Morningstar Inc. reported that variable annuity net sales as a percentage of VA total sales was only 18.3% in 2007. In the 2008 Annuity Fact Book, NAVA points out that withdrawal and surrender activity and 1035 exchanges either do “not result in new dollars to the industry or drain dollars from the industry (withdrawals and surrenders).”
It’s my belief that too many of the dollars going to annuities last year came from the pockets of other insurance companies. While most of the exchanges were in the consumer’s best interests, I wonder if we are collectively strengthening our industry and our profession or weakening it.
Here are some questions to consider:
–Would our industry be stronger if insurers were not subject to so many exchanges, rollovers, and transfers each year?
–Could actuaries then design annuities with even more pro-consumer benefits if persistency improved?
–Wouldn’t compliance, FINRA, and state departments of insurance like knowing that fewer policyholders incurred surrender charges at the time of exchanges, rollovers or transfers?
–And, finally, would financial professionals be able to build stronger careers if we discovered better ways to find new non-annuity dollars from existing annuity owners instead of moving annuity dollars from one insurer to another?
2 important questions
Question #1: Are there enough dollars out there?