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December 26, 2012 at 06:05 AM
Fixed annuity expert Jack Marrion predicts caps on fixed annuities will rise next year, but the velocity of the increase will be measured and one that carriers can handle.
Marrion, president of Advantage Compendium, a St. Louis-based research and consulting firm, made his predictions during a webinar last Thursday sponsored by the National Association of Fixed Annuities (NAFA). Marrion also serves as NAFA’s director of research.
During “The End of the Beginning: 2013 and Beyond,” he said that insurers may have cut too deeply and will make adjustments in the new year. He added that Treasury rates have been “unduly low” for so long a period that they, too, will head upward in 2013.
He said that bond yields “bottomed out” in early December and bond yields will also rise, which means bond prices will fall.
Whether carriers will raise the caps on existing policies is a decision that the individual carrier will have to make, he said.
Marrion noted that lower commissions have enabled carriers to raise caps as well. He further predicted that new product twists and riders will broaden the market for fixed annuities and make them more appealing to consumers who in numerous surveys have expressed positive views of annuities.
