Ernst & Young: US Life Insurance Industry Outlook

2010 will be difficult for life insurers as the US economy slowly recovers from the aftermath of financial events. Lagging employment with falling aggregate wages, tight credit, weakened residential and commercial real estate and a behavioral shift on the part of consumers from consumption to savings are factors contributing to a delayed economic recovery. The US life-annuity insurance industry will likely face an extended period of weak earnings, slow growth and greater regulatory oversight.

Many insurers are reacting to these challenges by following a “back-to-basics” strategy. This approach may help life insurers weather the storm, but just hunkering down may not be enough to succeed. Regaining profitability and growing the business within the current economy will require creative, pro-active steps to improve strategy and execution.

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