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Life Health > Annuities

5 Trends Defining Success in the Life and Annuity Industries

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What You Need to Know

  • The author believes that apps are a big deal.
  • He sees consumer confusion about what annuities are.
  • He notes that Secure 2.0 can make a 401(k) retirement plan account a defined benefit account.

The high inflation environment has consumers reevaluating their insurance and investments.

As more financial services are transacted online, it gets easier to switch providers.

These circumstances pressure the insurance and annuity industry and their advisors to find new opportunities for revenue generation, customer retention and satisfaction.

Here’s what insurers you work with must keep in mind as they cope with changing times.

1. Process Streamlining

Insurers are replacing legacy systems with rules-based applications and creating simpler products to simplify issue processing, eliminating manual underwriting, and issuing a policy within minutes rather than days.

Our take: companies that successfully reduce costs and increase efficiency will empower their advisors to provide a convenient customer experience.

Insurers are also facing challenges with the claims process; the most popular complaint being “too much paperwork”.

The process is often emotionally charged for customers, making it even more delicate for providers and their advisors.

In the 2023 Capco U.S. Insurance Survey, over 40% of respondents cited convenience, accessibility and user friendliness as key satisfiers when using an insurance company’s app.

This underscores the need for quick, painless interactions.

Our take: insurers can empower their advisors by streamlining processes, and engaging claimants digitally with apps that reduce friction to nurture the customer relationship with their agent and the firm.

2. Data Integration and Personalization

Insurance companies are integrating outside data through third party partnerships.

For example, integrating medical information from other companies can accelerate the underwriting process and cut time to issue.

For risk monitoring after issue, insurance companies can incorporate data from an insured’s wearable fitness tracker.

Insurance companies may even forgo measured data in favor of predictive analytics to measure risk.

Our take: Integrating data will empower agents to provide the seamless experience consumers expect.

3. Education and Building Trust

There is an alarming financial literacy gap, particularly concerning annuities.

In a 2020 LIMRA survey, over 60% of consumers said they wouldn’t buy annuities because they don’t understand them or know which type to buy.

Moreover, 40% of consumers surveyed trust neither insurance companies nor their agents.

The challenge for life and annuity advisors is educating unserved consumers, presenting products clearly and understandably.

The greater challenge is overcoming cynicism.

Our take: The life and annuity advisors that successfully educate and build trust with their clients can turn an underserved market segment into loyal customers.

4. Fixed Annuities

Annuities have looked more favorable since June 2022.

High interest rates have made fixed and fixed-index annuities attractive.

If interest rates remain high as expected through 2024, fixed annuities will enjoy brisk sales.

Our take: Advisors can promote their firms’ fixed annuities to leverage high interest rates.

5. Defined Benefits

Younger investors, skittish about market swings, are aligning with more conservative strategies and demand safer retirement alternatives.

The Secure 2.0 Act of 2022 empowers participants to devote a greater portion of their retirement savings to guaranteed income by eliminating the 25% of assets limit on contributions to income annuities and raising the dollar limit from $125,000 to $200,000.

The act further includes provisions for increased plan access, employer contributions for student loan payments and liberalized distribution rules.

Our take: SECURE Act 2.0 is a boon for retirement plan participants, and a marketing opportunity for advisors at firms that administer them.

Firms that confront high interest rates, data integration and prevalent ignorance and cynicism of financial products and execute effectively on their plans will empower their advisors for success and greatly enhance their bottom line.


Christopher BoormanChristopher Boorman is a senior consultant at Capco, a management and technology consultancy that serves clients in the financial services industry.

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