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Structured Settlements as a Means of Settling Liability Claims

  • Journal of Insurance and Finance
  • 2002, 13(2), pp.143-170
  • Publisher : Korea Insurance Research Institute
  • Research Area : Social Science > Business Management

마승렬 1

1삼한 손해사정사무소

Candidate

ABSTRACT

In some claimants cases, a structured settlement can be preferred to a lump sum settlement as a means of settling liability claims and with regard to the benefits received by insurers they should promote periodic payment settlement rather than lump sum cash settlement. In this study we analysed a viable alternative to the traditional method of settling bodily injury liability claims. From the result of this study we verified that a plan to apply 5 % of legal interest rate in the case of using periodic payment settlement will lead to underestimate the present value of lost earnings twice over. So we should calculate future lost earnings correctly using reasonable net discount ratio, and then device plans for structured settlements.

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