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Annuity sales will top $360 billion by 2014, according to a new report.

Celent, a division of Oliver Wyman Inc., New York, published this finding in a report released today, “North American Annuities: 2012 Market Trends and Technology Considerations.”

The study estimates that indexed annuities and other new annuities unveiled in recent years will fuel the market’s expansion by a compounded annual growth rate (CAGR) of 4% — approximately equal the total life insurance industry’s projected  growth rate — attaining $368 billion by 2014.

By 2014, Celent anticipates that annuities will account for about 52% of the total life/annuity/health market, a level “not markedly different from 2011 because long-term outlooks are for interest rates to remain low.”

The study notes that individual variable annuity sales in 2011 were their strongest since 2007 and reached $155.5 billion, or 12% growth over 2010. Individual fixed annuities saw nearly flat sales in 2011, falling 1.1% compared to 2010, or $75.6 billion.

Industry-wide annuity sales, including group annuities, were $327.0 billion in 2011, compared with $299.3 billion in 2010. So far into 2012, annuities sales were down in Q1 compared to 2011, the study states.

According to the report, life insurance is no longer the primary business of many insurers. In 2011, annuities outsold traditional life insurance by a factor of 2.6 to 1. The North American individual and group annuity market accounted for approximately half of the total life/annuity/health market with total premiums (or considerations) of $326 billion.

Turning to spending on information technology, Celent further estimates that U.S. annuity writers will spend $11.9 billion on information technology in 2012, growing to $13.9 billion by 2014. Of the 2012 total, Celent pegs the amount to be spent on software and services for new strategic projects at about $1.9 billion.

The total encompasses North American annuity insurers’ core system enhancements, new business systems, distribution systems and actuarial/product projects.

Celent estimates that North American annuity insurers will spend approximately 48% of their budgets on new projects, or $5.7 billion in 2012. Of this, 34% will be spent on external software and services for new projects, or $1.9 billion.