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2015 Life Insurance and Annuities Industry Outlook
Taking the longer-term view
In many ways, the life insurance and annuit...
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2015 Life Insurance and Annuities Industry Outlook: Taking the longer-term view

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In many ways, the life insurance and annuities industry is on more solid footing entering 2015 than it has been in a long time. As the US economic recovery gains momentum, unemployment is falling and consumer confidence is on the rise, creating a more conducive environment for carriers to market their products and services. Discover the bigger picture issues likely to have a significant effect on life and annuity insurer operations in 2015 and beyond.

Read the full report here: http://www2.deloitte.com/us/en/pages/financial-services/articles/2015-life-insurance-and-annuity-outlook.html

Publié dans : Économie & finance
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2015 Life Insurance and Annuities Industry Outlook: Taking the longer-term view

  1. 1. 2015 Life Insurance and Annuities Industry Outlook Taking the longer-term view In many ways, the life insurance and annuities industry is on more solid footing entering 2015 than it has been in a long time. As the US economic recovery gains momentum, unemployment is falling and consumer confidence is on the rise, creating a more conducive environment for carriers to market their products and services. Discover the bigger picture issues likely to have a significant effect on life and annuity insurer operations in 2015 and beyond. Transforming for growth The L&A industry is overdue for a reinvention, given historic lows in individual life insurance ownership and ongoing misunderstandings about annuities. Carriers need to rethink how they interact with consumers to achieve more consistent growth. They should consider: • More innovative business models, policy designs, and marketing approaches • Developing more precision around who the consumer is and specificity with regards to their needs • Fostering a more educated insurance consumer market, facilitating a shift from products that have to be aggressively sold to those that are actively sought out by new buyers Bottom line: Rebrand the business to emphasize insurers not just as product sellers, but as a long-term partner on which consumers can count to help them meet evolving financial needs over time. Addressing longevity risks Longer life spans and fewer defined benefit plans will prompt more consumers to seek out new lifetime income options, as well as solutions for related problems such as long-term care financing. Carriers should consider the following: • Demographic and economic trends could make longevity protection the industry’s biggest growth opportunity • The risk’s long-tail and investment market uncertainty could make longevity the industry’s biggest challenge as well • Carriers will need to carefully consider how they design, model, and distribute longevity products to meet economic targets and reduce downside risk over the long term Bottom line: Longevity insurers should stay engaged with the customer to manage expectations and product features as mortality trends play out, rather than just treat longevity policies as a one-time product sale and hope their assumptions turn out to be profitable. Achieving information fluency Data is the life blood of LA insurance, yet many carriers are suffering from a hardening of the arteries. The full value of data is rarely optimized by insurers because information often remains isolated in siloed, legacy tech systems and operating structures. To make data more fluent throughout their organization, insurers may want to consider: • Making information more easily accessible and translatable across the enterprise • Strategically transforming the way they amass, store, define, govern, analyze, and disseminate information • Turning proprietary information into a strategic asset and competitive advantage. Bottom line: While many carriers may be information rich, all but a few will be knowledge poor until they revamp how they process new types of information from emerging sources, while better capitalizing on the wealth of data already in their systems. Overcoming regulatory challenges Insurers can rely on regulatory uncertainty as an ongoing way of life rather than a passing conundrum as multiple overseers — state, federal, and international — sort out new standards and rules. LA insurers will want to look out for: • The potential for new group capital requirements • The first Own Risk and Solvency Assessment filing • The fate of life insurer-owned captives in the face of increasing regulatory scrutiny Bottom line: It may be time for insurers to consider compliance transformation, to facilitate the ongoing process of planning for change, and create value from mandatory regulatory exercises. Upgrading capital management LA insurers will need better frameworks and models to meet the increasing demands of stakeholders for more robust stress testing and scenario planning, as well as to support growth needs. Carriers may want to think about: • How to maintain, let alone improve ROE at a time of persistently low interest rates • Establishing a more robust internal risk-adjusted capital framework that incorporates a multitude of approaches • How advancements in modeling technology have made projection of capital requirements and understanding of the intersection of different capital frameworks more manageable and efficient Bottom line: A growing number of insurers will look to follow the lead of other financial institutions by implementing an internal risk-adjusted capital adequacy framework that accounts for economic as well as regulatory factors under one integrated system. As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2015 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

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