Is it true that casualty insurers favor structured settlements because it enables them to save money?
Yes and no. Structured settlements, if properly negotiated, should provide a financial incentive to both plaintiff and defendant. Over the years, CCI has handled numerous cases where we helped the parties share the government tax break given to structured settlement under I.R.C. section 104(a)(2). For example: if both sides recognize that a case is worth $1M, wouldn’t it be a great settlement if the defense can spend $925,000 and provide the plaintiff with a structured settlement benefit plan that the plaintiff would need $1.1M in cash to replicate? In this type of a settlement the plaintiff receives more than he or she would otherwise have accepted in cash, and the defendant pays less to settle the case than it would have had to pay in a cash settlement.
