Modernizing Regulatory Communications:

Providers of variable annuities and life insurance are facing significant challenges from a series of regulatory, technological and marketplace changes that are altering policyholder disclosure requirements. These new and shifting demands are forcing providers to overhaul internal systems and processes to modernize their regulatory communications functions.

In 2020, SEC Rule 498A set the regulatory foundation for disclosure in the digital age. Since then, variable annuity and life providers have had to deal with a string of regulatory actions such as the RILA Act and the Tailored Shareholder Report rule requiring adjustments to existing regulatory communications practices. At the same time, rapid innovation in digital technology and the more recent boom in artificial intelligence have provided providers with powerful new tools.

The convergence of these two trends has prompted many variable annuity and life providers to launch initiatives aimed at modernizing regulatory communications. Providers that haven’t taken that step should seriously consider doing so now, before mounting demands and accelerating schedules start increasing costs and risks and they find themselves left behind by further, rapid innovation.

For most firms, modernization efforts will focus on four main areas:

• Data Management and Governance
• Document Sourcing
• Policyholder Communications
• Technology Infrastructure and Integration

In this article, I’ll briefly address the challenges and opportunities facing providers in all four areas.

Data Management and Governance

Providers of variable annuities and life insurance produce and employ vast amounts of data to meet policyholder disclosure and compliance requirements. Unfortunately, these companies are not built for easy data collection and use. To the contrary, from an organizational perspective, most providers are the product of a long series of acquisitions, mergers and organic product launches. The end result is frequently an internal technology platform comprised of multiple outdated systems that have been cobbled together. Data often doesn’t travel well across these systems. Instead, it resides in silos, sometimes in incompatible formats.

I call this data fragmentation the “legacy trapdoor” — a pitfall that can doom automation and efficiency initiatives from the start. One large variable annuity provider whom I’ve worked with must draw on as many as 45 sources for policyholder data. Given the challenge of collecting, integrating and normalizing data from that many disparate data sources, it’s clear that any plans to modernize regulatory communications must begin with the establishment of a cohesive, organization-wide data management and governance platform.

This platform must have three key attributes. First, due to the highly regulated nature of the industry, it must include a secure compliance overlay that governs how policyholder data can be used and who can see it. Second, it must be centralized, acting as a single source of truth for the organization, capable of ingesting data in all formats (Excel, XML, API feed, etc.), normalizing it, distributing it for timely use, and imposing appropriate controls. Third, it must integrate the most up-to-date security features to protect policyholder data.

Document Sourcing

One of the biggest headaches variable annuity and life providers face is sourcing documents needed for policyholder communications from asset managers. That process, which imposes significant time demands on both sides, was made even more challenging by the SEC’s Tailored Shareholder Report rule, which increased the volume of documents asset managers produce by five times or more.

I firmly believe that in 2025, internal teams should not be spending time sending hundreds of emails to asset managers looking for documents. Technology has alleviated the need for this manual process—or at least it soon will. Third-party technology providers like my firm, Broadridge, are building digital document “supply chains” in which they source documents from asset managers and make them available to variable annuity providers with a single click.

A similar evolution is playing out in web hosting. Roughly 40% of providers taking part in a recent poll by the Insured Retirement Institute still use internal teams and resources to host documents on the web. Web hosting doesn’t seem like a very complicated or demanding task, until you dig a little deeper into the process, which turns out to be far more than just taking a document and putting it up online. Web hosting entails establishing and maintaining links, ensuring compliance, and updating prospectus supplements— many of which are filed after 5:30pm. Providers are now also tasked with ensuring ADA compliance.

As in document sourcing, providers looking to modernize their regulatory communications function should be outsourcing Web hosting to external partners with sophisticated digital solutions that can handle this task at scale, freeing up internal staff for higher-value activities.

Policyholder Communications

Up to 40% of variable annuity and life providers are unsatisfied with the process or solution they use for electronic communications to policy holders, according to another IRI poll. That’s a major problem for providers, because e-delivery becomes more complex and important every day.

Many providers are caught in a state of what I’ve dubbed “consent chaos,” in which existing e-delivery processes struggle to keep up with changes in policyholder preferred communications channels. Preference management is only one of the challenges facing providers. Modern e-delivery systems must also be equipped to track metrics like open rates, click rates and ROI on e-delivery, and to constantly maintain a compliance overlay that accounts for mail failures and other issues.

E-delivery will soon become the default for policyholder communications. For providers lacking the right e-delivery solution, it makes sense to upgrade now, before they are charged with informing policyholders about this historic shift and carefully walking policyholders through the final transition to digital delivery.

Technology Infrastructure and Integration

One through line connects all the issues discussed here so far: increasing complexity. New regulations and technology innovation are increasing demands on providers and accelerating workflows. Keeping up with these changes requires a change in mindset. Rather than thinking about tasks like document sourcing and e-delivery in isolation, providers will need to take a more strategic approach and deploy centralized, integrated platforms that enable them to execute across the entire regulatory communications workflow efficiently and at scale.

These platforms will not necessarily reside inside provider organizations. To the contrary, many providers will find it easier, faster and more cost effective to partner with an external provider. Broadridge and other technology firms are developing end-to-end solutions that enable variable annuity and life providers to outsource some of the most complex and challenging aspects of regulatory communications function. These solutions are highly integrated, a factor that is becoming increasingly important in the artificial intelligence era. Emerging capabilities in “document intelligence” and other areas are automating and bringing economies of scale to critical tasks across document composition, web hosting, distribution and compliance.

As these third-party solutions get more powerful and easier to integrate, forming external partnerships will become a cheat-code for variable annuity and life providers working to modernize regulatory communications.