Life Insurance Execs Expect Modest Growth in 2016, Report Says
January 19, 2016 by Frank Klimko, Washington correspondent, BestWeek: frank.klimko@ambest.com
ATLANTA – Life insurance executives anticipate a year of modest growth in 2016 as companies look for resurgence despite low interest rates and a tepid economic recovery, according to a survey by LOMA, the international trade association for insurance and financial services.
“The life industry is in transitional recovery mode. We’re still suffering from the hangover of the financial crisis and what now looks like long-term low interest rates,” Neil Sprackling, president of Swiss Re Life & Health America, said in the survey. “So, do I predict rocketing sales and significantly higher profits in 2016? No, however, my optimistic nature tells me that we’ve turned a corner.”
Sprackling was one of 14 senior executives from life insurers and consulting firms that took part in the LOMA 2016 Life Insurance Industry Forecast. The survey attempted to better define the contours of the life insurance industry in the coming year.
Survey participants expect moderate to low growth in both revenues and profits this year.
Various products will continue to grow in popularity, the report said. Industry executives expect growth for some products — especially indexed annuities and indexed life insurance — as well as for whole life insurance, especially at large mutual companies with career agency forces.
“I expect sales for life insurance products to marginally grow, led by equity-indexed universal life products and whole life, which have seen a resurgence over the last few years in the low interest rate environment,” said Michael DeKoning, president and chief executive officer at Munich American Reassurance Co. “I expect term life and traditional UL to be pretty flat. Annuities sales will depend on the outcome of the discussions on the fiduciary rule.”
The executives told LOMA technology will continue to have a profound impact and digitization may alter how products are developed. Predictive analytics, automated underwriting, and smart phones are important, but emerging technologies — such as wearables — may be game changers, the report said.
“We believe that with technology (a strong automated underwriting platform), a strong rules engine and the use of new sources of data using predictive analytics, there will be a fundamental change to the underwriting and new business issue paradigm,” DeKoning said. “What currently takes 30-40 days could be done in three-to-four hours.”
Swiss Re Life & Health America Inc. and Munich American Reassurance Company both Best’s Financial Strength Ratings of A+ (Superior).
