STP PROCESSING PRINCIPLES

A Leading Authority in Straight-Through Processing of Annuities

Background

The Insured Retirement Institute has long been committed to bringing the industry together to create efficiencies that better both the institutions that offer insured retirement strategies, as well as the consumers that rely on them to provide guaranteed income throughout their retirement. In 2006, the Insured Retirement Institute, in conjunction with over 100 participating organizations (Insurers, Distributors & Solution Providers), led a massive industry movement to address the operational challenges in processing annuities.  This collaborative industry effort resulted in the creation of Guiding Principles (standards) that are today the foundation of all Straight-Through-Processing (STP) occuring in the industry.  These principles – by design – primarily focus on new business, with post-sale and replacement processes under current consideration.  Since 2006, a significant number of insurance companies and distributors have adopted some or all components of the standards.

Accomplishments

  • 24 Guiding Principles immediately applicable to 70-80% of VA Premiums processed in the industry
  • A Technical Roadmap – downloadable for IRI members – for insurers with concerns that their current infrastructure cannot meet processing demands for Annuities
  • An Industry framework with the potential to help lower NIGO rates for approximately 30-40% of the annuity applications submitted
  • Model Trading Partner Agreements in support of these new technical components
  • Introduction of eSignature - an industry innovation for the electronic signing of annuity documents by a financial advisor and/or consumer.
  • Capturing of NIGO costs to better assist companies with the adoption of STP components.

Preview of the Processing Components for New Business

  • Suitability: Minimum standards for suitability procedures to be adopted by distributors and in carrier compliance reports.
  • Electronic Application: Use of an electronic application with an electronic signature at point of sale.
  • Privacy: Standards for the safekeeping of non-public information, including encryption of electronic transmissions.
  • Records Management: Standards for robust recordkeeping and the need for all records to be clearly audited to ensure full compliance with all applicable requirements.
  • Real-Time Messaging:  Standardized messaging between Insurers and Distributors
  • Trading Partner Agreements:  Model agreements to help expedite this essential step.

Benefits of Adopting

  • Greater Accuracy on Applications
  • Sustainable capability for Next Day Issue
  • Level of transparency required by customers, regulators & 2821
  • Significantly improve the Financial Advisor experience
  • Reduce Processing Cost including the reduction of NIGO (Not In Good Order) Tickets
  • Bring Annuity processing in-line with other Investment Products (i.e. Mutual Funds).
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