A combination of insurance market solutions provided by The Depository Trust & Clearing Corporation (DTCC) and Information Asset Partners (IAP) is giving the insurance industry a unique and dynamic view of market and competitive positions for annuities.
The service, called Annuity Market Assessment and offered by IAP, leverages DTCC’s Analytic Reporting for Annuities Service (a service offering of National Securities Clearing Corporation, a DTCC subsidiary) and IAP’s retail market analytics. The Annuity Market Assessment allows carriers, distributors and producers to identify – based on ZIP code – where current production lags local market potential; opportunities to improve distribution and wholesaling performance and competitiveness; and performance benchmarks and trends.
@dtcc recently asked Dr. Raisa Suhir, Managing Director of IAP, and Andrew Blumberg, DTCC Group Director, I&RS, to describe the benefits of the Annuity Market Assessment tool and how it will work for the industry.
@dtcc: What was the catalyst for this collaboration between DTCC and IAP?
Blumberg: We were introduced to IAP last spring at a Retirement Income Industry Association conference. After discussing DTCC’s ability to provide real metrics on annuity market activity by ZIP code, and IAP’s knowledge of estimated annuity buying activity by ZIP code, we agreed that there was an opportunity to deliver a new service to the market by analytically integrating the data sets.
Suhir: The initial analyses that we completed last year quantified the degree to which the industry’s marketing resources can generate more production. Because we are integrating IAP’s retail market potential estimates with ongoing production intelligence from DTCC, we’re providing the means to improve performance and return on investment.
We’ve always believed there is a need to evaluate market performance with respect to market opportunity. Market share and penetration are important but lagging indicators, particularly with a complex product such as annuities that has many distribution channels. We felt the insurance industry could benefit from objective metrics associated with the current buyer of the product.
@dtcc: What are some of the other key benefits of IAP’s Annuity Market Assessment?
Suhir: It helps sell annuities. A wholesaler can use the information consultatively with advisors to assess the local market and recommend products and marketing programs that are targeted to the demographics of that market. Beyond understanding how to align performance with opportunities, insurance carriers will be getting actionable information for sales and marketing resource reallocation and improving the process of wholesaler quota assignments. At the end of the day, because the information starts with the carrier and continues through its distribution relationships, the producer and, ultimately, the retail client, it will help to sell more annuities and make the industry more efficient and profitable.
Blumberg: A key benefit for insurance carriers, broker/dealers and individual producers is the ability to identify ZIP codes that are underperforming, performing as expected, or overperforming, in terms of sales of annuity products. Because DTCC can provide total market activity as well as an individual company’s activity by ZIP code, clients are able to understand what their market share is in every ZIP code and where there are additional opportunities to expand their market. Insurance carriers, for example, can use this information to better focus the activity of their wholesalers and broker/dealers can better focus the activity of their branches and individual reps.
Suhir: I would add that individual advisors have told us it’s not uncommon for a new client to have never heard of the annuity product. This is precisely why the analytics expose and qualify more and new annuity market opportunities. It will also benefit research departments who can use this current market data to assess new opportunities, develop strategies and advise senior management.
@dtcc: Explain how the tool works.
Suhir: There are 3 components, each at the ZIP code level:
The current annuity market: what the ZIP code represents in terms of annuity buying potential to the industry.
DTCC-reported production: what was sold across the industry. This is important because it represents how the industry is interacting with and capturing assets across distribution channels.
The client’s production: what a client’s position is at the ZIP code level. This is vital because it informs the client how to assess and improve production on the most local of levels possible. It also allows the advisor, producer, or analyst to assess any geographic market level.
ZIP codes are the “pieces to the puzzle” that form whatever market level the client is interested in. From there, there are two key indicators: the current level of annuity sales potential; and alignment of the industry to potential (low alignment = potential to explore; high alignment = competition for market share).
The solution serves virtually all marketing applications with a consistent framework of ongoing performance data that is focused on the current market of annuity buyers.
@dtcc: How do you foresee IAP clients using the tool?
Suhir: Targeting the markets that have considerable unmet production potential and taking the intelligence to the “front lines” of the registered investment advisor and producer offices.