More than 49,000 Ontarians are injured or killed in auto accidents every year, according to the Ministry of Transportation. Yet, when settling claims for their injuries, only 500-600 claimants each year receive a structured settlement – periodic payments that provide people with guaranteed, risk-free and tax-free funds to address their medical needs – instead of a lump-sum of cash.


The reason for this discrepancy, as is often the case, is education. Structured settlements have been an option for personal injury claimants in Ontario for over 40 years. Established by the Canada Revenue Agency (CRA), a structured settlement is an annuity that is paid out over a certain period of time which is negotiated by the claimant. A claimant can receive compensation over many years, even decades, as long as it’s more than five years.

“The problem is, structured settlement is not in the lexicon of most average people,” said Brittany Gillingham (pictured), principal at McKellar Structured Settlements Inc. “If you walk up to 100 people on the street and ask them if they’ve ever heard of what a structured settlement it is, most people will not have, or it’ll be something they’ve heard about on a commercial or from a television show. There’s not a good understanding of what a structured settlement is. Even within the personal injury space, there’s a whole group of people representing plaintiffs that don’t quite understand how structured settlements work. Our understanding is that lots of people just aren’t getting this information at that critical point when they need to make a decision about their settlements.”

The big benefit of a structured settlement is certainty, according to Gillingham. To her knowledge, in structured settlements’ 40-plus year history in Canada, not a single penny of payment has failed to be made under the contract. It is tax-free money that is totally locked in and secured for the claimant. The structure is virtually unlimited in terms of its design. It could be one lump sum payment 20-years in the future, or it could be monthly payments, or lump sums sprinkled throughout the settlement term. The one exchange is that once a structure is put into place, it cannot be changed, cashed in, transferred, invested or used as collateral.

“There’s an extraordinary level of certainty associated with structured settlements in the security of the funds,” Gillingham told Insurance Business. “If somebody has a structured settlement, they have a level of creditor protection, and they can’t lose it in a divorce or in bankruptcy. It’s not an asset of the person receiving the payments; it’s owned by the casualty insurance company [paying the claim]. There are a number of features, safeguards and benefits that are significantly beneficial for people who are catastrophically injured. The obvious [disadvantage] would be that there’s a lack of flexibility in a structured settlement. If, down the road, a claimant wants to access a big whack of money to do something, that wouldn’t be available in a structure if it hadn’t been contemplated when the structure was set up.”