Variable Annuity Sales In U.K. Post Record
By Cyril Tuohy
InsuranceNewsNet
U.K. variable annuity sales rose to a record £1.42 billion ($2.30 billion) in premium in 2012, an increase of 30 percent over 2011, according to research by Towers Watson. Quarterly sales also posted a record, surpassing £400 million ($648 million) in premium for the first time in the last quarter of 2012, and the total number of policies rose to 16,200, up 19 percent over 2011, the company also said.
“It is very encouraging that variable annuity sales grew to record levels in 2012, in both premium and policy number terms,” said Mike Williams, a leader in the Insurance Management Consultancy team at Towers Watson, in a statement. Higher sales and the march toward more market share among consumers, however, will require “establishing the virtues” of variable annuities, he said.
Variable annuities sold in 2012 still represent less than 4 percent of the total number of “at-retirement market sales” in the U.K, according to Towers Watson.
Consumers who benefit from pension savings and who are approaching or already at retirement are in need of guidance and advice to help deploy their assets, according to Towers Watson. The industry is likely to place more emphasis on alternatives to conventional annuities to deliver retirement income as U.K. regulators conduct a review of the industry.
Alternatives include enhanced and fixed-term annuities, as well as products with “evolving designs,” Williams said.
“Evolving designs to provide compelling propositions, as well as communicating that there are also risks associated with locking into prevailing market conditions through a one-off annuity purchase at retirement, will be the keys to future market growth,” Williams said.
Variable annuity sales premium in the U.K. reached as high as £1.15 billion ($1.86 billion) in 2008 before dropping to £947.5 ($1.53 billion) two years later.
A white paper published by McKinsey & Co. in 2010 noted that however variable annuities evolve, selling the products will require “an extensive sales activation program,” because of their relative complexity.
Cyril Tuohy is a writer living in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at [email protected].
© Entire contents copyright 2013 by InsuranceNewsNet.com, Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.
Wells Fargo: HSA Accounts Hit Record Numbers
The Annuity Disconnect Is Here—Now What?
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News