Automation, Centralization Make Inroads Into Annuity Training

The Depository Trust and Clearing Corp. (DTCC) has been in the news as major carriers have signed on with its compliance and agent training platform. Kevin Lewis, DTCC vice president of insurance and retirement services, answers questions about recent these recent carrier moves and what they mean for agent training.

Q: DTCC announced in August that Transamerica, New York Life, Great American and Prudential have adopted DTCC’s insurance and retirement services producer management portal (PMP), a compliance platform for agent training. Nationwide is expected to join in September. What signal does this send to the agent training marketplace?

A: We feel this signals a desire for greater transparency and automation in the agent training marketplace. It is critical to validate training prior to the submission of an annuity application to the insurance carrier to ensure the application is not returned, which is a problem for many firms who still utilize a manual process experience.

Q: How many life and annuity carriers are signed up with PMP and how does that improve life and annuity agent training 1) from the perspective of the agents and 2) from the perspective of the carriers?

A: We have nine carriers signed up, with an additional three carriers testing the application to be live in 2015. This is in addition to seven training vendors populating course completions. The ability for the broker/dealer, on behalf of their affiliated insurance producers, to have a centralized place to validate the training completions prior to application submission is critical to eliminate business being returned. From the perspective of the carrier, PMP offers a centralized solution to allow their distributors access to validate training requirements and quickly rectify any gaps in completions prior to submission of the business.

Q: PMP initially was released in 2013 with a focus on distributors’ desire for more transparent training and agent authorization. What was the issue that PMP was designed to solve? Has the issue been completely solved? What next steps are in the offing for PMP?

A: PMP was created to provide a comprehensive, centralized industry source for sharing, tracking and verifying producer training completions as required by state regulators because firms were struggling to accurately track and report training data due to the heavy use of manual processes. The need for a real-time notification process of training approvals in a centralized, standardized hub was critical.

Q: Right now, PMP acts as a central database saying that courses taken by a life or annuity agent satisfied the training requirements in a particular state. What is the long-term goal of PMP with regard to the “can-sell” message?

A: The tool offers the state-specific and product-specific training authorization but that is only one part of the insurance producer’s requirements to be authorized to sell annuities. Therefore, the opportunity to expand PMP to support the full “can sell” authorization is important. This authorization would include the insurance license, state and carrier appointment, and the training.

Enhancing the user experience by offering a more robust management tool for producer authorizations will result in increased in-good-order transactions received by the insurance carrier.

Q: If the Financial Industry Regulatory Authority (FINRA) licenses agents and brokers, and tracks which agents are authorized to sell life and annuity products, why is PMP even necessary?

A: FINRA and the individual states track the agents’ ability to sell variable insurance products; however, they do not track the training requirements and authorization. The National Association of Insurance Commissioners model regulation states that insurance carriers validate the completion of the training prior to the issuance of an annuity application. By centralizing the multiple insurance carriers’ training authorizations, it gives transparency to the insurance producers.

Q: Can you be trained properly to sell life and annuities without a license? Can you be licensed to sell life and annuities without being trained? If so, that would signal little relationship between insurance training and licensing. How is that possible?

A: There is no correlation between the license and appointment with the training. There are numerous education and training vendors that offer the state-level training and may not know if the individual is properly licensed, nor is it required prior to taking a training course.  There may be a relationship between the product-specific training and the carrier appointment, and that would be driven by the insurance carriers.

Q: Take me through an example of the value that the PMP brings. Let’s say I live in Pennsylvania and I want to sell life and annuities. What happens next?

A: PMP does not assist in the ability to sell life and annuities as it pertains to the licensing exams or appointments with the state and carrier.  This is all outside of the DTCC’s PMP process. Once you have your Pennsylvania insurance license and are appointed with the carrier and state, you are required to complete state-level annuity continuing education training in addition to product-specific training offered by the insurance carrier with which you are appointed to do business.

The PMP tool will hold the authorization of the training, and in the future, the licensing and appointment status, effective date, etc. This will assist in offering a central source for producer details and documentation to create heightened awareness of producer credentials and data.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].