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Improving rep experience through automation

7 min read


This post is sponsored by Vertafore Sircon® Solutions.

License and appointment standards and automation initiatives have delivered real benefits to carriers and distributors offering annuities. Despite these benefits, adoption of these standards remains limited to top distributors and carriers who use broker dealers as a key distribution channel. In this post, Tim Owen, vice president of product management at Vertafore, discusses representative management trends in the annuity market.

Question: What are some of the existing issues in terms of the authorization to sell annuities?

Tim Owen: For carriers and distributors, license and appointment standards and automation initiatives over the last 10 years have delivered real benefits in terms of streamlining the process of getting reps authorized to sell annuities. These improvements allow companies to streamline their time to revenue from weeks to hours/days and reduce operational costs by eliminating manual data entry and reconciliation, all while improving compliance results by eliminating data entry errors. Despite these accommodations, adoption of these standards and their automation remains limited to top distributors and carriers that use broker dealers as a key distribution channel. The reasons for low adoption include:

  • The complexity of licensing and appointing requirements due to the state-based regulatory system in the US.  In addition, some products are dually regulated by FINRA which require securities registration as they are considered hybrid insurance and securities product.
  • New and changing regulatory requirements.
  • Interpretation differences between carriers and distributors of the rules and requirements.
  • The different licensing and registration roles and responsibilities between carriers and distributors, since carriers are responsible for the appointment process, while distributors/reps are responsible for state license and registration requirements.
  • Process differences including just-in-time (JIT) appointing from one carrier to another, as well as different requirements to do business with one distributor versus another.
  • Legacy carrier and distributor systems that were not designed to automate licensing and appointing processes, and vendor solutions that have limited automation capabilities.
  • The prioritization differences between carriers and broker dealers for licensing and appointing processes versus other core system and modernization initiatives.

So we still have substantial opportunity to improve operational efficiency and compliance if we can drive down the cost, and drive up the adoption, of automation by leveraging and improving standards and best practices.

Q: Why is broker dealer and rep experience so important?

TO: The competitive environment in the industry continues to intensify. So it has become increasingly necessary for a carrier to deliver an improved broker dealer and rep experience. Here’s an example of how a carrier could utilize an improved rep experience as a competitive advantage:

Chris is in charge of onboarding and managing rep compliance for a major life and annuities carrier. His goal is to keep the carrier compliant while getting and keeping reps authorized to sell quickly and efficiently. In order to attract broker dealers, his company has looked for a competitive edge to help them become a carrier of choice.

While commissions and product features and pricing are the most common aspects used by carriers to differentiate themselves, Chris has learned that improved broker dealer and rep experience with onboarding and compliance can give them a competitive edge. With the ability to sell annuities within 24 hours, broker dealers would view his organization as an industry leader, especially as competitors rapidly respond to product and commission differences.

In implementing a plan to improve rep experience, Chris was able to also improve company processes across the board such as giving those in charge of onboarding more time to focus on other areas of business. These individuals can reallocate their time to focus on other areas of business.

Q: How is the Insured Retirement Institute (IRI) addressing these issues?

TO: To address the current challenges, IRI has created a License & Appointment Automation working group including distributors, carriers, standards organizations like the Association for Cooperative Operations Research and Development (ACORD), and solutions provider participants like DTCC and Vertafore. We are also working on a state of the industry brief to describe what we should do to continue to drive further automation, and increase industry adoption of automated solutions. Through more effective and prescriptive standards, adoption of automated solutions can be substantially improved. Chris, from the major carrier, will have the ability to optimize speed and efficiency, with improved compliance using such automated onboarding and compliance processes. If you are interested in participating in the working group, please reach out to your IRI contact or drop me an email at [email protected].

Q: Why is implementing license, education, training, and appointment automation so difficult?

TO: The process to build and implement an automated solution is complicated due to the complex rules, varying interpretations of the rules, and multiple standards that exist for implementing license, education, training and appointment automation. The standards that do exist are more like frameworks or guidelines since they are not prescriptive enough to help drive more efficient implementations. By providing a reference model for how carriers and distributors should put in place a standards-based process, the industry and solution providers can automate processes more efficiently. Once these solutions pass a reference model testing and certification process, they can be instituted almost immediately. When that vision becomes reality more distributors and carriers, directly or via solution providers, will be able to adopt and leverage the standards created by the DTCC and ACORD, and implement more effective processes for annuities.

Q: What are some best practices that annuity carriers can implement?

TO: First, annuity carriers can adopt existing standards and help create a reference model for how to implement them. Second, they can better understand the needs and challenges of their annuity selling rep, and the broker dealer they work for. Third, if they decide to adopt a just-in-time (JIT) appointment process, carriers need to make it easy for their broker dealer partners to understand what products reps are authorized to sell in each jurisdiction. Lastly, carriers need to work closely with their legal and compliance departments to create simple requirements for onboarding new reps.

For example, consider adopting standard background investigation questions like the ones on the new ACORD 821 producer information form, and consider accepting the ACORD 821 form itself in lieu of a custom form. The 821 form can be used even if the carrier is not a member of ACORD as long as they register with ACORD to use the form.

Q: How will implementing a Sircon solution benefit annuity carriers?

TO: Vertafore’s  Sircon solutions team has worked hard over the last 20 years to understand the challenges associated with rep compliance and we have created automated solutions to address them. Our solutions increase staff efficiency as much as 60%, while reducing turnaround times as much as 80%. These solutions also improve compliance and rep experience.

We participate in numerous working groups and collaborate with key organizations like IRI to better understand, define and facilitate the adoption of best practices in standards for automation. There is more to do, but we are making progress.

Our current focus is to create solutions that connect the key stakeholders in the sales authorization compliance and verification process including regulators, producing reps, broker dealers, carriers and the education providers, to eliminate unnecessary steps and ensure all the stakeholders have access to current and accurate rep information. We help automate the process through integration with DTCC, Financial Industry Regulatory Authority (FINRA), and the National Insurance Producer Registry (NIPR).