For the first time in its history, Insurance Services is reducing the costs of its services. While initially benefiting customers that operate under a family of participant numbers, the reductions mark the first step in a longer-term effort to cut fees for all customers.

"We are very happy to be able to directly lower costs for some of our customers, and we consider this the first step toward our ongoing corporate objective to deliver concrete and measurable cost reductions to all our participants," said John Ziambras, DTCC managing director, Insurance Services. "Driving down costs not only benefits our customers, but also further ensures that overall transaction costs remain low and helps promote industry growth."

The discount, which took effect in January, is based on the concept of "family pricing." Monthly fees are now calculated by combining the transaction volumes of each carrier or broker/dealer family across multiple participant numbers and applying a tiered pricing formula that provides discounted fees to customers having the largest volumes. Total discounts will be approximately $1 million in 2007.

A hallmark of DTCC is that it operates at-cost, meaning that revenues that exceed what it costs to develop services and operate the business are returned to customers. In 2006, DTCC reduced customer fees by more than $160 million, and in 2005, it rebated more than $500 million to customers.

"Because Insurance Services does not generate as much revenue as other DTCC businesses, our contribution to the company's past fee reductions and rebates has been very small and has had no direct impact on our carrier and distributor participants," said Ziambras. "But we are quickly reaching the point where we will break even on our product investments, at which time we will be able to offer our customers additional savings through fee reductions or rebates, and we're making every effort to deliver on this objective in the very near future."