DTCC Introduces Insurance Profile Service to support DOL Fidiciary Rule Compliance

The solution will support the exchange of data between insurance carriers and distributors for the on-going reporting of fees, expenses and commissions schedules.

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The Depository Trust & Clearing Corporation (DTCC, New York) today announced that pending regulatory approvals its Insurance & Retirement Services division will launch a new Insurance Profile service to facilitate annuities industry compliance with forthcoming U.S. Department of Labor (DOL) Fiduciary Rules around disclosure which are expected to take effect in April 2017.

The controversial new rule confers formal fiduciary responsibility on financial advisors receiving compensation for investment advice to a particular IRA owner, plan participant or plan sponsor. A DTCC statement notes that fiduciaries are required to act in their clients’ best interests, while providing new levels of transparency including their qualifications, recommended investments, fees and costs, material conflicts of interest and compensation. Data required to achieve levels of transparency required for compliance with the DOL rule are today largely handled in operational silos and via manual processes across market participant firms.

Data Access and Management Challenges

Ann Bergin, Managing Director and Head of DTCC Wealth Management Services.

Ann Bergin, Managing Director and Head of DTCC Wealth Management Services.

The DTCC’s says that its new Insurance Profile will help participants in the annuities marketplace to address these data access and management challenges by providing a centralized, automated and standardized solution to help satisfy disclosure requirements. The solution will support the exchange of data between insurance carriers and distributors for the on-going reporting of fees, expenses and commissions schedules to facilitate both “on demand” disclosures and website disclosures, the DTCC reports.

Once launched, distributors will be able to leverage Insurance Profile to access expense data at the contract, feature/rider and fund (subaccount) levels from a secure, centralized hub, eliminating the need to search and pull information across individual carrier partners, according to the DTCC statement. Carriers, or designated vendors acting on behalf of carriers, will be able to submit and maintain the required disclosure data online, leveraging an easy-to-use Insurance Profile interface. All data will be communicated via industry-standard ACORD XML and EDI messages.

“At Jackson, we are diligently working to help our broker-dealer partners navigate the complexities of the new regulatory landscape. For most firms, the new fiduciary rule disclosure requirements will bring a host of operational and resource concerns around data,” comments Robert Dearman, VP, Strategic Initiatives, Legal, Jackson National Life Insurance Company (Lansing, Mich.). “Once launched, DTCC’s Insurance Profile will provide insurance carriers and distributors with the data they need to provide proper disclosures to investors while enabling them to complete contract onboarding much more quickly. We believe this will enable broker-dealers to continue to do business efficiently and in compliance with the new regulations.”

The DTCC will offer the Insurance Profile through the organization’s National Securities Clearing Corporation (NSCC) subsidiary. The DTCC is developing the service with the aid of collaboration and feedback from the industry, including guidance from a dedicated working group of over 50 members representing leading insurance carriers and distributors, the organization reports.

Central Online Data Source

“By leveraging a central, online data source of comprehensive and standardized annuity information, market participants will be able to increase transparency into annuity expenses and commission schedules, while ensuring access to data that is critical to the adherence of Department of Labor fiduciary disclosure requirements,” comments Ann Bergin, Managing Director and Head of DTCC Wealth Management Services. “Increasing automation in this area will reduce the risks and costs associated with manually processing this data, while eliminating the support and maintenance costs and resources associated with proprietary feeds and databases.”

New Fiduciary Rule’s Applicability Date Approaches. Are You Ready to Comply?

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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