Advisor screening spurs data sharing initiative

By Kate McCaffery | October 21 2014 08:55AM

Advisor information – the type typically sought by compliance departments – is the latest data set industry collaborators hope to standardize and centralize, making it available to those who need it, without the manual and redundant processes in place today.It might seem like a logical move, but past efforts at data exchange between companies have often proven to be painfully slow moving at best, or ill-fated from the outset.

The project to address advisor information, however, is reportedly moving ahead with relative speed. So much so, that LOGiQ3 is moving from its position consulting and coordinating the project, to launch a new subsidiary company, APEXA Corp.

Designed to be a central database of advisor profiles, the information will first be generated using information and producer lists provided by the nine foundation companies involved in the project, including four national Managing General Agencies (MGAs) and five carriers.

Initially, the project seeks to match up all the information available, and hold it in trust until it is verified and released by each advisor, for use by industry constituents who need it. Ongoing, APEXA employees will screen the information to keep it relevant – highlighting when license information has expired, or when credit check and criminal background check information might need to be renewed. It will also give advisors the opportunity to review the information companies have on file, and attest to its accuracy.

“Apexa is going to be responsible for keeping that information current,” says Chris Murumets, LOGiQ3 Corp. CEO. “It’s not going to be a small organization.”

Right-minded concept

“I think it’s a really right-minded concept,” says Jim Virtue, president and CEO of PPI Solutions. “When this is fully implemented, it will simplify what is now a horribly manual, mish-mash system, and make it much simpler. It also provides a way for better compliance monitoring – something that is very important for MGAs and insurance companies. It makes the compliance easier for advisors too. You wouldn’t believe how manual the process is right now – every insurance company, and probably even every MGA has a different way of monitoring and doing this,” he adds. The result, particularly for independent advisors working with multiple companies, is almost the need to do more paperwork than business.

The “archaic” system in place now, means companies like PPI Solutions still collect licenses and certificates manually for submission to companies.

At HUB Financial, for example, company president, Terri DiFlorio says the company has contracts with more than 5,000 advisors. “Some are active with us all the time. There will never be a gap (in licensing or errors & omissions insurance coverage). But others will only submit business once every few months. They have another primary relationship. It might be really shocking to find out the ways we currently learn if an advisor has issues with a provincial regulator. Or a bankruptcy. It’s a problem.”

She points out that even random screening can become a problem for advisors as well: “Seven different entities could be checking the broker’s credit on an annual basis. That doesn’t do anything for his credit rating either.”

Along with HUB and PPI, Financial Horizons Group and the IDC Worldsource Insurance Network round out the group of MGAs working with LOGiQ3 to determine project needs.

“The volume of business done by these organisations is so significant, it’s giving us a lot of insight into all the permutations,” says LOGiQ3 senior consultant, Richard Sachs.

Carriers involved include Manulife Financial, Sun Life Financial, Canada Life, Empire Life, and Industrial Alliance. The technology behind the project is being developed by WealthServ creators, BlueSun.

Compliance is undeniably the biggest area of growth within the industry at large, and could be the point of differentiation making the effort successful where other data-exchange or standardization efforts have failed. Having the effort supported by a critical mass of distributors may well be the second.

“It’s probably one of the best examples of a project that’s being lead by distribution,” says Diflorio. “It’s challenging for carriers to really get behind something like this if they think only one or two or three of their MGAs are going to use it. It doesn’t’ really accomplish anything for them.”

But if the industry’s four largest MGAs (representing roughly half of the industry’s producers) tell major carriers that something needs to change, “and this is the way we want to do it, I think the carriers will feel confident about the investment they need to make.”

Although he has since moved on from the project, the players all independently credit Doug Paul for his work consulting with LOGiQ3 in the project’s initial phases – the really ‘heavy lifting’, they say – to get companies interested and involved. (Today Paul is the vice president of business development with SSQ Financial Group.)

“Compliance has changed drastically in our industry in the last five years, and it’s going to change even more in the next five years,” says DiFlorio. “As a distribution organization, if we don’t have enough resources to do the job we need to do, we need to find a new way.”

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