Annuity industry grapples with consolidation, innovation and planning shifts

TAMPA, Fla. — Consolidation among distributors, evolving technology and changing consumer expectations are reshaping how annuity products are developed and sold, even as overall sales surge.

A diverse panel of annuity sales executives reached those conclusions during a session at the LIMRA Life Insurance and Annuity Conference.

Panelists described a market in transition — one moving away from purely transactional sales toward broader financial planning, while also grappling with operational complexity and growing competition.

Aaron Murphy is associate vice president of variable annuity business development at Nationwide. Insurers are balancing a wide range of offerings, from traditional variable annuities to newer registered index-linked annuities, in an effort to maintain scale while entering new markets, Murphy said.

“We have a very diversified product portfolio. It’s very intentional,” Murphy said. “We’ve been very successful at that. But I would also say that it’s a constant challenge when you’re managing a product suite that large.”

Shift to independent distribution

Panelists highlighted a significant shift in how annuities are presented to consumers. Roughly 45% of annuity sales now flow through independent broker-dealers and insurance marketing organizations, reflecting a broader move away from captive distribution.

Stephanie Bartruff is executive vice president of institutional sales and distribution for Annexus Group. Industry consolidation accelerated after regulatory changes, she said, including the Department of Labor’s fiduciary rule efforts. Firms responded by either acquiring distribution networks or outsourcing back-office support.

The result, Bartruff explained, is a hybrid model where firms must balance centralized operations with maintaining relationships across multiple carriers and channels. It is at times a difficult collaboration, she noted.

Ryan Hinchey, senior vice president of product innovation at AmeriLife, noted that consolidation is driving significant acquisition activity, with firms seeking efficiencies by absorbing smaller distributors and centralizing administrative functions.

AmeriLife is one of the biggest acquirers, having added more than 100 acquisitions on the health side and 30 on the wealth side, Hinchey said.

“These are entrepreneurs, and they want to go out and sell,” Hinchey said. “So, can we make them more effective by letting them sell and taking care of everything else?”

Carrier challenges grow with scale

For insurers, consolidation has introduced new pressures. As distributors grow larger, carriers face increased competition within expanded product shelves and greater demands for customized solutions.

Murphy noted that larger distributors are leveraging their scale to negotiate tailored products, while also operating distinct internal channels that require different strategies.

“It has created some unique challenges,” he said, including questions about how legacy agreements apply when distribution firms merge or acquire new business.

Despite rising demand for personalized products, panelists cautioned against excessive customization, citing cost and complexity. Many carriers are instead using technology to modify existing products for specific distribution partners, rather than building entirely new offerings.

“You can’t do complete customization of everything,” Murphy said. “But I think there is a way to do a lot more personalization of the products than ever before.”

Modern systems allow for modular product design, enabling faster adjustments without lengthy development cycles, Hinchey added.

Technology and experience

Panelists repeatedly emphasized that product design alone is no longer enough. Ease of use, digital capabilities, and the overall client experience are increasingly critical, especially for younger investors.

“There’s more need now than ever for product managers to really understand the entire ecosystem of which their product is going to market,” Murphy said, “including the distribution strategies, the marketing strategy behind it, and what the experience is.”

Improving the purchasing process, often seen as cumbersome compared to digital investment platforms, will be key to attracting new customers, the panel agreed.

The discussion also highlighted a broader shift toward holistic financial planning, where annuities are positioned as one component of a larger strategy that may include life insurance and health products.

“There are still pockets where it’s a very transactional sale,” Murphy said. “But when you get into the independent broker-dealer channel and the independent channel, you are seeing now it’s a much more holistic conversation.”

Hinchey said firms are increasingly framing offerings as solutions tailored to client needs rather than standalone products, aiming to build longer-term relationships.

Growth concerns persist

While annuity sales have reached record levels in recent years, panelists expressed concern that much of the growth is driven by contract exchanges rather than new customers.

Murphy warned that this trend introduces “model risk” for insurers and may not be sustainable.

Industry leaders said expanding into new markets — including retirement plans, health savings accounts and younger demographics — will be critical to long-term growth.

Education also remains a major hurdle. Hinchey cited data suggesting only about one in five U.S. adults understands annuities, underscoring the need for clearer messaging.

Panelists agreed that collaboration between carriers and distributors will be essential to address structural challenges, including incentive alignment and customer acquisition.

They also pointed to generational shifts as both a challenge and an opportunity, as younger investors demand simpler digital experiences but may increasingly value guaranteed income solutions in the absence of traditional pensions.

“There are needs that we need to fulfill,” Hinchey said. “But we’re not talking their language the way that they talk about products and solutions.”

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