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NAFA IMO Summit Recap: Why Annuity Players Welcome Competition

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Recently, in Boca Raton, Fla., the 2011 NAFA IMO Summit took place and the buzz was all about new products and competition from non-traditional annuity players, like banks and broker-dealers. Despite the challenges, these annuity gurus say the future looks bright for the industry.

We spoke with event speakers Sheryl Moore, Eric Thomes and Allan Grissom to get their thoughts. In addition, once we got back from the conference, we contacted additional annuity experts Dana Pederson and Jeremy Alexander.

An outlook for the annuity business:

We all know how tough it’s been with the economy since 2008. People have gotten savvier about finances the last three years. They want to get the best deal and they’ve taken control of their finances. They’re out, they’re researching the products, and they’re finding that indexed annuities are a better value proposition when compared to CDs. It’s opened the door to so much more consumer traffic for these products. When they do the research, people are finding out that annuities are the solution to the fear they’ve had about their finances since 2008. 

-Sheryl Moore, President, Annuity

On product diversity and broker-dealers:

It’s good for the carriers to diversify their portfolios because they need that diversity to get a strong rating. With all the suitability involved from the broker-dealer side, it really legitimizes the products and broadens their appeal. There may be short-term pain points, but there will be long-term comfort to the consumer. To broaden the market is a good thing.

-Jeremy Alexander, President and CEO, Beacon Research

More on this topic

On the need to evolve:

The secret to winning in the space is that you have to evolve. Innovation is going to be the key. And that’s going to be innovation in terms of marketing these products and innovation in terms of developing these products so you’ve got more products that are meeting the specific needs of consumers. And, the good news is, we’re seeing that.

-Alan Grissom, Vice President of Insurance, Standard & Poor’s

On new product offerings:

One area we’ve seen some growth in is in the registered rep space, or in the banks or broker-dealers. The productsthe fixed annuities, the fixed index annuitieshave really evolved from a product development standpoint over the last five and six years and they are being more well received in those channels. We’re seeing banks sell more indexed annuities. The banks typically sold those three- to five-year rate guarantee productsstraight, plain-vanilla fixed annuities. It was a nice complement to their CD business. The average fixed annuity is paying a little bit better but not extremely better. The indexed annuities, at least the shorter duration, the five-year products as an examplewe have a couple of thosewe are finding those fit very well in that bank space as an alternative to CDs or straight fixed-rate annuities.

-Eric Thomes, Senior Vice President of Sales, Allianz Life Insurance Company of North America

On guaranteed death benefits:

There’s a big surge in guaranteed death benefits on indexed products where there’s a guaranteed, specified rate of return upon death. We saw that trend years ago in the variable annuity space. Now it’s coming to the indexed side. These products have really picked up in the last year with the top 20 companies offering some form of death benefit.

-Dana Pederson, Vice President of Annuity Products, The Phoenix Companies, Inc.