Some Turf Wars Could Surface In The FIA Biz: Opinion
October 6, 2014 by Linda Koco
If researchers at Cogent Reports have it right, the current market leaders in the fixed index annuity (FIA) market could run into some challengers this year.
FIA providers such as American Equity and Jackson National are showing stronger “momentum” than established market leaders among insurance agents and financial advisors, according to a new study from the firm. Momentum indicates producer intentions of placing FIA business.
American Equity drew the highest score for “asset investment momentum” (AIM) among agents, said Cogent, a business of Market Strategies International. The American Equity score was 37. Among financial advisors, Jackson National drew the highest AIM score, which was 32.
The AIM score is a proprietary metric that Cogent created. It measures producers’ stated intentions about whether they will begin using, increase or redeem a specified type of investment (in this case, FIAs) at various providers in the next six months. This particular study sampled views of 870 life insurance agents and financial advisors in mid-year 2014.
The industry average score was 24 among agents and 20 among financial advisors. As a whole, the industry average is “positive,” Cogent commented, because more producers had predicted an increase in their FIA sales than intentions to redeem assets held in FIAs by year-end.
At the individual provider level, 13 firms earned momentum scores higher than the industry average among insurance agents, and seven firms topped the average among financial advisors.
Allianz, the FIA industry’s longtime sales leader, beat the industry averages too. It earned a score of 33 among agents and 21 among financial advisors.
Cogent believes the momentum results indicate that “challenger” firms (like American Equity and Jackson National) are poised to capture increased FIA market share, even “threaten” the industry leaders.
It’s likely that FIA professionals have been expecting some serious competition to surface. After all, in the first half of this year, industrywide FIA sales shot up by 38 percent over the same period last year, according to Wink Inc.
So the market is hot. And since competition for business typically heats up when sales soar, rivalry will probably increase. To stay ahead of the pack, producers — especially the independent agents who comprise the large majority of FIA production — will be sure to eyeball all players and products, not just the leader.
It’s doubtful that Allianz execs are shaking it their boots, however. The company’s first half FIA sales this year came to more than $6.6 billion, according to Wink. That was nearly three times the production of the second-place carrier, as well as nearly 175 percent ahead of Allianz’ own FIA sales in the same period last year.
Still, if the surveyed producers represent the thinking of most producers, and if the producers follow through on their expressed intentions, the FIA industry could see some turf wars here and there as 2014 unfolds. That could have certain benefits. As the saying goes, the rough stone sharpens the knife.
