Tip #3 - Don't forget the Assignment Fee(s)!

October 15, 2013

You may recall, we previously dealt with instances where the contributing casualty insurer cannot (or will not) agree to own a structured settlement. In those instances, Absolute Assignment is required (see Tip #2 for more detail on that).

If Absolute Assignment is required, the discussion then needs to begin about the payment of the Assignment fee or fees.

Currently, each Assignee charges a fee of $2,000.00. On occasion, where a structure is underwritten by more than one life insurer, more than one Assignment fee becomes payable, since each life company has its own Assignee that charges a fee.

The Assignment fee is NOT charged by the structured settlement broker or the life insurer issuing the annuity. Rather, it is a fee charged by the insurer taking the place of the funding casualty insurer. The substitute insurer assumes the ownership of the structured settlement annuity and the ongoing liability for the structure payments. In some instances, the funding casualty insurer will agree to pay the Assignment fee. In other instances, it will not; or it may pay just one fee.  As such, the payment of the Assignment fee or fees MUST be negotiated at the time of settlement. Some people think the fee can be waived – not true. The Assignee requires payment in exchange for taking on the ownership of the structure and assuming the liability for the future structure payments.

So, now that you have the right to structure (see Tip #1) and know that the structure must be Assigned (see Tip #2), do not forget to clarify which party will pay the Assignment fee(s).

Laura Mullin, Principal (HBA, CIP, CSSC)