Ariz. HB 2192 to Protect Consumers who Depend on Structured Settlements

The Arizona Legislature passed a bill May 16 aimed at protecting consumers who depend on structured settlements, and could become the fourth state this year to enact such a law, according to the Alliance of American Insurers. Mississippi and Utah enacted such laws in March, while South Carolina’s governor signed a similar bill into law May 14.

Two other states—Alaska and New York—are considering such legislation this year. The Arizona bill, HB 2192, now goes to Gov. Jane Dee Hull (R), who is expected to sign it, according to John Lobert, senior vice president of state government affairs for the Alliance, an active backer of such laws.

If signed into law, the bill 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.

“HB 2192 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 Arizona 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.”

Kirk Hansen, Alliance director of claims, noted that the Alliance has worked hard to pass similar bills in other states and praised Arizona legislators for taking such decisive 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 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.

Hansen noted that 33 states have 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, Mississippi, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington and West Virginia.

Topics Arizona