Progress is a relative thing. Those
in the midst of activity might
think they are moving at a quick
pace. Others might yawn and ask.
“What’s taking you so long?”
In its recent Impact Note, Aite
Group identifies 10 trends that will
shape the U.S. health, life and annuity,
insurance segments in 2014. Todd
Eyler, research director for Aite on
the life side and one of the authors,
discussed the hits and misses on the
technology side and the progress, or
lack of, in the industry as a whole.
When Eyler returned to consulting after being away for six
years, he was disappointed to find not much has changed since
he left Gartner in 2008. He points out that on the annuity side,
straight-through processing has been placed on the back shelf.
More distressing, on the life side there has been little renovation of the core systems, according to Eyler.
“The financial crisis has in many ways continued for life
companies because of low interest rates,” he says. “Margins
remain compressed. There’s a lot to do with products and
distribution that requires investment—and not just with tech-
nology. As interest rates normalize and the economy perks up
a bit we may see some progress.”
Eyler recently returned from a voluntary benefits conference
and discovered some interesting activity and he expects more
progress over the next couple of years. He foresees changes
in enrollment with websites and other ways to make it more
efficient for advisors to help customers with needs analysis as
well as make it more efficient to do enrollment and servicing
without a lot of paperwork.
“[Advisors] understand the products and needs of the
employees,” he says. “They need an efficient way to present that.
That can be a growth area for the industry.”
Another area of focus is customer centricity and Eyler
maintains analytics is the key issue for carriers to help focus on
effectively segmenting the existing customer base or prospects
by using different metrics to predict what their needs are to
make it as efficient as possible for an advisor.
“[Carriers] need to make it more efficient to market to
customers and when an advisor comes in to be able to figure
out what they need, and minimize the amount of data entry,” he
says. “That’s critical.”
Eyler discovered a Kentucky insurer named Jefferson Na-
tional that has developed a value proposition for selling variable
annuity products to affluent customers.
“They are one of the few companies that found a way to
sell through registered investment advisors,” he says. “RIAs are
unique in that they have a fiduciary standard. They are obligat-
ed to completely act in the best interest of their clients with full
disclosure around everything.”
With a typical FINRA license, Eyler points out financial
advisors don’t have as high a bar. The RIAs don’t sell on com-
mission, so Jefferson National, which Eyler adds is leanly run,
“It’s a natural candidate to apply BPM techniques just as
insurers did on the underwriting side,” says Eyler. ITA
Slow Recovery Delays Progress
Lower interest rates following the financial collapse of 2008 still inhibit many
life and annuity companies looking for a technology breakthrough.