In 2023, the U.S. Federal Reserve raised its benchmark interest rate to a 22-year high, enhancing the appeal of annuities by boosting returns and income. Despite the stock market’s recovery from a challenging 2022, investors remain uneasy, grappling with uncertainties like inflation and the economy. This unease has driven a shift towards safety, with fixed-rate deferred annuities emerging as a popular choice.
In 2022, sales reached a record $313 billion, with LIMRA projecting a further surge to over $350 billion by the end of 2023, driven mainly by robust fixed annuity sales. The rise in fixed annuity popularity also responds to increased demand for investment protection amid market volatility. LIMRA anticipates this demand for protection products to persist in the coming years.
While this presents a lucrative opportunity for annuity companies, the true opportunity lies in retaining existing clients and introducing new products to their current portfolio, all while optimizing distribution channels. Harnessing the power of artificial intelligence (AI) is key to swiftly comprehending and analyzing their book of business.
The first challenge revolves around identifying clients on the verge of surrender and understanding the reasons behind it. Is it a seasonal trend resulting from ineffective marketing strategies or a need for better education on the product’s benefits? It involves guiding clients toward a more prosperous financial future by addressing their concerns and providing the proper remedy seamlessly. Despite the agent’s role being crucial in this process, it’s imperative to acknowledge that agents may not always be performing optimally.
To gauge agent effectiveness, AI predictive analytics can be employed to discern, in real-time, which agents are generating customers with a high lifetime value (LTV) and which ones might be negatively impacting the company’s bottom line. This analysis helps identify patterns and areas for improvement, ensuring that the company’s resources are allocated efficiently and that agents play a proactive role in customer retention and satisfaction.