The financial crisis stung annuities carriers more than most in the insurance industry. However, as the meltdown recedes, the industry is still well positioned to capitalize on broad shifts in demographics and consumer demand, a new report from New York-based Novarica finds.
"The annuity marketplace is changing rapidly, between its reinvention following the market crash of 2008 and consumers' growing interest in private alternatives to social safety networks like Social Security,” notes Don Desiderato, a principal in Novarica's insurance practice and lead author of the study.
To adapt to this new market, Desiderato says insurers will have to focus their technology investment on several fronts.
In light of the crisis, one obvious area for outlay is in actuarial systems. Investment here will enable carriers to hedge more frequently as well as improve pricing, reserving, capital management and statutory reporting.
Another area for investment, the report says, will be in technologies that enable straight-through processing (STP). In addition to reducing the number of touch points required by the back office, STP will help carriers builds stronger relationships with distributors.
Improving speed-to-market also will become a top investment priority, Desiderato adds. With the marketplace rapidly changing, operational flexibility will be imperative, as carriers will need to quickly deploy new products to serve market niches.
"Annuities carriers are defining themselves less by their wide range of benefits and more by their technological advances," Desiderato says.