Annuities sales are on the rise. LIMRA SRI expects the total sales for fixed income annuities to be around $70B for 2018, matching the trend of increasing sales in each quarter. Wink Inc. found that non-variable deferred annuity sales are up 46.2% from this time last year. While industry experts predict that this rapid growth will slow down in 2019 and 2020, carriers should still prepare for plenty of activity in the annuities space.
The increase in annuity sales seems to be rooted in a few different factors. For one, the increase in interest rates is likely making annuities a more attractive prospect for customers. For another, consumers are looking to create a guaranteed income or regular monthly check for their retirement since most US employers have switched from a defined benefit plan to a defined contribution plan.
With increasing numbers of annuities contracts, insurance IT leaders are likely to see increasing demands on several capabilities. Key areas of focus that will need to be bolstered include support for a single view of the customer, maintaining suitability of information, and security or privacy of customer information. Customers have grown used to the high-caliber user experience offered in retail or banking; a single view of the customer is crucial for insurers to meet these expectations.
Regulatory requirements such as the New York Department of Financial Services’ regulation 187 continue to press on greater information for suitability of annuity and life products. Along with New York, the NAIC and other states continue to write and review new regulations that also demand more timely and accurate customer information. As more information is stored—including customer preferences in addition to suitability information—the risk of a customer data breach increases. Recent large data breaches, such as the 500 million customer records breached through Marriott’s Starwood reservations system, and the subsequent public fallout only serve to remind carriers of the need for strong data management and security strategies.
As annuity sales increase and potentially break records, insurers must be prepared to accommodate the increased IT demands that come with this sales growth. Data security, maintaining suitability of information, and meeting customer expectations for user experience are crucial for insurers hoping to keep up.
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