The Depository Trust & Clearing Corporation (DTCC) will help move the industry closer to standards for data exchange between insurance carriers and distributors by making available to the industry its copyrighted record layouts for all current products within its Insurance Processing Service (IPS).
"We’re committed to eliminating a major obstacle between carriers and distributors," said Ann Bergin, DTCC managing director, Distribution Services. "By permitting the industry to use all our existing layouts — Licensing & Appointments, Financial Activity Reporting, Commissions, Positions & Valuations and Asset Pricing — we expect to see dramatic progress towards more automated processing and greater operational efficiency across the entire insurance industry."
This announcement will significantly alter the current technical and operational landscape, where many insurance carriers are inhibited because they are unable to "speak the same language" with their trading partners. This has effectively led these carriers to build and maintain proprietary processing systems to connect with individual distributors, resulting in a complicated network of point-to-point systems that limit communication and impede the marketing of insurance products. This challenge is not unlike that faced by the mutual funds industry in the mid-1980s. Once communication was streamlined for the mutual funds companies, through DTCC’s efforts, exponential growth became possible.
Last April, in a move that was endorsed by leading insurance carriers and service providers alike, DTCC took its first steps towards fostering industry-wide standards by permitting use of its Annuity Applications and Subsequent Premium record layouts for the sale and processing of fixed and variable annuity applications, services known as APP and SUB. Customers responded enthusiastically, and DTCC saw both a surge in customer inquiries regarding use of the service and higher usage volumes.
"DTCC's Insurance Processing Service has become the de facto standard for most of the electronic trading and clearing functions for annuities," said Michael R. Hicks, vice president, Investment Product Services and Technology, The Hartford. "By allowing industry usage of the IPS layouts, DTCC has solidified itself as a partner to the insurance industry and has furthered its reach in becoming the preferred method for transacting business."
"The ability for firms to utilize open standards leads to quicker adoption and deployment of solutions that will make annuities and insurance products easier to offer for financial representatives," said Amy Ferrero, Director of Insurance Operations, Merrill Lynch Insurance Group. "We support the use of these layouts and services and believe that these services will grow and expand through industry partnership."
Insurance carriers and distributors may use the record layout to process insurance products through DTCC’s Insurance Services or via other service providers.
"The benefits that customers receive from DTCC, including same-day money settlement, and secure, centralized processing will continue to encourage new users to connect to their trading partners through Insurance Services," said Bergin. "By permitting use of its layouts, DTCC extends these efficiencies to all carriers and distributors, regardless of size. We believe that by removing this communication barrier, distribution markets will expand."
Customers will be able to access these record layouts immediately from the password-protected section of DTCC’s Insurance Services Web site.