Life Settlement Broker - Behind the Scenes Unpleasantries.

A life settlement broker to a lot of people doesn't seem to add much value to the life settlement process. They collect and organize documentation to support the sale of a life insurance policy, then present this information to life settlement providers for consideration and hopefully an offer. In addition, a life settlement broker outlays money to acquire the necessary documentation and pays for the overhead of having someone manage this process. Many are surprised to learn that a life settlement broker may have actually spent over a thousand dollars with vendors just in putting together the documentation. This can include acquiring medical records, insurance records and life expectancy certificates. Then when the man hours involved in that process are included, the cost soars. This makes evaluation and filtering unmarketable life insurance policies a necessary part of the job. Otherwise, life settlement brokers would get stuck paying thousands of dollars for life insurance policies that have no chance of selling. In much the same way, life settlement providers try to hedge their time and money by "chasing" the deals they are most likely to close.

The disturbing facet of life settlement brokers is the interaction with life settlement providers. Two recent incidents exemplify this point well. Amrita Financial believes the more life settlement providers it works with the better the potential market is for policy sellers. Consequently, Amrita Financial seeks to engage with all reputable, institutionally funded life settlement providers. In the past month, Amrita Financial became aware of a small life settlement provider working on behalf of an endowment. After doing due diligence, the life settlement provider based in Texas was added into our system and given an opportunity to review cases and bid on life settlements.

This was a small operation that only purchased a handful of policies each month, unlike the large providers that purchase hundreds each month. As a follow up to the provider receiving their first case from our online life settlement platform they got a courtesy phone call from Amrita Financial. The purpose of the call was to ensure the provider had no technical issues and was able to access the requisite information. What happened next is quite shocking.

The best practice of a life settlement broker or any other type of intermediary in a life settlement transaction is to not divulge what other offers have been received for a policy. This ensures the life settlement provider will offer their best price for a policy, not just enough to merely beat the next offer. Now I can't blame life settlement providers for asking what the current bid is. After all, they need to be efficient and diligent with their time and resources. However, I do expect them to respect the integrity of any intermediary that doesn't disclose this information. The vast majority of life settlement providers are good and honest. They respect the integrity of the process and intermediary by working within a blind bidding system.

When this question was posed by the small Texas life settlement provider they received the standard answer that we can not disclose this information. They continued asking the same question in a variety of different incarnations all with the single goal of learning the current offer on the policy. When it was made clear that the information in no way shape or form would be disclosed the mood of the conversation turned for the worse. This life settlement provider abruptly ended the call saying they would not participate in the life settlement case.

So what does this mean and why is this important? As you can imagine, there are other life settlement brokers or intermediaries that would have easily disclosed the information. According to another, very well known life settlement provider, almost 1/2 of all life settlement brokers they work with will disclose the current offer. So in essence, unbeknownst to many, almost 1/2 of the time in a life settlement transaction the integrity of the process is being compromised. This is important because any time the life settlement transaction process is compromised the policy seller loses. What if that information causes a life settlement provider to reduce or change a bid they would have otherwise made? Then the revealing of current offers potentially cost a policy seller a higher settlement offer. So the moral of the story is that a policy seller must have confidence that the work behind the scenes of an intermediary or life settlement broker is not counter productive.

As a follow up to that incident, Amrita Financial was being reviewed by a different life settlement provider in consideration of establishing a relationship. Meaning the life settlement provider wanted to make sure Amrita Financial was reputable enough to do business with. Kudos to them for taking the time to understand who was on the other end of the email so to speak. As part of the conversation with their rep, the question was again posed asking how they could learn the current offer for a policy if our system was truly an electronic platform. Meaning if Amrita Financial isn't working the phones with life settlement providers and the process is automated.....who are they going to ask about current offers. In essence, who can they go to in order to compromise the process? Our standard position was provided that current bid information is not disclosed. Their response was that if they can't get that information, then our system wasn't "very provider friendly". That is really at the crux of this entire post. A life settlement transaction is a high dollar, very important, personal transaction. Amrita Financial developed an online platform to ensure that the process was not corrupted and that integrity is maintained in the process at all times. At the end of the day, creating an environment that gives policy sellers control of the transaction and removing doubts about the behind scenes dealings was the goal for the Amrita Financial online platform. So when providers tell us our system isn't "provider friendly" because they can't game the system, we feel like we have accomplished our goal.

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.
This question is for testing whether you are a human visitor and to prevent automated spam submissions.