Over the past several years, life insurance issuers have likely learned the hard way that the recovery hasn't been uniform, and many companies may have continued to struggle despite broader economic improvement. However, it seems that this could turn around in the near future, as the U.S. in particular could drive sales forward considerably going forward.
The American life insurance market seems to have taken a pretty substantial hit over the course of 2013, with policy premiums dropping 7.7 percent - and leading to just a 0.7 percent increase in all developed economies worldwide, according to the latest data from Swiss Re Zurich. That global slowing is down from the 2.3 percent growth seen in 2012. However, Kurt Karl, the firm's chief economist, noted that this sluggish U.S. market - where premiums totaled $533 billion of the global $2.2 trillion - is actually more or less in line with the nation's entire economic recovery, which has been sluggish. However, good signs appear to be on the horizon.
Specifically, housing data and employment figures continue to improve, and analysts in those fields tend to agree this is not an aberration, the report said. This may lead more Americans to once again consider taking on these policies,which many eschewed during the lean years toward the end of the last decade, when other financial priorities might have seemed more pressing.
What else might signal strength ahead?
Further, another hindrance to the life insurance industry overall in the last few years has been the fact that interest rates have remained well below historical norms, the report said. But over the second half of 2013 in particular, these started to creep upward, and that trend is likely to continue for the remainder of 2014, and all the way through the end of 2017. While this won't be of immediate help to most life insurance companies, it certainly signals some better days ahead.
Sales growth has obviously been slow since 2008 or so, but all this data seems to confirm that if companies that have already gutted out some tough times can continue to do so for a little while longer, the reward within the next few years could be substantial. The recovering economy is likely to put millions of Americans in improved financial positions, and with so many millennials getting to the age at which they may start families, there could be another major boost in the market before the end of the decade.