Among the technologies that annuity carriers will note as priority will be the use of social media in marketing tools. They will also look at increased STP adoption, more sophisticated actuarial systems, improved analytics and sales reporting. They are also looking for proper tools for enhanced risk management, with a focus on internal controls
The individual annuity marketplace is extremely competitive and requires a significant amount of operational flexibility to meet the needs of the insurer and the insured, Novarica opines.
According to the report, the impact of the Great Recession has run its course, with interest rates poised to rise in the fourth quarter of 2015 and beyond. These two events will drive huge demand for innovative annuity product features, such as alternative asset classes via funds and sub account investment options to guarantee income at retirement for baby boomers.
Mitch Wein, VP of Research & Consulting of Novarica said that 2015 is an inflection point for annuities. “It is the year when Millennials equaled Baby Boomers in the workplace. From here, they will start retiring, going from 50% of the workforce to under 10% in the next 15 years,” said Wein.
If the annuities have to deliver, core systems must be replaced to support new product features and agent portals must be updated to support straight-through- processing to provide the operational efficiency required. “Any carrier not willing to invest in these areas needs to decide whether to remain in the business or exit,” says Wein.