How does the defendant insurer benefit?

Expenses associated with paying claims are eliminated. In addition, savings are realized by lowering overall administrative costs. When determination has been made that liability for pollution exists, and the terms for clean-up are established and quantified, future costs can be funded with an annuity or similar agreement offered by a life insurance company.

In this way, the potentially responsible party can pay for its future obligations on a more economically efficient basis. It can also give the life insurance company the administrative responsibilities of making the payments. NOTE: The tax treatment of these alternative uses of structures is not the same as for the physical injury cases.

A qualified tax expert should be consulted before any decisions or annuity purchases are made.

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