As previously reported and discussed, even though sales numbers for the annuity market struggled in 2017 they did look better in the fourth quarter for fixed products. Much of the reason for this late uptick in the year was attributed to the special transition period to 2019 of a good part of the DOL fiduciary rules, exemptions, and amendments. This could change and possibly put best-interest, commissions, and other topics back into the light as there seems to be a shift from the DOL to the SEC and NAIC according to a recent article on InsuranceNewsNet. This could certainly create some concern for annuity carriers as they continue to look for ways to capture customer needs, grow market share, and ultimately grow the overall market.
Carriers and new entrants have made some significant changes or improvements in product offerings with the focus to grow sales. In particular, these carriers and new entrants have created new direct to consumer products, flexible variable annuity products, “personal pension” focused products, and better fixed products to bring needed performance, guarantees, and customer experience amiable to today’s consumers. These changes have stretched many IT organizations to deliver solutions in the timeframe required by the business, and certainly many of those IT teams are having to modify and work around legacy platforms in the process. Many CIOs have updated or are in the process of updating their IT strategy documents to ensure they have the flexibility and capacity to meet these significant business demands. Further movement in regulations and resulting product requirements will only continue to up the demand and requirement for speed and agility. CIOs who need all the time they can get to react and adjust can no longer wait for normal project management processes to occur but rather they need to engage directly, understand all market conditions, and work with organizational peers to determine direction and solutions.
The need for CIOs to move away from legacy platforms, services, and processes is expanding as the need for change continues to grow. By combining an efficient operation model with products that reach and meet the needs of changing distribution, products, regulatory entities, and customers, carriers will see a much needed improvement in market share and overall market expansion for annuity products.
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