NAVA recently announced 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. The goal of NAVA's Straight-Through Processing Standards Initiative (STP Initiative) is to create a set of operational standards for a paper-free process, garner regulatory acceptance of the process, and assist the industry in the implementation of the STP standards. In agreeing with these uniform processes and procedures, the industry intends to establish a means of delivering clearer information about annuities to better inform consumers.
There are 24 sets of STP standards that were developed in strict compliance with state and federal laws and regulations. If presented with different requirements, in most circumstances, the highest standard was chosen. These standards address a number of key areas, including:
o Suitability - minimum standards for suitability procedures and provisions for pre-selection of appropriate annuity products and features
o Electronic forms - standards that incorporate the use of electronic forms with an electronic signature at point-of-sale for ease of use
o Privacy - standards for the safekeeping of non-public information, including encryption of electronic transmissions
o Record management - standards for robust record keeping and the requirement for clear audit capability of all records to ensure full compliance with all applicable requirements
The use of the STP standards is voluntary on the part of both insurers and distributors. Consumers also must elect to do business electronically to take advantage of the increased level of service, ease of access, and faster transaction time offered through an STP-compliant process.
The STP Initiative covers all types of annuities -- deferred and immediate; qualified and non-qualified; and variable, fixed, and index annuities. Most of the required electronic processing technologies already exist -- from electronic order entry to e-signature capabilities -- and numerous vendors are currently providing partially automated solutions.
