Digital-friendly life, annuity providers lead in satisfaction study

Life insurance and annuity providers using digital technology to interact with customers are receiving higher satisfaction scores, according to the latest reports from J.D. Power.

Among both products, customers using digital channels to engage with providers reported increased levels of satisfaction, said Breanne Armstrong, director of insurance intelligence at J.D. Power. Digital tools allow for more frequent interaction with the products and make consumers more likely to incorporate life insurance and annuities into their overall financial plans, she explained.

“What we found is people under the age of 55 will go online and watch videos with information about investing and about their products and other tools that are available to them that will help with planning,” Armstrong told InsuranceNewsNet. “It’s almost what you see with a wealth management company.”

In life insurance, the number of customers buying life insurance policies via insurer websites has doubled over the past five years, Armstrong added. More than six-in-10 life insurance customers are using digital channels to interact with insurance providers, and overall satisfaction of these customers is 79 points higher than those who do not interact digitally.

This has helped boost the rate of customers purchasing life insurance for financial reasons – as opposed to death planning – up to 39% in 2023 from 30% last year.

Life insurance as investment tool

“In the past, death benefits were the main driver: protecting your family after you pass away or leaving something for your family,” she said. That is shifting as clients are learning more about the products online. “They are thinking about life insurance more as an investment vehicle; how they can tap into the policy in retirement or get some type of tax benefit to help the individual while they are still living.”

Annuities providers are further behind in the roll out of technology, but digital onboarding in particular is paying dividends for increasing customer satisfaction. Nearly three-fourths of annuity customers now regularly interact with their provider via a website, email, chat, text or mobile app, and satisfaction is 35 points higher than those who do not, J.D. Power found.

Both products benefit when firms empower agents and advisors with digital customer engagement tools. Life insurance customers who only purchased through a rep scored a 795 on the satisfaction scale, while adding digital interactions increased satisfaction to 821. For annuities, scores jumped from 784 to 809.

New customer surge for annuities

There is a surge of new customers coming to annuities for the first time. Total annuity sales increased 11% year-over-year to $89.4 billing in the third quarter of 2023, setting a new record for the sixth consecutive quarter, according to LIMRA data.

Expecting the trend to continue into 2024, it is imperative that annuity providers invest in digital onboarding processes, Armstrong said.

“So many people are becoming prime age to buy annuities, providers are going to have to focus on bringing the experience into the modern age, so it matches what people are receiving in other industries,” she said. “I think the next few years are going to be interesting to see the companies play catch-up.”

State Farm ranked the highest on J.D. Power’s U.S. Individual Life Insurance Study for the fourth year in a row, earning a score of 843 out of a possible 1,000. F&G (formerly Fidelity & Guaranty Life) also earned a score of 843 to take top honors on J.D. Powers’ 2023 U.S. Individual Annuity Study.

Brighthouse Financial scored the lowest on the life insurance study with a score of 739, while Midland National Life brought up the rear on the annuity study with 762.

J.D. Powers’ studies measured overall customer satisfaction across five factors: communication, interaction, price, product offerings and statements. The life insurance study collected responses from 5,588 individual life insurance customers, while the annuity study used 3,579 responses from customers. Both studies were fielded from May through July 2023.

Ryan W. Neal has more than 14 years of experience as a reporter, including nine years covering the financial services industry. He formerly served as technology editor at Investment News. 

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