We just returned to New York after spending 4 days in gorgeous Palm Springs, California for the 2008 NAVA Marketing Conference and I must admit that the 20 degree temperatures in the Big Apple are difficult to handle right now. Now that I have had a chance to reflect on the conference, I think the elective session which left the biggest impression on me was the wonderfully orchestrated “STP Live” presentation.

The session was carried out like a play consisting of two acts demonstrating Straight-through Processing from pre-sales to submission. Five actors (individuals from NAVA and firms with products displayed in the presentation) filled the roles of narrator, producer, client and principal and actual online STP systems - Blue Frog Solutions’ Affirm and Finetre’s AnnuityNet - were used to present the process in an authentic manner.

Act one highlighted the STP experience for a client looking to open a new annuity contract while act two focused on a client who was replacing an old annuity. The demonstration began by showing how producers can use the STP system to assist clients in selecting the product that is right for them. By inputting personal and financial information about the client, the system can generate a report featuring product comparisons, suitable products lists and recommendations.

Once a product is selected, producers can complete the application online using client information that they have previously gathered and saved. The system provides the producer with guidance through the application completion process to ensure that materials are submitted in good order.

Producers then email the completed applications to the client for signatures. The email contains a link leading back to the STP system which securely holds the electronic application. Clients must login before gaining access to the application and to do so must input username, password as well as answers to two security questions (Favorite Food, Car, etc.) which were previously established.

Since the entire STP process is completed electronically, e-signatures are supplied online using technology from eLynx. To sign, clients simply click the link where indicated on the application and type in the date. This is one of the bigger compliance hurdles that NAVA’s STP initiative has overcome and is the key to completing and submitting application materials in a fully electronic manner.

After reviewing and signing, the application is then electronically signed by the producer and sent out for suitability review and processing. The suitability review process is automated and in most cases contracts will get approved without having to go through a human-being. Finally, funding instructions are submitted and once the money is received and validated, the contract is issued.

Having now seen the entire process first hand, it appears that NAVA’s STP initiative has been quite a success. While there is still much work to be done, the advent of automated principal suitability reviews coupled with e-signatures greatly expedites the account opening process by eliminating the need for paper and postal mail. In addition, the guidance in application completion provided by the STP system catches errors and ensures good order, another major shortcoming off the account opening process in the past.

The next step is getting carriers and producers to buy into the STP concept and invest the time and more importantly money to implement the systems for regular use. A few firms already offer STP functionalities including Transamerica, which provides producers with Finetre’s system and Fidelity, a direct firm that allows prospective clients to open an annuity contract via the public website.

The presenters approximated that it will take a year or so for STP to really catch on with carriers and producers. Merrill Lynch and Wachovia were firms that are rumored to be implementing STP systems in the near future. With all the tangible benefits provided to both producers and clients, here’s to hoping that Straight-through Processing becomes a fixture in the annuity industry sooner rather than later.