Variable annuity policyholder behavior could be considered tough to take the pulse of. Clients who in the 1990s purchased the products because of their tax advantages are now keen on them because of their living benefit guarantees. All of this, coupled with the residual impact of the global financial crisis and fluctuating and fickle advisor temperament, make policyholder data difficult to comprehend and act upon.
Lincoln Financial Group (Lincoln) recently announced that it is collaborating with global professional services firm Towers Watson and global management firm Oliver Wyman to implement two advanced analytic modeling techniques in order monitor and adapt to variable annuity policy behavior. Namely the techniques being put into action hope to help improve assumptions, setting, valuation, risk management and new product development. Lincoln hopes to take a page out of the property and casualty playbook by employing predictive modeling in product design and they believe they are among the first variable annuity companies to do so.