Replacement Processing

DTCC Replacement Processing is an automated, centralized system to electronically link and network insurance carriers and distributors as they exchange information to support a customer’s replacement request for “like-for-like” fixed or variable annuities contracts. DTCC Replacement Processing is now available for pilot participants and first movers to begin testing in our dedicated testing environment.

Replacement Processing will enable carriers to communicate the customer’s request for a replacement transfer in a standardized, automated manner to promote greater efficiency and lower operational risks. This web services application will primarily be used by insurance carriers to exchange information related to the replacement of a contract but also has the ability to enable distributors to receive pending case status information on their outstanding replacement contracts from their carrier trading partners.

Cory Stark, Director, DTCC I&RS said, “The 1035 replacement space was identified as a manually-intensive process that justified a need for automation. Our Senior Advisory Board, made up of our active participants, agreed to proceed with the development. Introducing a standardized, automation of replacement processing supported the insurance industry and Insured Retirement Institute (formally NAVA) plan for added straight through-processing.”

Using a mainframe or Internet connection, insurance carriers can transmit replacement request/notification with document attachments and status information back and forth through the DTCC SMART Network. The new business replacement carrier can inform their distributor partners of their latest pending case status information. The standardized message automation will help facilitate efficiencies for “In-Good-Order” replacements. The service will also feature a money settlement interface for surrendered contracts.

By using Replacement Processing, firms will benefit from the ability to reduce processing cost by minimizing the manual process of transmitting the information between carriers via fax, mail and phone. Overall, carriers can reduce “Not-In-Good-Order” rates, ensure prompt notification and confirmation between carriers and ultimately, satisfy the customer’s intention to replace a contract securely and efficiently.

Stark adds, “ Our objective is to bring much-needed efficiency to the process which will yield benefits to our participants and their customers.”