Annuity market undergoing many changes

Many companies are examining the ways in which they market and sell annuities these days because of decreasing consumer interest, in part due to low interest rates. It is for this reason that these companies may want to take a number of things into consideration when planning their next steps.

Some annuity products have grown unpopular among some issuers. This is particularly true of the more volatile variable annuities that used to be more popular, according to a report from Life Health Pro. Many are reining in their issuing of these products while others are simply scaling back customer investment options. Some are considering buying out these products from owners as a means of reducing risk.

However, certain types of annuities that offer variable rate features  while also offering a mix of more stable fixed options – known as hybrid products – are increasing in popularity among investors and the carriers that issue them, the report said. This may be because the fixed aspects of these products make them a little safer for companies to issue. It is important to note that the rollout of hybrid products has been somewhat slow given their relative newness in the market.

Since some consumers may be turning away from the annuities they might have been accustomed to previously, it is incumbent upon issuers to target new customers. These hybrid products may be a means of regrowing this potentially flagging aspect of their businesses.

Of course, it's also important for issuers to keep in mind that the Financial Industry Regulatory Authority (FINRA) recently introduced new suitability models to which companies have been required to adhere for nearly a year, the report said. That might mean they need to be vigilant about the kinds of record keeping and training they undertake as a means of avoiding any potential regulatory obstacles that might occur in normal course of business.

Annuity issuers may also have to become more creative in how they market these products to consumers. This could occur by highlighting the benefits of hybrid products, for example, or coming up with creative ways in which they might be able to make these products more appealing in general as a means of generating new business.