Having weathered the financial storm, life insurers need to shift away from rebuilding capital and towards premium growth, according to a new study by Hartford, Conn.-based
The Conning Research study, "The Real Challenge in Rebuilding Individual Annuities: Developing Competitive Advantage in a Concentrating Market,” says such a shift is necessary for carriers to establish their competitive positioning.
"The first priority for individual annuity insurers following the financial crisis has been to rebuild capital," said Scott Hawkins, analyst at Conning Research & Consulting. "Insurers have made significant progress in repairing their capital positions. At the same time, premiums have actually declined, and rebuilding them will be a challenge. As insurers seek new growth, each will analyze and leverage their unique competitive advantages to position themselves for either organic or acquisitive growth."
To prosper in this new environment, insurers need to address a variety of areas says Stephan Christiansen, director of research at Conning.
"Individual annuity insurers have responded to a slowing rate of growth over the past fifteen years with product development heavily focused on variable annuity benefits," Christiansen said. "Yet as insurers look to the future, it is unlikely that enhancing benefits alone will provide the support it has in recent years. Our analysis points to the need for insurers to refine their individual success factors, including superior product development, distribution effectiveness and new market penetration."
