Setting Standards to Improve Products

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Setting Standards to Improve Products

• BISA 2007 Annual Convention
• Hollywood, Florida
• March 12, 2007

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Panel

• Judith Hasenauer, Blazzard Hasenauer, Moderator
• Deb Tucker, NAVA
• Lana Macumber, DTCC
• Joel Jessen, Wachovia

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Straight-through Processing NAVAs Standards
Initiative

• STP Project Overview

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STP Standards Initiative - Mission

• To create a set of standards establishing a
  common process for doing electronic new business
  submission for annuities that includes
  e-signature and standard interpretations of all
  state and federal regulations for which we get
  regulatory acceptance.

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NAVA STP Initiative

• What it is
• A set of standards establishing an industry
  accepted process for doing electronic new
  business submission from client or agent computer
  to distributor to insurer
• What it is not
• Another automated order entry system
• A software application
• Dependent on a specific technology or vendor
• Automation of back-office processing

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Why is NAVA Leading this Initiative?

• At the request of its members
• NAVA has distributors, carriers vendors as
  members
• NAVA has alliances with other standards
  organizations trade groups
• SIFMA (SIA) Scope Implementation
• ACORD Data Messages
• SPeRS E-Signatures
• ACLI Government Relations

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NAVAs Standardization Projects

• Since 2001, NAVA has worked on the development of
  standards
• Standard Data Messages
• Data Conformity
• E-Signatures

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Standards Governance

• March 2006 - STP Executive Council formed
• Council has responsibility for
• Scope
• Progress/performance
• Standards
• Project timeline
• Budget

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Executive Council Members

• Morgan Stanley
• National Financial
• Nationwide Financial
• New York Life
• Pacific Life
• Pershing
• Principal Financial
• Prudential Financial
• Raymond James
• RBC Dain Rauscher
• RiverSource
• Smith Barney
• Sun Life Financial
• TIAA-CREF
• UBS Financial
• Wachovia Securities
• Wells Fargo Investments

• AEGON
• AIG/SunAmerica/VALIC
• Allianz Life
• AXA Financial
• Edward Jones
• Fidelity Investments
• Genworth Financial
• Guardian Life
• Hartford Life
• ING US Financial
• Jackson National
• John Hancock Financial
• Lincoln Financial
• LPL Financial Services
• MassMutual
• Merrill Lynch
• MetLife

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Project Scope

• All types of annuities
• Variable
• Fixed
• Indexed

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Project Scope

• All forms of distribution

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Project Scope

• All electronic process
• New business transactions
• Suitability standards
• Meets the highest requirements

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Improved Product for Consumers

• Make the purchase of an annuity more like buying
  a mutual fund less like buying a house
• Reduce time it takes from buying annuity from
  months/weeks to a day
• Obtain higher level of service NIGOS from gt30
  to lt10

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Improved Product for Regulators

• Include robust records management with ability to
  mine data 25 artifacts captured in a single
  record
• Provide tools to facilitate more suitable sales
  to the consumer more robust market conduct
  examinations
• Resolve regulators current concern obtain
  signature at point of sale vs. back-end

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Improved Product for Industry

• Common process to simplify the selling of
  annuities so more producers are willing to sell
  annuities
• Standards create common language
  interoperability between trading partners
• Electronic transaction reduce costs fewer
  NIGOs, E-Delivery

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The Standards Cover

• Data (3)
• Privacy (2)
• Forms Disclosures (5)
• E-Forms (3)
• E-Signature (3)
• Documents Records Management (3)
• Suitability (5)

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(No Transcript)
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Regulatory Reaction

• Reaction is positive no inhibitors identified
• To date informal meetings
• Insurance commissioners staff
• NASD
• SEC

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Implementation Challenges

• Getting from where each company is today to STP
• Front-end signatures
• Different levels of automation
• Adoption of new technologies vendor readiness
• Workflow modifications (workload shift)
• Scalable, re-usable solutions
• New legal interpretations suitability, forms
• All electronic handoffs between trading partners
• Getting everyone to agree to sequence of adoption
• Getting other distribution channels engaged
  including independents banks

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Straight-through Processing NAVAs Standards
Initiative

• Deborah Tucker
• NAVA, Inc.
• Vice President
• dtucker_at_navanet.org
• [phone] ext 15

