Best’s Special Report: Life/Annuity Insurers Adjusting Distribution Strategies to Reach Consumers, Survey Finds
February 15, 2022 by AM Best
OLDWICK – FEBRUARY 14, 2022 08:28 AM (EST)
Results from an AM Best survey of life/annuity insurance companies show that carriers are actively implementing improvements in distribution techniques given changing customer expectations and an evolving distribution landscape exacerbated by the COVID-19 pandemic.
Highlights of the survey of 78 U.S. life/annuity companies rated by AM Best are detailed in the Best’s Special Report, titled, “Life/Annuity Insurers Adjust Distribution Strategies to Reach Consumers.” More than 80% of survey respondents said they believe the middle market, which has been an elusive market for life insurers, is extremely or very important to future growth, compared with 70% when asked the same question in a similar 2018 AM Best survey.
“Despite these results, and a renewed focus on the role life insurance plays in protection and planning amid the pandemic, creeping inflation could increase skepticism of a potential customer’s ability to afford life and annuity products, especially in the middle market,” said Jason Hopper, associate director, industry research and analytics, AM Best.
Other survey highlights include:
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- Nearly 60% believe that shortening the application, underwriting and policy issuance process is the best way to penetrate the middle market effectively.
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- As the pandemic reduced in-person interaction and created internal process and communication hurdles, managing general agents (MGA) have attained more authority.
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- A majority of surveyed companies are moderately satisfied with innovation efforts related to distribution, while 10% are very satisfied and 4% are not satisfied.
Top-line growth has challenged the life/annuity segment for a number of years, the report states, particularly amid the pandemic, as punctuated by declines in 2020 direct premiums written across all lines except group annuities. Digitalization and technological investments required to improve the customer experience are among the biggest challenges to modernizing distribution and growing sales, according to the survey results; however, new customer approaches are being tested for growth opportunities.
“While life/annuity insurers faced unexpected budget expenditures during the pandemic, many still found ways to invest in their distribution capabilities to keep up with the changing environment,” said Michael Adams, associate director, AM Best. “More attention placed on reassessing and refining overall distribution strategies is reflected in a significant majority of respondents saying that they are at least midway to reaching their goals and are moderately or very satisfied with innovation efforts related to distribution.”
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=317447 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.
