Despite the recent Department of Labor legislation bringing annuities into the limelight, more needs to be done in the industry to make these products relevant in the minds of Americans. Forbes magazine’s Matt Carey and Olivia Mitchell discussed the changes necessary in the annuity industry in the article “DOL Rule Aside, Annuity Market Will Have To Change to Achieve Relevance.” Annuities should be top of mind as the population of Baby Boomers ages and fewer Americans have traditional company pensions. Annuity products are the private equivalent of Social Security and pensions and one of the only ways to bridge the income gap in retirement.
Annuities make sense for the aging U.S. population, but LIMRA says that the annuity market is 10% smaller now than it was 5 years ago. The article’s authors said that the biggest reasons that annuities aren’t filling the retirement income void like they logically should is that they are more “antiquated, opaque and expensive” than they should be. People are frightened to buy annuities because they have a reputation for being complex, and sometimes they are. There is one solution that could really help the annuity industry become and stay more relevant and it’s pretty simple: technology. The technology already exists and it will not replace the humans working in the industry so it’s really a no brainer.
There are three ways that technology can help the annuity industry. First of all, annuity agents and advisors don’t have the time to educate everyone about the many details of annuities. But it’s important that annuities get into the right hands to help Americans avoid outliving their retirement savings. Technology can not only help educate more consumers about annuities, the information can be better tailored through YouTube, SlideShare and other learning modules. Secondly, technology can make it much simpler to compare annuities from different providers. It can be time consuming calling providers to get quotes for the detailed annuity that you are interested in, but an online platform to compare pricing and options would make it easier for everyone to get multiple annuity quotes. Most other insurance industries already offer this kind of technology, so the annuity industry would do well with this innovation. Third of all, many people have called for more transparency in the annuity industry. Technology will help ensure that DOL rules are followed and consumers are only being recommended products that are in their best interest and consumers will know exactly what they are getting.
It is really in everyone’s best interest to have these technological advances in the annuity industry. Insurance companies will be able to run more efficiently and reach a broader range of consumers. Consumers benefit in every way, including more education, a better way to compare products and improved suitability. Technology also helps agents and advisors find new clients and add more value to their business. In this day and age, technology is our friend and really the only way to remain relevant going into the future.
Written by Rachel Summit
