Life insurance companies are in a bit of a pickle.

Premiums fell 12% last year, but expenses only dropped 2%, according to a report by Conning Research and Consulting in Hartford, Conn.

It’s a sign of the times, said Terence Martin, an analyst at Conning who wrote the report.

“Customers weren’t buying nearly so much life insurance,” he said. “They kept their wallets shut because of the recession.”

It isn’t just consumer frugality keeping individuals from buying new life policies. Martin said that the insurance industry gets a lot of its new premiums from people selling old policies and buying new ones with better features.

“No new features is part of it,” he said. Most new features include increased risk and higher costs, he said.

While there isn’t much insurers can do to gather premiums until the market picks up, they can do more to lower expenses — just not if it impairs their ability to grow with the market.

Martin said that this may be the best time to introduce more efficient technology and systems. While it may sound counterintuitive to spend more on technology in lean times, insurance companies are also at their lowest staffing levels, so there are fewer people to train.

By taking this approach, existing employees will already be up to speed on improved platforms when insurers are ready to hire, Martin said.