The question was: What changes can the insurance industry expect to see from variable annuity providers in 2010?
The answer is: To optimize variable annuities as a viable investment instrument, insurers will reassess key variables in their product design, such as the effectiveness of their hedging programs and the simplicity of product design and fee structure, to name a few.
Some insurers have already begun to retool their hedging programs to better manage unfavorable market movements and correlated changes in equities and interest rates. They've also focused on reducing the complexity of their current policy designs, especially in terms of policy guarantees, which have evolved from simple solutions to promises that include optional features and riders.
Moreover, insurers are now more attentive to the fact that increases in underlying fund choices available to policyholders, coupled with minimal limitations, add to the insurers' inherent market risk and complicate 
hedging efforts.
For most of this decade, VAs have been one of the most popular investment products offered by insurers. The attractions of tax-deferred growth, guarantees and a broad range of investment choices made VAs one of the fastest growing products in the insurance industry.
But the financial markets crisis, which saw virtually every asset class post massive declines in the U.S. and globally, dampened enthusiasm for VAs. Recently, investors have shied away from the products in favor of fixed annuities.
