Opinions

Alaska's DC delegation should look into structured settlement abuses

With the election over, Republicans and Democrats in Congress, including Alaska's three elected leaders, are all pledging to support people who work hard and play by the rules.

If that's true, then a good place for them to start is by investigating a recent fraud involving nearly 1,500 accident victims who have lost almost a billion dollars in insurance payments though no fault of their own.

A lifelong Anchorage resident, I am one of the victims of this fraud. Many years ago, while riding a motorcycle in California, I was struck by a car whose driver was not paying attention.

The damage to my body was massive and permanent. Since the other driver was at fault, her insurance company agreed to pay damages. This is where my problem started.

At settlement, the insurance company brought in a structured settlement consultant from New York. Instead of a cash payment, this man funded my settlement with a structured settlement annuity issued by an insurance company. Since the U.S. tax code encouraged structured settlements, I felt that this option would bring better financial security than a cash settlement.

But even though the structured settlement consultant knew I was an Alaska resident, he used an annuity from a New York insurance company that was never licensed to do business in our state!

Recently, this insurance company, Executive Life of New York, went into liquidation. Those payments I was promised have suddenly been cut by almost 60 percent.

Adding insult to injury, after the settlement, I found out that the consultant took a large fee from Executive Life for what he did.

Congress set up structured settlements to help accident victims protect their financial security. Instead of a lump sum, Congress changed the tax code to encourage a guaranteed stream of tax-free income.

Sen. Lisa Murkowski and Rep. Don Young are powerful, experienced legislators. Senator-elect Dan Sullivan is a former attorney general who understands the importance of protecting innocent victims of financial misdeeds.

All three have the power to demand answers from the structured settlement consultants who took Congress' good idea and collected huge, undisclosed fees while creating a financial disaster that has ruined so many lives.

If Congress wants another example of how the deck has been stacked against accident survivors, look at the structured settlement industry's D.C. trade association. Though it claims to support people with disabilities, it knew about the financial risks to us for almost a decade but did nothing to warn us.

Congress surely never counted that the system it set up to help innocent people would instead ruin their lives while enriching outside consultants. It is time for Congress to investigate!

Reggie Kelley is an Anchorage resident and structured settlement beneficiary.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.

Reggie Kelley

Reggie Kelley is an Anchorage resident and structured settlement beneficiary.

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