Ernst & Young LLP’s Global Insurance Center foresees continued good performance for the life insurance industry in 2007.
At the same time, it expects continued tough competition for the dollars of a new generation of retiring consumers.
“With an aging population and an increasing number of retirees, we anticipate good sector performance in 2007 with solid fees, dependent on stock market performance and premiums across product categories,” commented Pete Porrino, global director of insurance for the Global Insurance Center of E&Y, New York.
In the U.S., general nervousness about long-term economic security and about social security, Medicare-Medicaid and reduced employer-paid health and retirement benefits will spark interest among consumers in self-funding and insuring their retirement, predicts E&Y.
In the “middle wealth” retirement market–the middle 66% who are less than wealthy but far from impoverished–life insurers have an opportunity to launch both new kinds of advisory services and innovative income-generating protection products, the accounting firm says.
Insurers will continue to improve their risk management, while Solvency II developments in Europe will likely pressure many large U.S. insurers to shore up their financial strength, E&Y predicts. Specific areas of importance in 2007 will be economic capital, suitability and market conduct and hedging.
E&Y also expects life insurers to continue to seek securitization and other market solutions to capital management demands.