Celent study: Steady growth for annuity sales in coming years

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.