STP Standards

Leading the Industry Toward an Efficient, Effective, Paper-free Reality

The Insured Retirement Institute is spearheading an industry-backed initiative to establish a comprehensive set of standards for simplifying and improving the electronic annuity purchasing process for consumers, insurers, distributors, and regulators.

IRI's Straight-through Processing Standards Initiative (STP Initiative) has the following goals:

1. Create a set of operational standards for a process that is paper-free.
2. Garner regulatory acceptance of the process.
3. Assist the industry in the implementation of the standards.

In agreeing with uniform processes and procedures, the industry intends to establish a means of delivering clearer information about annuities to better inform consumers.

The goal of STP Initiative is to create a set of standards for doing annuity business electronically—to define a future state that is paper-free. The required technologies already exist—from electronic order entry to e-signatures—and various vendors are currently providing partially automated solutions.

The compelling business motivations for taking this action include the reality of an increasingly intense regulatory environment, a market for annuity products that is projected to grow exponentially as the "boomer" generation enters into retirement, and broad recognition that the current manually intensive and paper-constrained process is inherently unproductive.

The STP Executive Council as of 2006 has approved 24 sets of standards. They were developed in strict compliance with state and federal laws and regulations. If presented with different requirements, the Council chose the highest standard, in most circumstances.

Participation in the STP Initiative is voluntary on the part of both insurers and distributors. While the goal is eventually to make available a completely paperless process, consumers who elect to have their annuity transaction done electronically can, at any time, elect to receive paper copies of any of the documents or to stop participating in the electronic process.

The STP Initiative covers all types of annuities—deferred and immediate; qualified and non-qualified; and indexed, variable, and fixed annuities. The STP standards are technology- and vendor-neutral.

The STP Standards address:

1. Suitability: Minimum standards for suitability procedures to be adopted by distributors and in carrier compliance reports.
2. Application form: Use of an electronic application with an electronic signature at point of sale.
3. Privacy: Standards for the safekeeping of non-public information, including encryption of electronic transmissions.
4. Records management: Standards for robust recordkeeping and the need for all records to be clearly audited to assure full compliance with all applicable requirements.

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