Utah Structured Settlement Bill
NU Online News Service, March 14, 3:29 p.m. EST?Utah's legislature has approved legislation similar to measures approved in 30 other states to regulate the sale of structured settlements.
Shortly before adjourning last week, the State Senate gave final approval to SB 163, which, according to the Alliance of American Insurers of Downers Grove, Ill., makes it the first state this year to pass a measure designed to protect the recipients of structured settlements.
The measure has been forwarded to Republican Gov. Mike Leavitt, who is expected to sign the bill into law.
Under a structured settlement, explained the Alliance, an injured person receives funds disbursed over time, usually in the form of an annuity, rather than in a large lump-sum payment.
The structure is frequently touted as ensuring long-term financial security.
But in the Alliance's view, this security is undermined when sales of the settlements are not regulated.
If SB 163 becomes law, it will require factoring companies (which offer to buy structured settlements) to disclose all fees, charges and other amounts that are to be deducted from the sale's proceeds.
The bill also conditions the transfer of such funds on approval by a court.
"SB 163 protects consumers' long-term financial security from unscrupulous factoring companies," said John Lobert, senior vice president of state government affairs for the Alliance, which actively supports such laws.
"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," he explained.
Once signed, the Utah law would apply to structured-settlement transfer agreements entered into May 6, 2002, and later.
The Alliance reported that Alabama, Alaska, Mississippi, New York and South Carolina also are considering such legislation this year. Thirty other states have laws on the book designed to scrutinize these transfers, the Alliance said.
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