Insurance Profile Solution Aims for Annuity Transparency

Depository Trust & Clearing Corporation (DTCC) is seeking regulatory approval for a new Insurance Profile solution that will facilitate compliance with the U.S. Department of Labor (DOL) fiduciary rule.

According to DTCC, the Insurance Profile service provides carriers and distributors with a centralized, automated and standardized method to satisfy disclosure requirements under the significant disclosure and conflict of interest reforms.  

“Under the new DOL rule, any financial adviser receiving compensation for providing investment advice that is directed to a particular plan sponsor, plan participant or individual retirement account (IRA) owner will generally be deemed a fiduciary,” the firm says. “Fiduciaries are required to act in their clients’ best interests, while providing new levels of transparency including their qualifications, recommended investments, fees and costs, material conflicts of interest and compensation—data that is largely handled in operational silos and via manual processes across market participant firms today.”

To address this hurdle, the DTCC solution supports the exchange of data between insurance carriers and distributors for the on-going reporting of fees, expenses and commissions schedules to facilitate both “on demand” disclosures and website disclosures.

Once launched, distributors will be able to leverage Insurance Profile to access expense data at the contract, feature/rider and fund (subaccount) levels from a secure, centralized hub, eliminating the need to search and pull information across individual carrier partners, DTCC says. Carriers, or designated vendors acting on behalf of carriers, will be able to submit and maintain the required disclosure data online, leveraging an easy-to-use Insurance Profile interface. All data will be communicated via industry-standard ACORD XML and EDI messages.

“By leveraging a central, online data source of comprehensive and standardized annuity information, market participants will be able to increase transparency into annuity expenses and commission schedules, while ensuring access to data that is critical to the adherence of Department of Labor fiduciary disclosure requirements,” says Ann Bergin, managing director and head of DTCC Wealth Management Services. “Increasing automation in this area will reduce the risks and costs associated with manually processing this data, while eliminating the support and maintenance costs and resources associated with proprietary feeds and databases.”

Insurance Profile will be offered by DTCC’s National Securities Clearing Corporation (NSCC) subsidiary. More information is available at www.dtcc.com.