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The Insurance Industry in 2004

Source: www.towersperrin.com/tillinghast/press/2003
(With adaptations)

Annuity Sales to Increase: Tillinghast experts expect to see roughly a 10% increase in annuity gross sales in 2004, reflecting favorable demographics for the product, an improving economy with a buoyant stock market, and the continuing appeal of attractive guarantees in the variable annuity market. “The impact of the 2003 tax reform legislation has been limited to date, although the success of President Bush’s savings account proposal could negatively impact sales in the second half of 2004,” says Eric Speer, Managing Principal for the Americas.

Life Sales Still Under Pressure: Under current conditions, the outlook for life insurance sales is not as positive, and sales in 2004 will be lucky to grow by a few points over 2003. “It is difficult to see how the life market can grow substantially without a rebound in variable life sales, which have been in a big slump,” says Mr. Speer.

“The whole insurance industry is ripe for realignment, and most companies won’t have the option of sitting on the sidelines,” says Ms. Guinn. “A few major players will aggressively build scale and invest in brand strength, while others will be placing more focused bets in segments where they can create competitive advantage.”