At many property and casualty companies, structured settlements have gained a solid following. Yet, many claim professionals still hesitate to incorporate them into negotiations. This shuts off a viable settlement option, as an outside structured settlement consultant is, essentially, a free resource to help settle open cases.

Some of this hesitancy probably stems from a misunderstanding of structured settlements' role in the claim process. Typically, they are not substitutes for cash settlements, although there are exceptions. Rather, a structured settlement is most effective when used as a complement to cash, a replacement for that part of the settlement designed to compensate future needs.

For a casualty company, the greatest appeal of a structured settlement is the bottom-line impact. Because federal law allows claimants to take advantage of the time value of money tax-free, a structured settlement offers significant additional benefits over cash. By casting settlement discussions in terms of meeting specific future needs, a structured settlement approach helps focus attention on appropriate compensation, rather than on lump-sum demands that may be arbitrary. For insurers, that could mean faster closure of claim files, lower administrative costs, savings on legal bills, and, most significantly, reduced danger of runaway juries.