Converting Record Demand into Sustainable Economics

Executive Summary

Leading carriers that have applied business-driven AI to specific distribution bottlenecks are already realizing 10-20% improvements in sales conversion rates, and 20-40% reduction in cost per policy compared to their peers.  This paper outlines how these outcomes are being achieved and why they are reshaping competitive advantage across the industry.

Life & Annuity carriers are experiencing unprecedented demand for retirement income solutions, translating into record sales and strong earnings performance across much of the industry. In the U.S., annuity sales alone have nearly doubled over the last four years, surging from $219 billion in 2020 to $434 billion in 2024. This momentum is expected to continue as more than 4.1 million Americans will turn 65 each year, over 11,200 per day, through 2027. Yet the quality and profitability of growth among carriers with similar products, capital strength, and distribution reach are diverging sharply.

The difference is not strategy or ambition. It is execution.

Leading carriers are converting demand into premium faster and at lower unit cost by systematically reducing friction across distribution, underwriting and servicing. Others remain locked in linear growth models, where premium increases are achieved only through proportional increases in headcount, training, and operating expense.

Industry data illustrates the scale of this divergence:

• Top-quartile producers materially outperform peers on advisor productivity and conversion speed, often by a factor of 2-3x.
• Top-quartile carriers have reduced their total expense ratios by more than 200 basis points, while growing revenue more than 3x faster than their industry peers.
• Bottom quartile carriers spend roughly ~16% of gross written premium (GWP) on sales and distribution, compared to ~9% for the top-quartile peers, reflecting materially different cost structures.
• Because sales and distribution frequently account for roughly half of an insurer’s cost base, even incremental improvements in execution efficiency translate into significant margin expansion and reinvestment capacity.

These advantages compound over time. Early adopters are institutionalizing execution improvements as repeatable operating capabilities, creating economic separation that becomes increasingly difficult to reverse.

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