The Alliance of American Insurers urged New York’s Governor George Pataki to sign Bill S7810/A6936A which would enact legislation regulating structured settlements, as a necessary measure to protect consumers.
The new law 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. It also conditions the transfer of such funds on approval by a court or other administrative authority.
“This bill protects consumers’ long-term financial security from unscrupulous factoring companies,” stated John Lobert, Sr. VP of state government affairs for the Alliance, which has been an active backer of such laws.
The announcement described a structured settlement, as one that provides for an injured person to receive funds disbursed over time, “usually in the form of an annuity, rather than in one large lump-sum payment.” The compensation aims to ensure long-term financial security. Structured settlement bills address the problems which arise when this security is undermined by the unregulated sale of lump sum settlements.
“By ensuring full disclosure prior to any transfer of a structured settlement, the bill protects New York 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 continued.
So far this year Arizona, Mississippi, South Carolina and Utah have enacted similar statutes, joining some 30 others, including California and Texas that have enacted them.
Lobert praised New York legislators for their action to protect consumers. “This bill goes a long way toward protecting benefit recipients and ensuring that the benefits they are entitled to receive will be there for as long as they need them,” he stated. “We urge Gov. Pataki to sign this important consumer protection bill into law.”
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