DTCC Insurance & Retirement Services recently launched the first of many API-enabled services to transform the Insurance industry.
Producer Authorization (PAR) allows advisors to send real-time request/responses through DTCC to insurance carriers to inquire if they are authorized to sell a specific annuity in a specific jurisdiction. PAR is the first of several transformative solutions that will ultimately create faster transactions, seamless standardization rules and real-time management for the insurance and retirement services industry.
Related: DTCC's I&RS Launch API Messaging Service
DTCC Connection sat down with Jon Volpe, Product Management Director of Insurance & Retirement Services (I&RS), to discuss the background of this initiative, the benefits to the industry and which other APIs are in development.
DC: Can you tell us about the current process for selling annuity and life insurance products?
JV: To sell annuity and life insurance products, agents must possess three vital credentials—they are required to be licensed in that jurisdiction, appointed by the carrier and have completed state and product training — in order to have a successful transaction. However, this information is highly fragmented, and agents sometimes don’t find out the status of their credentials until the carrier rejects the order—leading to the client losing time on the transaction.
DTCC wanted to help the industry solve this problem. In 2022, we created a pilot working group to collaborate on innovative solutions to provide up-to-date, real-time, financial advisor licensing appointments and training – all in one place. We proposed a distributed ledger technology (DLT) solution that would solve all these issues, and we were more than ready to begin the build. While the industry wasn’t quite ready to move to a DLT solution, several ideas were borne out of that working group that could help the industry without a massive commitment of labor or resources.
DC: Why is there a lot of interest in PAR?
JV: When an annuity application is submitted to an insurance carrier, the carrier needs to determine if the advisor is properly credentialed to sell a specific product within a specific jurisdiction. If they are not, the application is determined to be “Not In Good Order” (NIGO) and is not processed. This leads to delayed business and a poor advisor and end client experience.
The Producer Authorization API message allows advisors to know prior to submitting the application if they are licensed, appointed and trained to sell that product. This verification process should reduce NIGO submissions, which is a major reason why there is so much interest in this service.
DC: Can you describe the collaboration between DTCC and the industry?
JV: Our I&RS team is very involved in the insurance industry, not only with our working groups but also in organizations like The Association for Cooperative Operations Research and Development (ACORD) and the Insured Retirement Institute (IRI), which after seeing the need for digital solutions, created the Digital First for Annuities initiative. This initiative is meant to establish best practices and solutions, as well as prioritize efficient, flexible, cost-effective and scalable data – all ultimately, to support digital experiences.
DC: Are there any other new API-enabled services through I&RS?
JV: We’ve created two additional products to support the insurance industry. Paperless Replacement Processing (RPL) allows for the exchange of critical information during the 1035 exchange/transfer process and Activity Status Tracking (ACT) is a real-time status request and response API messaging service to track annuity applications through the underwriting process. We are looking forward to enabling clients to enhance their businesses with all three of our latest solutions and continuing to innovate with new features and services to solve industry issues.