LIMRA Annual Conference: The State of the Industry

September 2024

As we enter the final months of 2024, the life insurance industry is as strong as ever. Fresh capital combined with good earnings have created a strong capital base. Life insurance claims have reverted to more normal levels. Talent pressures have subsided. And revenues continue to be strong, led by record-level annuity sales.

This certainly does not mean that the industry is without challenges. Expenses are under pressure, given strong wage inflation over the last few years. General accounts are challenged with unrealized losses in bond and commercial real estate portfolios, and the industry continues to be burdened by legacy systems.

As leaders, we have to be mindful of the key risks ahead for our industry, but we certainly have a lot to be excited about.

At the 2024 LIMRA Annual Conference later this month, I will share six meaningful opportunities for our industry:

1. Annuity products hit record sales. LIMRA research shows total U.S. annuity sales reached $215.2 billion in the first half of this year — representing a notable 16 percent increase over 2023 and setting a new sales record for the first six months of a year. Higher rates have been a key catalyst to the jump in sales, and these elevated sales levels in retail spread products should continue for some time. Additionally, rapidly growing in-plan annuities provide a lot of tailwind for growth in the institutional space.
   
   
2. Life insurance reaches record consumer demand. According to the 2024 Insurance Barometer Study, more than 102 million Americans say they need life insurance or more life coverage. That represents a high-water point since we first started measuring this 14 years ago. The industry challenge is on the supply side. The number of full-time life licensed agents continues to decline as retirements exceed new entrants. And the direct-to-consumer channel has been stuck at 6 percent of total industry sales for the last decade. That said, there are new players in the independent channel with aspirations to grow life insurance sales, and there are new technologies available to supplement current approaches to both face-to-face and direct-to-consumer sales.
   
   
3. Private equity (PE) expands industry capital. According to the NAIC, nearly 137 insurance companies are owned in whole or part by PE, up 50 percent from 2018. It is remarkable how quickly PE firms have grown their investments in the insurance industry. Like anything else, this change comes with opportunities and challenges for the industry. Right now, consumers are benefiting from higher annuity rates, and carriers are benefiting from an additional supply of reinsurance capital.
   
   
4. Carriers are progressively differentiating with expense management. Carriers have always spent a lot of effort managing expenses. However, based on work LIMRA has done with McKinsey, it is evident that expense management has become a key differentiator amongst peers. Today, when ranked by expenses as a percentage of gross premiums or annuity considerations, first-quartile carriers have more than a 50 percent advantage over fourth-quartile carriers. Our 2024 study will be out in the next couple of months, and given the record number of participants this year, this benchmark will become progressively valuable to our members looking for competitive advantage.
   
   
5. Leveraging new talent to provide a fresh industry perspective. The talent wars have subsided, and turnover has reverted to historical levels, but today’s talent landscape is very different from just five years ago. For example, in 2019, 87 percent of the industry operated on a five-day-in-the-office workweek. Today that number is just 11 percent. Moreover, almost half of the average carrier’s employees joined their company in the last five years. In short, we are an industry that is now working more remotely and with newer talent. This is exciting as it leads to new and different ways to collaborate.
   
   
6. Seizing opportunities through artificial intelligence (AI). We know AI is going to change our industry. To address the rapid changes taking place in this space, LIMRA created a committee with representation from 40 member companies to help the industry with governance, best practices and use cases. An interesting survey of these companies reveals 47 percent believe AI will have a significant impact on our industry; another 41 percent believe the impact will be moderate. However, almost 29 percent had a flat AI spend this year, and next year, 71 percent will have a flat or just moderately higher spend. In addition, nearly half (48 percent) have not yet implemented any type of employee training program on using this technology. So, there’s a big variance in how companies are investing in these new technologies, and time will tell how much of an advantage first movers have over followers.

At LIMRA and LOMA, we are here to support our members as they try to capitalize on these opportunities. Please let your member relations director know how we can help.

I look forward to seeing many of you in Nashville, Tennessee, for the Annual Conference later this month, where we’ll all come together to talk through these and other key areas of focus for our industry.