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Meaning Of Structured Settlement

Volume 281: debated on Tuesday 16 July 1996

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10.17 pm

I beg to move amendment No. 1, in page 4, line 13, at end insert—

'(8) Where—

  • (a) an agreement is made settling a claim or action for damages for personal injury on terms whereby the damages are to consist wholly or partly of periodical payments;
  • (b) the person against whom the claim or action is brought (or, if he is insured against the claim, his insurer) purchases one or more annuities; and
  • (c) a subsequent agreement is made under which the annuity is, or the annuities are, assigned in favour of the person entitled to the payments (so as to secure that from a future date he receives the payments as the annuitant under the annuity or annuities),
  • then, for the purposes of section 4 above, the agreement settling the claim or action shall be treated as a structured settlement and any such annuity assigned in favour of that person shall be treated as an annuity purchased for him pursuant to the settlement.

    (9) Subsections (2) to (7) above shall apply to an agreement to which subsection (8) above applies as they apply to a structured settlement as defined in subsection (1) above (the reference in subsection (6) to subsection (1)(b) being read as a reference to subsection (8)(b)).'.

    The purpose of clauses 4 and 5 is to enhance the protection conferred on structured settlement beneficiaries by the Policyholders Protection Act 1975 from 90 to 100 per cent. When a new settlement is set up, an annuity is purchased for the beneficiary, and there is no problem. Clause 4 will give him 100 per cent. protection in the unlikely event—

    Order. I am sorry to interrupt the hon. Gentleman, but there is too much noise. Those who are wanting to engage in conversations, please go outside.

    I am grateful to you, Madam Deputy Speaker. I think that the voices are a chorus of support.

    I am grateful to the hon. Member for Brent, South (Mr. Boateng) for tabling an amendment in Committee to draw attention to doubts about whether the clauses would always operate as they were intended to. There is doubt about whether the clauses would increase the protection in cases where the settlement had originally been set up on a different basis and the annuity was formally assigned to the beneficiary at a later date. That will most often be so when a settlement was made before the reforms that we introduced in the Finance Act 1995. Since those reforms, the parties to existing settlements can modify their arrangements, and usually it is sensible and more convenient for all if the annuity is assigned to the beneficiary.

    This is a technical amendment to ensure completely that the enhanced policyholders' protection conferred by clause 4 will apply regardless of whether the person entitled to the payments becomes the policyholder of the annuity that is central to the structured settlement. The amendment makes a good Bill better, and I commend it to the House.

    The Opposition welcome the Government's positive response to the amendment that we tabled in Committee. It is a worthwhile and useful Bill and we wish it well.

    Amendment agreed to.

    Bill read the Third time, and passed, with amendments.