Life insurers had better be sure that both they and their customers understand the costs and limitations of the annuity benefit guarantees they are selling.[@@]
Analysts made that argument earlier this week at a risk management seminar organized by the American Council of Life Insurers, Washington.
For the most part, the companies are doing well, and consolidation is creating larger companies that should be in a better position to cope with volatility, according to Robert Riegel, a managing director at Moody's Investors Service, New York.
Life insurers also have a unique opportunity to sell annuities and other products that can help create steady income streams for the growing population of retirees, Riegel said.
Colin Devine, a managing director at Smith Barney Citigroup, New York, said the life insurance industry now has a $250 billion opportunity to wrap annuity living benefits guarantees around retirees' 401(k) plan assets.
"The industry will have more business than it can afford to write," Devine said.
But, at the same time, the current life insurance climate is fiercely competitive, Riegel said.
"There are very few areas for a company to differentiate itself in," Riegel said.
Devine warned life insurers against letting competitive pressure and ignorance foster either internal or external confusion about annuity guarantees.
