Agent FIA Distribution Falls Below 60 Percent Mark

Independent agents’ market share of fixed indexed annuity (FIA) sales fell below 60 percent in each of the four quarters in 2017. This marks the first time independent agents' share of the FIA market fell below the 60 percent level for a calendar year since FIAs were created more than 20 years ago, new data indicate.

“Sales from independent agents aren’t necessarily declining, but sales through banks and broker/dealers are growing,” said Sheryl J. Moore, president and CEO of Moore Market Intelligence and Wink Inc., publisher of Wink’s Sales & Market Report.

FIA distribution among banks and broker/dealers has reached all-time highs, Wink data show.

Independent agent market share of FIA sales in 2017 was 57 percent in the first quarter, 58 percent in the second quarter, 59 percent in the third quarter and 56 percent in the fourth quarter.

Despite the drop in market share, over the past four years, independent agents still sell between $6 billion and $10 billion worth of FIAs every quarter.

The fact that independent agents are still selling FIAs at a healthy clip while at the same time ceding market share to other channels is possible because the FIA sales pie as a whole continues to grow, Moore said.

Indexed annuity sales rose 10 percent in 2016 to a record $58 billion over 2015.

Indexed annuity sales fell 7 percent in 2017 to $54 billion compared to 2016, Wink reported late Wednesday.

The Five-Year Trend

In the third quarter of last year, independent insurance agent market share of FIA distribution was 59 percent, down from an 88 percent market share in the third quarter of 2012.

Bank distribution was at 17 percent in the third quarter of 2017, more than twice the 7.1 percent market share it had in the third quarter of 2012.

Broker/dealer distribution was 16 percent in the third quarter of 2017, way up from the 1.2 percent market share broker/dealers held in the third quarter of 2012.

Career insurance agents commanded a 6 percent share in the third quarter of 2017, little changed from the 4 percent share the channel retained in the third quarter of 2012.

FIA sales were $34 billion in 2012.

Increases in market share of banks and broker/dealers have taken place against the backdrop of new regulation placed on independent insurance agents and independent marketing organizations.

A raft of new products launched by insurers designed to be sold through banks and brokers have also help boost sales through those channels.

In some case, insurers have set up subsidiaries to sell products specifically into the bank and broker/dealer channels.

In one example, American Equity, a big seller of FIAs, launched Eagle Life in 2008 to sell annuities to banks and broker/dealers.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].