The Washington Post reported on structured settlements and the predatory purchasing of those structured settlements. Unlike traditional settlements, which are paid out in one sum, structured settlements dispense the payout in portions over a lifetime to protect vulnerable people from immediately spending it all. Since 1975, insurance firms have committed an estimated $350 billion to these agreements, spawning a secondary predatory market in which companies compete to buy payments for a smaller amount of upfront cash.
Andrew Larsen, one of the nation’s foremost experts on structured settlements, called the profit margins “egregious.” “If you look at what is considered a fair profit margin in other industries, I don’t think anyone is making these terms,” said Larsen, former president of the National Structured Settlements Trade Association.
Such deals, industry advocates say, get desperate people the money they need for emergencies and big expenses, such as home purchases. But they also expose sellers to the risk that they will exchange lifetimes’ worth of income for pittances.