F I N A N C I A L S E R V I C E S

Navigant’s Unclaimed Property Compliance Solution Includes Fuzzy Match capability for NYREG200 and Policy Finder matching

CHANGING REGULATORY LANDSCAPEInsurance companies are faced with challenges to develop the capability to comply with new unclaimed property regulations. Recently, the speed of change in this environment has accelerated with newly signed Global Resolution Agreements, Regulatory Settlement Agreements, approved regulations from New York (NYREG200) and Maryland and pending regulatory changes from additional states.

All of the changing regulations require insurance companies to perform periodic matches to the Social Security Death Master File (DMF) or State Vital Statistics and State Policy Finder files.

RECENTLY APPROVED REGULATIONS / GUIDANCE » NCOIL Model Law » New York Reg 200 » Alabama HB 136 » Kentucky HB 135 » Maryland SB 77 » New York & Oregon Policy Finder Searches

CHALLENGES FACED BY INSURANCE COMPANIES » Ongoing regulatory changes, many of which have widely differing requirements » Increasing demands for data management/warehousing capabilities » Inability to easily refresh data to accommodate periodic matching » Dealing with the inaccuracies and gaps across DMF versions (11/2011

change to SSA DMF file) » Missing or stale policyholder data (SSN, DOB and address) » Inaccurate or incomplete data (SSN, DOB and address) » Implementing and maintaining fuzzy matching criteria » Operational capacity to handle the additional work required to research matches

NAVIGANT’S EXPERIENCE DEALING WITH THESE CHALLENGES INCLUDES:

» Pre Global Resolution operations, capacity, DMF matching, reserve estimation and financial liability planning

» DMF matching of over 40 million Life, Annuity and Group policies / contracts using exact and fuzzy matching logic

» Support of Verus Global Resolution Agreement » NY 308 compare, tracking and on-going reporting / monitoring » Regulatory response and analysis related to Verus settlement, NY 308,

NYREG200 preparedness, MN subpoena, MA subpoena and more

NAVIGANT SOLUTIONS OVERVIEWData Warehousing / Management: Navigant has built data warehouse / management tools to assist Insurance companies compile, analyze and manage millions of Life, Annuity, Group and other policies / contracts, including the data refresh and compare process necessary to keep up with periodic (monthly and quarterly) DMF matches.

» Data management – Navigant is able to manage and organize an insurance company’s contract data, DMF records, state vital information and facilitate the ongoing needs for refreshed data.

» Data Security Protocols and Regulatory Separation – Navigant is able to establish the appropriate data structure / firewalls for distinct policy populations and customized solutions for specific regulatory data sets.

Data Analytics: Navigant has built proprietary logic to perform sophisticated data analytics including the following:

» Name Parsing Engine – splits out first, middle and last name when a name is stored as a single field. This allows for more efficient and accurate matching to the DMF and state deceased records.

» Address Parsing Engine – splits out state information as well as other address components when the resident or issuing state of the owner/insured/annuitant is stored as a single field. This is necessary to understand the proper jurisdiction of a given contract.

» Data validation and anomaly detection – analyzes key fields including DOB and SSN to find missing, valid and invalid data. In addition, distribution analysis is performed that can help distinguish between anomalous mis-keys and systematic data storage or defaulting issues.

Death Records Database: With recent changes to the public DMF, the SSA will publish 1 million fewer records annually.

» Navigant will continue to maintain its existing 89+ million death records from the Aug. 2011 DMF plus add the subsequent monthly files to provide a more comprehensive compare capability.

» Navigant is actively working with multiple states and other resources like funeral homes and genealogy societies to bridge the gap for missing death records in the DMF.

www.navigant.com

Matching: Navigant’s proprietary matching engine enhances your ability to adhere to ongoing regulatory requirements.

Required Inputs: At a minimum, data files from administrative platforms will include: Policy Number, SSN, DOB, First, Last and Middle Name/Initial and Gender.

