4 Life Insurance and Annuity Trends and Predictions for 2023

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As 2022 comes to a close, we can reflect on an eventful year. Notably, annuity demand rose—and didn’t stop rising—as investors looked for products with guaranteed returns amid surging inflation. Life insurers likewise had tough decisions to make in response to rising interest rates. How would they tweak their products to be the most profitable while ensuring they did not lose existing customers?

In short, 2022 was never boring. And next year will likely be no different. As we at Hexure look ahead to 2023, a few emerging trends stand out.

1. Employee Recruitment Efforts

LIMRA reports that 50% of the current insurance workforce will retire in the next 15 years. That’s 400,000 open positions. This while unemployment for insurance-related jobs is 1.7%. What we are left with is a big hole to fill—and our industry is fresh out of shovels.

To add to the tension, employee churn is at an all-time high. In coming months and years, your organization will face the challenge of recruiting young talent while taking steps to reduce turnover.

We have seen carriers and distribution firms focus on improving their technology solutions to help attract a younger generation of workers. Younger individuals have been using technology their whole lives. They expect to see it in their workplace, helping them do their jobs as efficiently as possible. When you position your firm as tech-forward and offer the latest technologies, recruitment conversations tend to go well. Your firm sells itself.

We expect to see even more firms adopting digital solutions in the coming year. Sales platforms that reduce or eliminate NIGOs, for example, get rid of the frustrating and repetitive work that employees face when correcting persistent NIGOs. Give your employees the tools to eliminate tedious work and be the most effective at their jobs, and your firm will be in position to manage upcoming workforce challenges.

2. Post-Pandemic Practices

It turns out the way distributors do business after the pandemic looks a lot like the way they did business during it. At the height of COVID-19 concerns, digital processes went from nice-to-have to necessity. Advisors took on practices like virtual meetings and electronic workflows, including e-applications, e-signature and e-delivery.

Though pandemic concerns have started to die down, these digital processes are showing signs of stickiness. Clients appreciated the convenience and flexibility of virtual meetings. Many advisors learned to love the productivity benefits of wizard-based e-applications, electronic document delivery and fewer in-person meetings.

3. Connectivity

In our conversations with influential carriers and distribution firms, one thing has become clear: they are tired of disparate technology solutions. With so many solutions needed to handle different channels and processes, productivity begins to suffer, and expenses start piling up. More and more, we hear of frustrations with disconnected workflows.

The industry is calling for connectivity in insurtech and wealthtech solutions. The best digital sales solutions manage all the sales activity—starting with needs analysis all the way through post-sale support—on a single platform. They are built from the ground up with a single code base. This is one way to minimize the headaches of managing multiple integrations. It also ensures the user experience is seamless and free of speed bumps.

4. Automated and Accelerated Underwriting

Another trend we see making its way into the mainstream is automated and accelerated underwriting. Modern life insurance buyers accustomed to online shopping and two-day shipping expect a streamlined sales experience. Our industry needed to catch up. Automated and accelerated underwriting is one way we are getting closer to offering the convenience consumers demand.

Most insurers today offer some form of automated and accelerated underwriting. Some carriers have taken this to the next level by adding the automated decision up front, inside the sale. In fact, we have spoken with many carriers with plans to do just that in 2023.

By using available data such as prescription profiles, MVR and EHR data, carriers can reach an automated decision on 80% of cases. By integrating their automated underwriting system with their e-application software, carriers can often offer a decision in minutes. Which means a decision can be provided while the advisor is still sitting with the client.

This is a stark improvement from the weeks or months clients would historically have to wait for a decision. It is an exciting prospect for carriers and distributors alike, and a trend we expect to see more of.

Ready for 2023

Much is unknown about the year ahead, but a few things we do know. Technology continues to improve. And carriers and distributors continue to find creative ways to improve efficiency and solve challenges. Which means 2023, like many years before it in our industry, should be characterized by innovation and solution-oriented progress.

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