Straight Through Processing Is Close To Being A Reality

NAVA was particularly gratified to have support not only from numerous state insurance regulators, but also from the Securities and Exchange Commission and the Financial Industry Regulatory Authority. It would have been impossible to develop as comprehensive and complex an initiative as STP without consideration of the numerous regulatory elements that impact on electronic processing of regulated products.

For instance, the STP project proceeded at the same time that FINRA was developing new suitability and supervision requirements for deferred variable annuities. If the STP project was to work, it was essential to provide for suitability and supervision standards that could be incorporated into the STP processes.

Another example: STP has had to deal with the wide variety of regulatory requirements involving the bias toward use of paper. Likewise, disparate requirements for replacement processing, manually-signed applications, privacy protection, and the like, all had to be taken into consideration for STP, and solutions had to be found to enable nationwide consistency. A key element has been coordination with all the various regulatory bodies, one by one, to attempt to develop a consistent program that will work everywhere.

Today, NAVA is continuing its efforts to reach out to all state insurance regulators and is continuing dialogue with the SEC staff and FINRA.

When the STP project first began, many thought that e-signatures would be the biggest hurdle, from both a regulatory and technology viewpoint. That turned out to be one of the many myths not based in reality. President Bill Clinton signed a bill intended to implement e-signature capability nationwide, and every state has adopted some form of a law permitting e-signatures. Meanwhile, a number of e-signature vendors now have low-cost, effective e-signature solutions, and several participated in the STP standards setting and have committed that their products and services are or will be NAVA STP compliant.

Throughout the standards setting process, numerous issues like e-signature were tackled and resolved, thanks to the hard work of the NAVA staff, a small group of consultants, and people within the industry who made huge contributions. To quote Winston Churchill, "never have so many owed so much to so few." Finding people with the requisite knowledge, talent and willingness to work, often without compensation or with reduced compensation and very little recognition, has not been easy, but it has been done.

What does this mean to the annuity industry? STP will soon be a reality. It will become the standard by which the annuity business, and eventually the entire financial service business will be done. Any insurer or distributor that is not on board with the program will be left behind–far behind. Every insurer and distributor needs to be sure their STP team is in place and that everything will be ready when STP is not merely a great idea, but is in reality the best and most productive way to do business.

Norse N. Blazzard, JD, CLU, and Judith A. Hasenauer, JD, CLU, are attorneys in the firm of Blazzard & Hasenauer, P.C. Their email address is: [email protected]