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Straight-through Processing NAVA’s Standards Initiative

STP – An Industry-wide Update

Nov 12, 2008ESRA Conference

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Tony DeakinsManaging DirectorAbraham, McDonald & Associates, IncOffice: (904) 808-8328Cell: (904) 910-1614Fax: (904) 212-2101Email: tdeakins@amcanet.com

Project Director for NAVA’s Straight-Through Processing Initiative

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AgendaThe Industry InitiativeTechnology ConsiderationsBenefits

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Straight-through Processing NAVA’s Standards Initiative

The Industry Initiative

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The ProblemNo ability to meet anticipated demand for annuities with current paper-intensive business process Compliance with differing regulatory

requirements Differing company interpretations of the

same regulatory requirement Consumer expectations for greater service Need for technology solutions

To meet legal & compliance obligations To address interoperability To allow for modular implementation

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The Mission “To create a set of standards establishing a common process for doing electronic new business submission for annuities that includes e-signature and standard interpretations of all state and federal regulations – for which we get regulatory acceptance.”

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Industry CommitmentAEGONAIG/SunAmerica/VALICAllianz LifeAXA FinancialEdward JonesFidelity InvestmentsGenworth FinancialGuardian LifeHartford LifeING US FinancialJackson NationalJanney Montgomery Scott John Hancock FinancialLincoln FinancialLPL Financial ServicesMassMutualMerrill Lynch

MetLifeMorgan StanleyNational FinancialNationwide FinancialNew York LifePacific LifePershingPrincipal FinancialPrudential FinancialRaymond JamesRBC Dain RauscherRiverSourceSun Life FinancialTIAA-CREFUBS FinancialWachovia Securities

NAVA STANDARDS INITIATIVE

Technology ConsiderationsWhat are the key tools & assumptions?

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Critical TechnologieseCommerce functions centered on:1. Engaging the customer electronically2. Business process automation for

transaction processing 3. Compliance through Transparency4. Electronic documents5. Electronic signatures6. Electronic records management

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Statutes & RegulationsUETA (Uniform Electronic Transactions Act) and ESIGN (Electronic Signatures In Global and National Commerce Act) Permits electronic transactions if agreed to Permits e-delivery Permits e-signatures Permits e-records

All state replacement regulations satisfiedAll suitability regulations met/exceededAll disclosure requirements satisfied

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End State VisionSignificantly increased sales volumes

Without increased human intervention

Significantly reduced compliance risks Through use of rigorous business rules and

checkpoints

Greatly enhanced customer experience Simplified buying process Increased assurance of having made the right

decision, selected the right product

Greater transparency Improved responsiveness to regulators

NAVA STANDARDS INITIATIVE

SUMMARY OF BENEFITS

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Consumer BenefitsMaking it less complicated – simplify processMaking it easier to understand – transparencyRemoving frustration– fewer errors, less time & less cost related to repairing customer confidenceObtain higher level of service

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Regulator Benefits

Provides tools to facilitate more suitable sales to the consumer & more robust market conduct examinations Includes robust records management with ability to easily search and find in a single locationResolves regulators’ current concern – obtain signature at point of sale vs. back-end

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Industry BenefitsCommon process to simplify selling and enhance the attraction of annuitiesStandards create common language – interoperability between trading partnersElectronic transaction reduce costs – fewer errors, E-Delivery