2006 Accomplishments Lay the Groundwork for a Strong 2007
Growth in new customers and trading relationships, and the imperative of all carrier and distributor participants to reduce costs, increase efficiency, and manage risk, made 2006 a strong year for Insurance Services.
"2006 saw a number of successes for Insurance Services," said John Ziambras, DTCC managing director, DTCC Insurance Services. "We had solid growth in all products and across our customer base, made strong gains in our relationships with customers, business partners, and the industry at large, and laid the groundwork for several new services to be introduced this year and next - all of which have given us a strong foundation to build on in 2007."
Insurance Services, a business unit of National Securities Clearing Corporation, a DTCC subsidiary, experienced increased customer usage of all its solutions in 2006. Leading the way was ACATS/IPS, which facilitates the transfer of annuity assets within an investment portfolio when customers move from one brokerage firm to another. The service is currently supporting 13 broker/dealer and 12 insurance carrier customers - with a number of additional large firms committed to its adoption in 2007- making it one of Insurance Services' most successful new product launches ever. (See "ACATS/IPS Gains Industry Traction".)
Double-Digit Growth
Insurance Services also recorded strong performance in its other services. Highlights include Commissions and Applications & Subsequent Premiums, where transaction volume rose 18% and the total value of money settled increased 25% over 2005.
Other services that experienced strong customer demand were Financial Activity Reporting, which posted a 30% increase in transactions processed; Positions & Valuations, which processed 2.7 billion transactions, an increase of 18%; and Licensing & Appointments, volume for which rose to 6.4 million transactions, an increase of 18% over 2005.
Putting Customers First
"A major focus in 2006 was to improve the overall customer experience," said Lana Macumber, DTCC director of Relationship Management, Insurance Services. "We focused a lot of attention last year on improving day-to-day customer service and ongoing relationship management, and judging from the results, our efforts clearly resonated with customers. Not only did participants increase their use of our services, but they also gave us high marks in terms of overall customer satisfaction, scoring us 17% higher than the previous year."
Actions taken by Insurance Services last year to strengthen customer relationships included leveraging DTCC's corporate-wide Relationship Services Group for front-line customer service, and staffing Insurance Services' senior relationship management team with professionals who have extensive industry knowledge and experience and who can work with customers at a more strategic level. (See "Meet the Team: Insurance Services".)
Another key activity of the group was working with customers to increase product utilization through expanded trading partnerships. To this end, Insurance Services relationship managers helped customers identify opportunities with trading partners that have implemented the same solutions but were not yet doing business with one another - recognizing that the sooner customers start trading with each other, the faster they can maximize their return on investment and reap the operational efficiencies and cost reductions these services offer. Thanks to these efforts, trading relationships between distributors and carriers rose to 7,011 in 2006, versus 4,903 in 2005 - an increase of 43%.
In addition to the gains made by Insurance Services in working with current customers, it also added a number of new participants to its client base. Total customers increased to 307, up 12% over 2005.
Industry Leadership
In 2006, Insurance Services continued its strong tradition of working with business partners, trade organizations and regulators to advance the interests of customers and the industry as a whole.
A key point of emphasis was strengthening relationships with business partners that offer integrated solutions for the broad range of Insurance Services' products. The business unit is also working closely with its partners to make available new technologies to support products currently under development.
"Our commitment to the business partner community is a key component for supporting and enhancing the services we provide customers," said Steven Acosta, DTCC senior relationship manager, Insurance Services. "And we will continue our focus on building an even stronger partner network that can provide broader, higher-value solutions to our participants."
Significant advances were also made in strengthening relationships with industry associations. Insurance Services entered into an agreement with the Association for Cooperative Operations Research and Development (ACORD) to use its XML standards in future services development. The move to XML - a first for Insurance Services - reflects increased interest and use of this technology among customers and the industry, with many companies moving to adopt XML as the basis of their current and long-term system architecture plans.
"We're pleased to be working with ACORD to leverage XML standard messaging in future services," said Randi Gordon, DTCC vice president of Product Management, Insurance Services. "Clearly, new services that incorporate ACORD XML will help customers maximize their current ACORD investments, saving them both time and money."
In a recent video interview with ACORD CEO Gregory Maciag, John Ziambras comments on the DTCC-ACORD agreement, as well as discusses DTCC and Insurance Services. The interview can be viewed by going here and clicking on the player - http://www.acord.org/oneclip_general/ziambras.html.
Eye on the Future
In 2007, Insurance Services is targeting two new services for rollout that will incorporate ACORD XML standards. The first one is Fund Transfers, which will automate and standardize broker-initiated fund transfers within variable annuity products. (See "Solution Spotlight: Fund Transfers".) The second is Attachments, which will support the electronic transfer of imaged documents, signatures, and forms related to pre- and post-annuity sales. Both services are expected to launch by year-end, subject to regulatory approval.
Also on tap for the industry in 2007 are three key initiatives: SEC Rule 22c-2 reporting compliance, NAVA's Straight-Through-Processing (STP) Standards Initiative, and a joint undertaking sponsored by NAVA and the Securities Industry and Financial Markets Association called the Retirement Income Standardization Initiative. (See "Industry Happenings: What's New".)
"The STP and retirement income initiatives are critically important to the industry and couldn't come at a better time," said Macumber. "Both are aimed at making it easier for the investing public to purchase annuities and retirement products, which will play a significant role in the personal financial plans of baby boomers as they approach retirement and start looking at investments that will generate retirement income."
In a related effort to support the industry's heightened emphasis on the retirement marketplace, Insurance Services recently filed a rule change request with the Securities and Exchange Commission (SEC) to expand its services to non-insurance retirement products offered by broker/dealers. By opening up Insurance Services to a new class of products and participants, the SEC rule filing supports industry efforts to develop and grow the market for retirement products. (See "Insurance Services Opens Its Doors to Retirement Programs".)
10th Anniversary
In 2007, Insurance Services will celebrate its 10th anniversary. With this milestone and with adoption of its services continuing to grow, Insurance Services is taking the first step in reducing customer costs, starting with the January introduction of "family pricing," which aims to consolidate transaction volumes within participant families when calculating monthly fees. (See "'Family Pricing' Reduces Customer Costs".) The "Invest-Recover-Return" business model is fundamental to how DTCC operates, and it's starting to become a reality for Insurance Services, as well. More information on this subject will be forthcoming as the year progresses.
"All of us in Insurance Services are very excited about the opportunities that lie ahead," said Ziambras. "We stand ready, willing, and able to join with the industry - customers, business partners, trade associations, standards-setters, and regulators - to help drive industry success."