Simplify, Simplify, TowerGroup Advises VA Issuers
April 19, 2008
Annuity issuers must reduce product complexity, streamline the sales process, and ensure the suitability of sales if they hope to win consumer trust and capture more retirement assets, according to new research by TowerGroup.
“It is imperative that insurers create an environment where customers and advisors feel secure and comfortable with annuities in order to attain real market growth,” said Rachel Alt-Simmons, a senior analyst in TowerGroup’s Insurance practice and author of the research.
“Building customer understanding and trust can only be achieved by making both annuity products and business processes more transparent,” she said, noting that the variable annuity industry over-relies on exchanges for its sales. The TowerGroup estimates retirement assets in the US at $18.5 trillion in 2007.
Insurers should create a client bill of rights; change the compensation structure around annuity products; more closely monitor sales practices; enhance disclosures; and make transactions easier, the consultants recommended.
Two new TowerGroup reports, titled “Growing the Variable Annuity Market: Global Challenges” and “Life Insurers, Act Now! Demographics Are Rocking the Boat,” are now available for purchase. The TowerGroup is a unit of MasterCard Worldwide and has offices in Needham, MA, and London.
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