Utah Legislature Sends Structured Settlement Protection Bill to Gov.

The Utah Legislature has passed a bill aimed at protecting consumers who depend on structured settlements, becoming the first state this year to do so, according to the Alliance of American Insurers. Five other states are considering such legislation this year. They are Alabama, Alaska, Mississippi, New York and South Carolina.

The bill, SB 163, now goes to Gov. Mike Leavitt (R) for his signature, which is expected, according to John Lobert, senior vice president of state government affairs for the Alliance, an active backer of such laws.

If signed into law, SB 163 would require factoring companies (the companies that offer to purchase such settlements) to disclose all fees, charges and other amounts that would be deducted from the sale’s proceeds. The bill also conditions the transfer of such funds on approval by a court or other administrative authority.

“SB 108 protects consumers’ long-term financial security from unscrupulous factoring companies,” Lobert said. “By ensuring full disclosure prior to any transfer of a structured settlement, the bill would protect Utah’s citizens from factoring companies that promise ‘cash now’ and deliver pennies on the dollar without fully informing consumers of the cost and consequences of the transaction.”

Lobert noted that the Alliance has worked hard to pass similar bills in other states and urged Gov. Leavitt to sign the bill into law. “This bill goes a long way toward protecting recipients and ensuring that the benefits they are entitled to receive will be there for them as long as they need them,” he said.

Under a structured settlement, an injured person receives funds disbursed over time, usually in the form of an annuity, rather than in one large lump-sum payment. Compensation is made with the aim of ensuring long-term financial security. However, this security is undermined by the unregulated sale of these settlements.

Thirty other states have already enacted legislation designed to scrutinize these transfers. They are: California, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Iowa, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Virginia, Washington and West Virginia.