US life-annuity insurers will enter 2016 in relatively good financial condition, but facing exponential changes from rapid advances in technology, rising customer expectations and growing competition. These market shifts will require insurers to reinvent their strategies, services and processes, while coping with nagging financial, economic and regulatory uncertainty. Fortunately, after years of bolstering their balance sheets, life-annuity firms are in a strong position to invest in the innovations and technologies needed to fuel future growth.
With premiums declining, many question whether the industry can survive in its current form. EY's retail life insurance executive survey examines the challenges and opportunities.
Life insurance companies continue to recalibrate in the face of new regulations, evolving technologies and customer expectations, and more. Of great concern are new regulations at both federal and international levels as well as the possibility of tax policy changes for industry products. Another year of low interest rates is the most difficult challenge of all.
LifeHealthPro Senior Editor Warren S. Hersch recently interviewed Doug French, a New York-based managing principal of the Insurance and Actuarial Advisory Services of Ernst & Young LLP. The interview explored initiatives identified in EY's “2015 U.S. Life Insurance Outlook” report the professional services firm believes should be top priorities for life insurers in 2015. The following are excerpts.
LIMRA Survey: More than Half of Financial Executives Surveyed Predict Outside Disruption in Life Insurance Market
Fifty-seven percent of financial executives believe an outside source (Google, Amazon, etc.) will be a disruptive force in the life insurance market within the next 5 years according to a new LIMRA report.
In many ways, the life insurance and annuities industry is on more solid footing entering 2015 than it has been for quite some time. Economic growth is improving and the unemployment rate is steadily falling, which should create a more conducive environment for carriers to market their products and services.
But fundamental challenges — some new, some ongoing — are keeping industry executives on their toes.
Prospects are generally upbeat in 2015 for providers of life insurance and annuities in the US. Insurers can expect to build upon recent improvements in annuity sales, as credit rates continue to increase and customers return to simplified, tax-deferred products. Life insurance sales will benefit from rising levels of consumer confidence and personal wealth, both driven by the ongoing economic recovery and expectations for gradual increases in interest rates.