us insurance industry overview

(1) Before reinsurance transactions, includes state funds.Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute. With some 55 million active members of 401(k) plans holding an estimated US$5.7 trillion in retirement assets as of March 31, 2019,Along the same lines, the Rehabilitation for Multiemployer Pensions Act of 2019 would provide financial support that managers of some 1,400 US multiple employer plans (MEP) could use to transfer pension obligations to private insurers by purchasing group annuities.However, altering the rules alone may not make a major difference in annuity sales unless the products and sales process are also revised. Where do insurers stand as they enter 2020? Digitalization to support or perhaps supplant traditional intermediaries could be important, but many companies are not yet fully prepared to accommodate emerging online consumers.By 2020, more than nine in 10 new life insurance sales are expected to be at least influenced by digital interaction, including online searches to assess life insurance providers and advisers; compare price and coverage options; and apply for a life insurance or annuity policy on an insurer’s website.CRM efforts should be facilitating a more mature set of capabilities for sales management, both in terms of direct-to-consumer sales, as well as for producers. New York is debating its own privacy rule that appears likely to go farther than either GDPR or CCPA by establishing insurers and other data collectors as information fiduciaries and allowing private causes of action.The good news for carriers—at least those with a global footprint—is that much of the effort going into GDPR compliance overlaps with what should be done for CCPA (figure 9).

Direct premiums written by private flood insurers soared 70 percent between 2016 and 2018, to US$644 million.Private reinsurers are also bolstering their place in the market. The adviser of the future may also have to modify the way they present annuities to make them more palatable as discretionary products, which will likely require skills to more effectively build rapport and understand the emotional connections involved in investing large portions of retirement savings.Carriers should also continue upgrading their robo advisory capabilities. At the same time, insurers are being challenged to become more flexible by offering alternative staffing opportunities such as contract, freelance, and gig arrangements, which are increasingly mainstream.One option is to stem the tide of retirements by retaining and retraining older professionals. Where should insurers be heading in the 2020s? Those looking to enter or expand in the market should be asking:Despite a slowdown in the volume and value of US insurance merger and acquisition (M&A) activity into the summer of 2019 (figure 5), the pace of deal-making picked up considerably in other regions around the world, and the possibility of achieving nonorganic growth or repositioning through acquisition remains a viable option for many carriers.In the L&A sector, while M&A activity has slowed, the trend of divesting noncore segments to focus on acquiring blocks of business for market leadership in key strategic areas will likely continue, thanks to declining interest rates and pending changes to GAAP accounting.Deals of note in the United States include Ameriprise announcing a US$1 billion sale of its auto and homeowners’ lines to American Family in April to focus on its core growth areas of advice and wealth management, as well as asset management.While consolidation in the US insurance brokerage sector remains high, activity fell nearly 10 percent compared to the first half of 2018. Efforts are already underway to achieve this goal.This isn’t to suggest that selling private flood insurance will be a slam dunk. As a result, many are being far more selective about where they direct organic expansion efforts.