Conning Study Flags Growth Opportunities for Annuity Providers

But converting those prospects into clients could be a challenge, particularly if insurers fail to recruit enough young advisors, Hawkins warns. Most producers, he notes, are over age 50.

“Advisors and insurers will have to figure out how to reach to prospects in 20s, 30s and early 40s with products and marketing strategies that appeal to people who are increasingly accustomed to transacting business online,” Hawkins says. “How will they win over these new savers to help them plan for retirement?”

One avenue, he suggests, is to market annuities as accumulation vehicles inside employer-sponsored defined contribution plans, including 401(k) plans. The plans might, for example, contribute a fixed dollar amount to a guaranteed income annuity, or to a hybrid vehicle combining features of a mutual fund and an annuity. The vehicle could be a target-date fund offering guaranteed minimum withdrawal benefit.

Australasia

The Pacific Rim “Australasia” market is not as big as the U.S. market, but it is a rapidly expanding market for life products, Hawkins says.

“Those U.S. insurers that are looking overseas should think of these markets as long-term growth prospects,” Hawkins says. “And they should pursue them sooner rather than later because of the increasing competition in the region.”

Old Markets Are Maturing

U.S. insurers need to look for opportunities to grow because revenue growth has slowed to about 2.5% per year, Hawkins says.

From 1995 to 2000, annuities were growing 12% per year, and they were still growing 6.5% per year from 2001 to 2007.

“Along with that decline, we anticipate a consolidation of insurers,” Hawkins says. “But those that survive will offer more products than are now available on the market.”

To see an earlier Conning life-annuity market analysis, please read Conning Sees Industry Recovery After This Year.