiss army knife at the settlement table and a resource that any risk manager, administration official or claims handler should have on call when attempting to resolve complex claims against the entities they serve.

Editor’s Note: As reprinted in the August 2021 issue of School Transportation News

Alex Hunt is a settlement consultant with Ringler, the largest settlement firm in the industry. He advises clients nationwide on a wide range of complex liability and worker’s compensation settlements.

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