Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

Why does a casualty insurer allow structures?

April 26, 2017casualty insurer structures

0

10 Posted

Why does a casualty insurer allow structures?

1 Answer

0

Posted

The income stream from a structured annuity is tax-free. The income stream from investment of a conventional lump sum is not tax-free. Therefore, in order to produce the same after-tax income stream in the plaintiff’s hands a casualty insurer must pay out a higher conventional lump sum. It is called a tax gross up on the award, and the casualty insurer saves this amount when purchasing a structured annuity.These savings are significant when multiplied by any number of similar claims made against an insurer.