5 States Where Switching Annuities Is Rare

Individual fixed annuity holders may be a lot more content with their contracts in some states than in others. In 2020, consumers in a typical state replaced about 28 annuity contracts for every 100 new contracts they purchased. Consumers in Utah were much quicker to replace their annuities: Issuers there replaced 35.2 contracts for every 100 new contracts they issued. But in five states, consumers replaced fewer than 20 individual fixed annuities for every 100 new contracts issued. (For a list of those five states, see the gallery above.) The National Association of Insurance Commissioners provides 50 states of individual fixed annuity replacement-to-new-issue ratio data through its Market Conduct Annual Statement Scorecard dashboard. The numbers include 1035 exchanges and some other types of exchanges.

The Data

The market conduct dashboard provides market conduct data for many different lines, including individual variable annuities, term life insurance, cash-value life insurance, disability insurance and long-term care insurance, as well as for individual fixed annuities. State insurance regulators must market conduct data to monitor how well insurers are treating customers and other stakeholders. The NAIC sees the market conduct data as a tool regulators can use to identify insurers or products that might need extra scrutiny. For individual fixed annuities, for example, the replacement ratio data stream comes alongside four other data streams, such as the types of data streams available, such as contracts replaced where the holder is over age 80 compared to total replacements.

Why the Numbers Matter

Insurance agents, brokers and advisors can use the data to gauge how competitive and aggressive different states' markets are. Of course, producers and advisors need to look deeper to put the market conduct numbers in context. In some states, some indicators may look unusual because of regulatory changes, insurer insolvencies or other issues not directly related to active efforts by insurers or others to compete aggressively for business. .... Pictured: Sioux Falls, South Dakota. (Photo: Shutterstock)