How It’s Done: Utilizing a proprietary matching engine that includes fuzzy matching logic, Navigant matches administrative platform data to a comprehensive SSA DMF File (Aug. 2011 full file and subsequent monthly files).

Results: Navigant’s proprietary matching engine has been tailored to accommodate multiple regulatory needs.

» State Regulatory Settlements: The Matching Engine mimics the John Hancock and Prudential settlement agreements including fuzzy matching logic. This tool has been tested and used in supporting the execution of a Global Resolution Agreement and has achieved exceptionally high accuracy rates over time.

» NY 308: The Matching Engine was tailored to meet NY 308 matching logic and generate on-going monthly reports.

» NY Reg 200: The Matching Engine was customized to meet Regulation 200 logic for quarterly reporting requirements.

» Policy-finder or Similar State Self-Identifying Lists: Additional matching to state files reducing the need for manual research can be performed, ensuring timely regulatory response.

» Complex Analytics: Includes summary and detailed reporting, and documentation of the fuzzy logic and other matching criteria utilized.

Refutation Engine: Utilizes additional policy level data (e.g., paid claim, escheatment, benefit calculation, accounting, and other non-system related information) to identify false positives. Navigant also uses administrative data to determine if at the time of death there is a benefit payable for each of the matches identified during the compare process. Navigant then assigns, at the policy level, category codes for those policies that do not have a benefit due and payable (e.g., claim already paid, DOD occurred after the policy was in force, etc.).

» Developed with algorithms in place to identify false positives, performing a thorough investigation of names, addresses, and other identifying data fields, reducing operational response efforts.

» Tailored to reflect carrier-specific business rules to determine if a benefit is still due and payable on the matched policies. Using this logic, items can be marked as un-reportable, avoiding unnecessary research costs and payments.

» Built to include Operational, Financial and Actuarial considerations, rules, etc. » Utilizes analyses on additional policy and administrative data, identifying

false positives and ensuring the match is your insured.

Tracking & Reporting: Analysis and categorization of matching and refutation results.

» Assists in mapping refutation reasons to global resolution agreements » Provides summary analytics of results by business unit and global organization

» Integrates results with workflow platforms » Assists in predictive analysis and reserve monitoring

OTHER SERVICE OFFERINGS AND SUPPORTRegulatory Responsiveness: Assisting companies with regulatory requests compliance.

» Assist with the documentation and response to regulatory requests, including monitoring, issue tracking and organizing data and documentation

» Work to ensure the quality and completeness of data compiled for regulators

Exposure & Settlement Analyses: Performing detailed exposure and settlement analytics utilizing Navigant matching and Refutation engine results (iterative process).

» Estimate benefits calculation at the policy/contract level » Provide analytics and reports, gaining feedback and reiterating » Develop detailed management reports » Support financial liability / reserve estimation / operational and IT

planning processes

Settlement Implementation and Operational Response: Documenting and communicating settlement requirements to internal stakeholders and implementing appropriate infrastructure to execute settlement.

» Design work flows, update existing policies and procedures to accommodate settlement process (e.g., policy research, beneficiary outreach, benefit calculation, payment and escheatment processing and treasury operations)

» Develop sourcing strategy and capacity model based on estimated exposure analysis

» Integrate or build work flow system and inventory tracking system for Monthly Settlement processing

» Design and implement Due Diligence and Reconciliation requirements » Implement management reporting capabilities / reserve tracking » Develop monitoring, compliance framework and audit response

Future State Design: Understanding and documenting future state regulatory requirements, performing impact assessment and designing a roadmap to implementation.

» Document requirements and update policies and procedures » Design workflows, complete capacity analysis and develop target operating model » Implement monitoring, compliance framework and audit response capability

Jonathan Berry | Director | Financial Services 610.745.0849 | jberry@navigant.com

Jordan Kuperschmid | Managing Director | Financial Services 908.347.5610 | jkuperschmid@navigant.com

©2012 Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services.See www.navigant.com/licensing for a complete listing of private investigator licenses.