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DTCC and STP Prepared For 2007 BISA Annual
Convention
Lana Macumber Director, Relationship
Management DTCC Insurance Services Group March
12, 2007
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Agenda Topics

• DTCC / Insurance Services Overview
• DTCC Support of STP
• STP Challenges

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DTCC Overview

• DTCC serves as the principal post-trade
  infrastructure for the US Financial System,
  handling clearance, settlement and information
  services
• Provides safety and soundness to our capital
  markets by supporting the trading and settlement
  of more than 1.4 Quadrillion in securities
  transactions
• Serves and is connected to a network of almost
  3,000 brokers-dealers, banks, clearing firms,
  mutual funds, insurance companies, service
  providers and vendors

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DTCC Overview

• Extensive infrastructure
• Business continuity capabilities
• A single network / community of users
• Money settlement
• Not-for-profit business model
• Trusted industry utility for over 30 years

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Insurance Services overview

• 10th year in existence
• Vision is to mainstream insurance, annuities and
  retirement products within the broker-dealer and
  bank markets (as we did with Mutual Funds), and
  utlimately enable STP
• Customer and industry-driven business
• Aligned with key industry associations such as
  NAVA, SIFMA, and ACORD

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Insurance Services Overview

• Historically focused on servicing the large
  broker-dealer / wirehouse firms, but rapidly
  expanding into the independent and bank
  distribution space
• Membership expansion to Retirement marketplace
• Evaluating opportunities to make membership more
  accessible to IBD and Bank markets
• Strengthening partnerships with Clearing Firms
  and Vendors

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DTCC Support of STP

• Fully Support NAVA STP Initiative
• Participate in NAVA STP Task Groups
• Enable Implementation of Standards
• Existing Services
• New Development
• Provide Customer Accessibility

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DTCC Support of STP

• Existing services to be leveraged
• Licensing Appointments
• Applications (annuities)
• Premium Settlement
• Financial Activity Reporting (App confirmation)
• Positions (customer statements)

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DTCC Support of STP

• Planned 2007 / 2008 Development
• Attachment messaging
• Automate the exchange of images, e-forms, and
  e-signatures needed to support pre and post-issue
  processing
• Replacements
• Automate the transfer of annuity and life
  insurance assets between carriers
• Other Opportunities
• Point-of-Sale Appointment Validation
• Application expand beyond annuities

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STP Challenges

• Commitment to Adoption
• Industry bandwidth
• Cant do it all simultaneously
• Multiple distribution channels
• Accessibility to solutions
• Affordability of solutions
• Diverse set of needs and expectations
• Enforcing standard usage

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Contact Information
Lana Macumber Director, Relationship
Management DTCC Insurance Services Email lmacumbe
r_at_dtcc.com Phone [phone]
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Wachovia and STP

• BISA 2007 Annual Convention
• Joel Jessen
• Wachovia Retail Retirement Group
• 3/12/07

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Agenda

• Wachovia Overview
• Support of the STP Initiative
• Challenges

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Overview of Wachovia Annuity Distribution
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Overview of Wachovia Annuity Distribution

• Wachovias Retirement and Investment Products
  Group provides annuity product management and
  sales support to Wachovia Securities.
• Individual and Group annuity sales in all 3
  channels totaled about 6.8 billion in 2006.

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Wachovia Support of STP

• Supports and values the STP initiative.
• Aligning processes with the STP roadmap.
• Commitment to do a pilot of STP in Wachovia.
• Membership on the Executive Council.
• Participation in subcommittees.
• Progress of data standards.
• App/Sub files - good
• FAR COM need some improvement, but work is
  progressing well

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Wachovia Support of STP

• Benefits of STP to distributors
• Consistency of process across product providers.
• Clearer definition of compliance and suitability
  standards.
• Improved broker and client experience.
• Simplified processes
• Reduced NIGO issues
• Standardized records retention procedures.

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Challenges for the STP Initiative from a
Distributor Perspective

• Standardized regulations among state and
  regulatory guidelines.
• Standardized interpretations of those guidelines
  between carriers and distributors.
• Proper education of the regulatory body auditors
  when conducting audits of distributors using STP.

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Challenges for the STP Initiative from a
Distributor Perspective

• Organizational challenges
• Dependency on larger organization
• E-signature technology
• Broker Dealer sets suitability and compliance
  standards.
• Multiple channel differences
• Bank vs. Wirehouse vs. Independent