Medicare Set-Aside Blog on August 30, 2010
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For those of you who are members of the LinkedIn forum run by Kim Wiswell at CompPartners, this discussion may seem kind of stale. I have been meaning to address the topic in more detail but have been lacking the time and motivation until this morning.

By way of background, a new company,, began sending emails in early August to industry firms advertising “free rated ages”. Initially there was no identifying information or description of the “how” and “why” of this new service. They purported to have a solution for the rated age problems we all face as MSA providers and structured settlement brokers. The basis of the service was that had the permission of at least one life company to provide rated ages directly to the MSA industry and bypass the traditional structured settlement broker distribution channel.

Ok, sounds good so far so what’s the catch? How does it really solve the problem of rated ages and the burden they place on life underwriting departments? Why would this be offered for free? And who is offering it?

Well after a lot of questioning feedback in the forum, the proprietor, structured settlement broker Tom Stanley, revealed himself in an open letter on the site’s home page. Here is what we found out and the questions that remain.

1. The service is free for now. However, Tom plans on charging for the service if and when he decides it is viable. So maybe it should be more accurately advertised as a free trial period of an indeterminate length.

2. So far only one life company is participating. However, in the days of median rated ages and disclosure of all rated ages obtained that may not be such a bad thing. Structured settlement industry participants chimed in saying there wasn’t any value unless all life companies were participating. I don’t think that is true at all. Still, maybe two or three companies that do not routinely issue “standard” rated ages would be a nice enhancement.

3. Tom claims that underwriting departments are overwhelmed by issuing rated ages for cases where they have no expectation of receiving premiums. But in the open letter he claims the pilot company didn’t incur much cost at all? Which is it? What technology does bring that reduces the life company’s costs?

There are some positives and negatives with this program. On the positive side, Tom is getting formal permission from the life markets to issue rated ages to MSA companies. This is much better than the current system in place (which is a don’t ask/don’t tell kind of situation). The life markets need to understand that it is the same structured settlement customers (the P&C carriers and attorneys) that need rated ages so their help is critical. Like it or not, MSAs are here to stay as part of the claims resolution process. I also like his stated intention of raising the awareness and dialogue of the problem “above a whisper”. It is a big problem that most do not really understand unless they operate in both the structured settlement and MSA industries, which Tom and I both do.

On the negative side, I don’t like the way the service was initially marketed because of the lack of disclosure that Tom Stanley is a structured settlement broker and also prepares MSAs as part of his business model (don’t expect a lot of business from the major MSA firms or brokers that are trying to break into the business). The marketing seems to indicate that his company is something different and unique. But has far as I can tell, he is simply interjecting his company as a middleman into the same process, which does nothing to address the underlying issue of life market costs. I also didn’t like the “free” come-on. We all know nothing in life is free so what is the catch? An annuity relationship with the MSA provider? We now know that his plan is to eventually charge for the service (and I am sure he will place the annuity if you twist his arm). I think that marketing tactic is a little like the neighborhood drug dealer that offers free samples to his customers to get them hooked. I don’t have a problem with him charging for service but be upfront with your intentions (although again how does paying reduce the life company’s costs? I would rather just pay the life company directly as opposed to a middleman).

The solution to the rated age problem is to use an independent underwriter than meets CMS’s ever changing definitions or pay the life companies a fee for service that is waived upon the placement of annuity premium. I can’t see how interjecting into the equation does anything to alleviate the stated problem.

BTW, the going rate for a rated age is about $20 through an independent underwriter. Send me an email if you would like some referrals.