The life insurance and annuities (L&A) industry stands on the precipice of a massive generational wealth transfer, so the millennial market represents an unprecedented opportunity for growth. But the insurance industry — burdened by legacy technology and human intensive and inefficient processes — has traditionally been ill-equipped to capture this burgeoning market.
Rather than viewing annuities as products that are simply “sold, not bought,” the industry must focus on evolving to meet the needs of today’s consumers. Historically, a lack of strong education and transparency around these products has required agents to serve as the primary source of information. However, as we adopt more technology-driven, self-serve solutions — similar to those in banking and wealth management — we can empower consumers with the tools they need to make informed decisions independently.
To get there, we must work toward the development of industry best practices and standards that enable more interoperability across the L&A value chain. This shift is not about incremental improvements, but about fundamental transformation — enabling carriers to launch products faster, streamline operations, and deliver superior customer experiences.
Millennial market potential
As millennials continue into their peak earning years and prepare to inherit an estimated $90 trillion over the next two decades, their need for an enhanced level of financial security and stability will only increase. A recent Zinnia survey found that while only 9% of Americans own an annuity, 61% of millennial consumers (and 69% of Gen Z) said they were likely to consider one as part of their retirement savings plan, and 93% of millennials said a guaranteed monthly income in retirement was “important” for them.
Having grown up immersed in digital technology, millennials have been trained to have higher expectations for how technology can help them in their day-to-day lives — including financial transactions. An example of this is the digitization of banking, retail brokerage and wealth management platforms, taxes, and many other technology-driven innovations that improve user productivity and ultimately lead to higher product satisfaction.
By developing predictable, repeatable, and scalable solutions and user-friendly platforms, the L&A industry will be better equipped to capitalize on growth opportunities while making the products better for the consumer.
See also: Revolutionizing Life Insurance Uptake in Younger Markets
Overcoming legacy systems for a customer-centric approach
When I joined Zinnia in 2020, it was not uncommon for carriers to spend 12 to 18 months bringing a product to market — an eternity in today's rapidly evolving financial landscape.
This lengthy product launch cycle was a symptom of a larger problem: the industry's heavy reliance on bespoke solutions that served individual carriers but failed to address the need for interoperability and standardization across the industry. By investing heavily in emerging technologies, modern data infrastructure, and scalable platforms, carriers can significantly reduce product development timelines. That means being able to react to market trends and offer up products that potential customers are looking for.
Adopting a digital-first approach is good for consumers, too. The Zinnia survey also found that while 82% of annuity holders said it was important for them to be able to manage their financial accounts on a website or mobile app, less than half (49%) were satisfied with the digital tools used to manage their annuity accounts.
This underscores the importance of insurers taking a truly consumer-centric approach — one that seamlessly integrates insurance and annuities into consumers’ broader financial strategies.
Unlocking efficiency through automation and digital innovation
Embracing advanced technologies such as AI, blockchain, and smart contract technology has the potential to transform the L&A industry. These tools not only improve operational efficiency but also enhance customer service by providing customers with more personalized experience and greater transparency.
Blockchain and smart contracts can also play a pivotal role in the L&A space by enhancing the security of transactions and simplifying complex processes. Zahara, Zinnia's cloud-based system of record, provides a single source of truth for policy data and leverages real-time processing to accelerate transactions, improve data accuracy, and create a more transparent and auditable process.
These automations have already had a significant impact on operational efficiency. In January 2023, just 7% of electronic annuity applications were automated, and it took around 30 days to issue a contract to an applicant, based on Zinnia’s internal data. As of October 2024, around 50% of these transactions are automated, from agent and app validation to payment and transfer processing, while the average time to issue contracts has been reduced to just six days — a monumental improvement over 20 months earlier.
See also: Rethinking Insurance With a Gen Z/Millennial Mindset
Transforming the L&A industry for the present and the future
The future of the L&A industry lies in reshaping age-old systems and processes and ultimately putting the customer first. The opportunity to address consumer expectations, lay the foundation for long-lasting relationships, and capture market share is no longer just a pipe dream — it’s right there for the taking.
