Annuity Carriers Face New Challenges and Emerging Opportunities


Annuity Carriers Face New Challenges and Emerging OpportunitiesRecently, we had the opportunity to facilitate a Special Interest Group meeting focused on annuities. Our Special Interest Groups are confidential knowledge-sharing meetings where our team can share recent research results and participants can discuss industry trends in specific lines of business.

The latest session on annuities involved a diverse group of senior leaders diving into a broad array of topics. While the discussion covered issues that span the entire insurance industry, a few key themes specific to annuity carriers emerged:


Our participants had diverse perspectives on cloud journeys, but some commonality is emerging within annuity providers. Everyone reported being beyond “cloud hype” and felt they are more like “cloud pragmatists.” The group’s consensus was that cloud can be more cost effective in many situations, but it is not a universally cheaper alternative for managing all workloads.

Cheaper and more capable are very different concepts. Ultimately, choosing cloud should be about functional capabilities, not about a guaranteed cost reduction. All participants are being deliberate when it comes to making decisions; they are ensuring that their cloud choices align with their larger strategic intent.

Everyone agreed that legacy technologies within the annuity industry continue to be a barrier. Several participants brought up the importance of and challenges with retooling and upskilling staff in a tough marketplace. One CIO warned against blindly lifting and shifting workloads without a well-thought-out plan for execution. Another participant noted the need to provide direction on the theme of “no hands on keyboard” in support of Infrastructure as Code (IaC).


Cybersecurity remains a key topic in terms of finances, effort, operations, and Board of Directors reporting; this is especially true when it comes to technologies and security spending trends. Once again, legacy technologies within insurance were raised as a challenge. The group agreed that people continue to be the weakest link in an overall security framework, which highlights the importance of repeated training.

In addition, account takeover (ATO) continues to be a concern within the annuities segment. Some ATO vectors, such as when a relative conducts the impersonation, are especially difficult to stop. One participant noted that they had implemented voiceprinting to mitigate some of the ATO risk. Several noted that, “Just because you can digitally enable transactions doesn’t mean you should.” This is an especially notable insight given the client demographics for an important segment of the annuities in force.

Future State Working Environment

As in nearly all conversations in 2022, we discussed the issue of where work is being done. While nearly everyone agreed that where to work is a topic their organizations are discussing, our participants had a wide range of approaches to the issue. One carrier has been executing a hybrid model for over a year. Another participant said that “work from anywhere” has become their default due to marketplace competition for key labor skills.

Some companies are attempting to entice employees with approaches such as free food, but it remains to be seen what will happen if those amenities are removed. For many, a model like the 3-2-2 approach identified by Harvard Business School Assistant Professor Ashley Whillans seems to be taking root: three days in the office, two days remote, and two days off.

The wide-ranging discussion at this Special Interest Group meeting highlighted the challenges and changes facing annuity carriers. Capital consumption, acquiring and retaining talent, and increasing speed to market while lowering unit costs are all key areas of focus for these insurers. We expect to see all these trends continue over the course of the current planning horizon.

To find out about our upcoming research on cloud journeys, business continuity planning and disaster recovery and to participate in our forthcoming cloud research questionnaire, reach out to me at [email protected] or Rob McIsaac at [email protected].