The finance industry is undergoing a significant amount of technological development and companies specializing in investments and annuities are getting a lot of the attention. From the underwriting process to compliance, new technology is stepping in and making processes easier and more efficient. But what do customers need to know?
Keep an Eye on These Trends
The importance of the next three to five years in the investment and annuities industry cannot be overstated. There are approximately 10,000 baby boomers retiring every single day, which means there’s increased pressure on every financial company that holds retirement assets to deliver without compromising performance for the next generation.
Take the annuities industry as an example. With roughly 70,000 people entering retirement every week, there’s a significant pool of people expecting annuity payments to begin soon, or at least looking into their options.
But there is a positive stemming from all of this stress on companies in the investment and annuities industry. Many are turning towards technology and innovation to help them remain competitive and capture more of this growing market. As a result, we’re seeing some tech trends unfold.
1. Changes in Underwriting
Principal Financial Group, which manages roughly $287.4 billion in assets, is currently working on one of the life insurance industry’s biggest points of friction: lengthy and complicated underwriting processes. They believe they’ve developed a system that allows them to reduce the underwriting process to within just 48 hours without the need for physical examinations and lab work.
“The company’s Principal Accelerated Underwriting program uses a proprietary algorithm in combination with business process management technology to apply automated underwriting and process new business largely without human intervention,” according to VP Greg Linde.
In the future, Linde and his partners believe that roughly 40-45 percent of The Principal’s business can be written without human intervention.
2. Increased Focus on Self-Service
When it comes to the annuities market, one of the major focuses is an increased emphasis on self-service capabilities. Companies are developing robust “customer portals” that they hope will give customers a sense of control and reduce the frustrations that often arise out of a lack of information.
“Customer portals have advanced to include online payment, policy changes, allocation and transfer of funds, withdrawals and contract loans,” says expert Kristen Beckman. “Priorities within customer portals will center on increasing self-service capabilities for advanced inquiries and account changes, and preventing alienation of independent distribution channels and agents concerned about disintermediation.”
3. More Sophisticated Actuarial Software
For such a sophisticated industry, it may come as a surprise to many that Excel has historically been the preferred product for actuaries. In fact, one study says that 98 percent of actuaries prefer to use Excel, while 95 percent use it daily. Despite this affinity for such a basic platform, 100 percent of spreadsheets reviewed in the study had errors. Most of these errors were the result of copy and paste issues or accidentally selecting the wrong cell. Then there’s the limitation of working within the constraints of 256 columns and 65,636 rows.
The good news is that there has been an increased emphasis on the sophistication of actuarial software that’s more intuitive, user-friendly, and accurate. One can only assume that this will lead to stronger results and better management of data.
Changes on the Way
The connection between the investment and annuities industry and evolving technology is growing. In response to an aging population that’s looking for opportunities to establish financial security, we’re seeing significant changes – most of which are good. Keep an eye on this industry over the next three to five years, because big things are coming down the pipeline.