Phoenix Companies Survey: Carrier Tech Must Meet Shifting Annuity Demand

Shifting demands on the part of annuity professionals and their customers require responsive changes in carrier technology supporting both distribution channels and back-end systems.

Annuity distributors crave additional benefits but they chafe at increasingly complex product designs, according to a recent survey conducted by The Phoenix Companies, at the National Association for Fixed Annuities’ 2013 NAFA IMO Summit in Aspen, Colo., held Oct. 16-18. Better carrier illustration tools could help to reconcile these antagonistic demands, suggests Mark Fitzgerald, national sales manager for Saybrus Partners, Phoenix’s distribution subsidiary.

“For both carriers and advisors, finding the right balance between products that can address multiple needs and products that are less complex will continue to be a challenge,” comments Fitzgerald. “For carriers, that might mean developing better illustration tools. For IMOs and agents, it points to the critical role education and advice play in navigating the breadth and complexity of solutions found in the retirement marketplace.”

The survey contrasted annuity professionals’ opinions about the most desirable annuity features over the past 12 months and during the coming year. Nearly 70 percent identified guaranteed lifetime withdrawal benefits (GLWB) as a “must have” feature for annuities sales during the preceding year, with no other options rising above 5 percent. Over the coming year, however,

Rob McIsaac, Novarica.

Rob McIsaac, Novarica.

GLWB dropped to 37 percent, as other benefits have become desirable, including “choice of combination benefits” (25%), “alternate index strategies or indices” (11%), and “principal preservation income riders” (10%).

But while respondents showed interest in products that offer “a choice of combination benefits,” 44 percent expressed a preference for manufacturers to develop “less complex product designs” during the next 12 months. Eighteen percent of respondents selected both “better illustration tools” and “improved mobile application tools” as an area of focus for annuity manufacturers in the coming year. Thirteen percent selected “multi-product platform solutions.”

These shifting demands on the part of annuity professionals – and ultimately their customers – require responsive changes in carrier technology supporting both distribution channels and back-end systems, according to Tom Benton, principal, Novarica. “Changes in the tech vendor space, such as the recent merger of iPipeline and Aplifi, along with increased carrier interest in modern policy administration systems, could mean that carriers dependent on development for new product lines will have longer lead times to launch products,” says Benton. “Carriers may also see delays if their annuity administration systems do not support a flexible product development process.”

“The Phoenix Companies survey points out the pressures on carrier IT teams and vendors to provide changes for products customers want, but to do so with a response closer to ‘Internet time’ – much faster than they have been able to provide in the past,” Benton adds.

Providing an increasing range of products and features has been critical to carriers’ competitive position for some time, with other riders having dominated demand in recent years, according to Rob McIsaac, principal, Novarica. “This highlights the need for carriers to have more flexible and responsive systems,” he says.

The current shift in demand may help fuel carriers’ review of their current capabilities and, in turn, stimulate interest in policy administration platforms, McIsaac notes. “I suspect this could also create a need for carriers to think more about how to segment new business efforts from legacy products and closed books of business,” he adds. “It’s hard to climb a mountain with an elephant on your back.”

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at or (503) 936-2803.

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