Insurance Services' automated solution for transferring annuity assets held within a client portfolio from one broker/dealer to another is winning a growing number of customers, including some of the biggest names in insurance and brokerage (see below).

The service, called ACATS/IPS (Automated Customer Account Transfer Service/Insurance Processing Service), brings greater speed and efficiency to distributors and carriers alike by automating the change of broker/dealer of record, as well as agent (REP) and broker identification number (BIN) changes, for annuity contracts.

"We've been able to cut our transfer completion time dramatically by using ACATS/IPS," said Scott Hanson, vice president and Account Transfer manager, Robert W. Baird & Co. "What used to take anywhere from 20 days to six months can now be completed in three to four days and, in some cases, the next day, which is outstanding."

"Before ACATS/IPS, it was fairly common to be unaware that an annuity transfer had even taken place," said Hanson. "And even when we did receive a statement, processing it required substantial paperwork and multiple sign-off reviews. Now we get automatic notification. And once the annuity assets are loaded into the system, all we do is type in a couple of keystrokes, send an electronic confirmation through DTCC to the annuity carrier to make sure the rep and account information matches, and then it transfers."

The carrier side of the industry cites similar efficiency gains. "Prior to ACATS/IPS, we had a completely paper process that, at best, lagged the actual customer moving from one broker/dealer to another by six weeks," said Frank Norton, e-commerce program director, Annuities & Mutual Funds, Pacific Life Insurance. "Now we're getting almost immediate notification of customer requests to change broker/dealers. This is a huge plus, as it allows us to quickly move contracts to the right representative so commissions are paid accurately and on time, with no back-dating or reversals."

Echoing the experience of Pacific Life is Hartford Life.

"For certain transactions - for example, BIN changes - we've achieved a 99% hands-free processing rate with ACATS/IPS," said Mary Heimlich, assistant director, B2B Commerce, Hartford Life. "For other transaction types, we're tracking at around 95% for straight-through processing."

Another big plus of the service cited by Heimlich are the cost savings."Since implementing ACATS/IPS, we've achieved processing cost reductions of about 60%," said Heimlich.

Better Customer Service, Too
Equally important to carriers are the efficiencies that ACATS/IPS generates from a customer service standpoint.

"Because we're getting transactions electronically, our customer service staff no longer has to process them manually," said Norton. "With ACATS/IPS, the broker/dealer submits a transaction to DTCC, which verifies it and creates a transaction that is sent to us electronically. We either accept the transaction, which we process electronically - for example, using imaging technology to capture the transaction for auditing purposes - or we reject it. Since we began using the service, we've processed more than 1,000 annuity changes and achieved significant time and cost savings in processing these transactions straight through without any human intervention."

The reduction in customer service calls is yet another benefit for carriers and their customers, according to Norton.

"In the past, we'd get calls from clients who would say, ‘I switched broker/dealers, but it's not shown on my monthly or quarterly statement.' And we'd say, ‘Well, we weren't notified.' That would create customer service issues," said Norton. "With ACATS/IPS, those calls - and issues - are all but eliminated."

Building Critical Mass
As more customers sign on to ACATS/IPS, its value to the industry will be even greater.

"The more distributors and carriers use ACATS/IPS, the better it will be for all participants," said Lana Macumber, DTCC director, Relationship Management, Insurance Services." ACATS/IPS brings annuity processing in line with mutual fund and other financial services processing solutions, and we're confident that additional companies will be implementing the service in 2007 as they learn more about it and its benefits." ACATS/IPS was the subject of a recent article in Insurance Networking News. The article, "Annuities Business Becoming Paperless," can be read by going to the home page of the Insurance Services Web site at http://insurance.dtcc.com.

In 2006, ACATS/IPS added nine broker/dealers and four carriers as customers. A total of 25 companies are now using the service - more than double that of 2005. ACATS/IPS customers are:

Distributors

• AG Edwards
• Davenport
• Edward Jones
• Ferris Baker
• Hilliard Lyons
• H&R Block
• Janney Montgomery
• Merrill Lynch
• R. W. Baird
• Stifel Nicolaus
• Wachovia
• Wells Fargo
• UBS

Carriers

• AEGON
• AIG Sun America
• Allstate
• Equitable
• Genworth
• Hartford
• ING
• John Hancock
• MetLife
• Pacific Life
• RiverSource
• Sun Life Financial