The individual annuity market continues to be hyper-competitive, with technology playing an ever-larger role in insurers’ ability to attract, retain, and profitably serve clients, according to a new market trends report from Novarica, titled “Business and Technology Trends: Individual Annuity.” 

The report indicates that individual annuity carriers often have existing technology for reporting and analysis, but are expanding their business intelligence capabilities to include predictive analytics; many are now applying predictive models to the underwriting process through the application of business rules.

In addition to BI initiatives, other top technology initiatives for individual annuity carriers include agent and customer portal enhancement and core system upgrades or replacements. Agent and customer portals continue to be viewed as key elements of acquiring and retaining customers, and core systems investments continue to be critical in improving time to market and product flexibility.

In addition to core system application areas, individual annuity carriers use a variety of specialized components to support the overall management of this line of business. As an example, the report cites e-applications as table stakes, especially for those carriers seeking to use third-party distributors

Lower priority technology initiatives include mobile apps, CRM, distribution management and specialized components. While mobile access for customers is deemed to be important for the future, most carriers are still trying to understand what functionality is appropriate to enable through this technology platform. A focus on producer mobility has a much higher prioritization for the majority of carriers.

Beyond the technology priorities, the report briefly outlines the competitive insurer landscape within the industry, noting 40 “very large” insurers in the space (with more than $5 billion in total premium across all lines), 41 “large” insurers (with more than $1 billion in total premium across all lines) and 74 “midsize” insurers (with between $100 million and $1 billion in total premium across all lines). Among the breakdown, Novarica pointed to a high degree of concentration — the top 20 companies account for 79 percent of sales according to LIMRA, and that number rises to 92 percent if one looks solely at variable annuities. And within that, the top two companies account for 19 percent of individual annuity sales and 28 percent of variable annuity sales.

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