Deloitte: Life And Annuity Carriers Can Still Grow If...

Although total annuity new business unit costs have increased by 1.8% a year for the last five years, the researchers say the low-cost variable annuity performers spend 11% less than the median on new business, and the low-cost fixed annuity performers spend 38% less.

Furthermore, low-cost VA performers spend 17% less than their median counterparts on call center staffing models and tools, the researchers say, adding that the low-cost firms are "doing well" in leveraging self-service opportunities and utilizing e-service at much higher levels than the median.

In the FA business, the median firms have been seeing more than 150% growth, sometimes over 200%, the consultants note. However, they say, this is not a result of new organic growth but rather of "significant turnover of existing portfolios."

"When you look at life insurance and annuities, the path for growth aligns closely with the impending baby boomer retirement trend," observes Richard T. Roth, head-global benchmarking at Deloitte. To take advantage of this once-in-a-century opportunity, "carriers should review operations and expenses now and make the necessary adjustments," he says.

"The economic downturn placed an even greater focus on the role of managing the costs associated with doing business in all industries, with particular importance to insurance," says Joe Guastella, the leader of Deloitte's-global insurance practice.