The U.S. life and annuity industry will experience significant growth from 2022 to 2024, with record sales, expanding profit margins, and strong capital inflows. However, as we move into 2025, early signs of a slowdown are starting to emerge. While it may be tempting to assume that 2026 will return to the favorable conditions of 2024, I think this assumption may be risky. As we enter 2026, I believe life and annuity executives should consider several strategic areas. Here are some ideas:
1. The real challenge: product architecture
In 2025, the Federal Reserve’s interest rate cuts compressed yields across the industry, making it more difficult for products to offer competitive credit rates. I believe the challenge isn’t just about pricing; it’s about product architecture. The easy interest rate environment of 2022-2024 allowed simpler products to flourish, but that era appears to be over. I believe the focus should shift to comprehensive retirement income solutions that provide stability, flexibility and confidence. For example, Goldman Sachs Asset Management Annual Annuity Industry Survey Highlights: Nearly 80% of respondents prioritize solutions that meet these needs in production-limited environments.
2. Build a product ecosystem
I believe that operators should not view products as isolated silos but should consider creating integrated ecosystems that meet lifecycle needs. For example, combining a registered index-linked annuity (RILA) for growth, a deferred income annuity (DIA) for guaranteed income, and a fixed product for liquidity can meet different client needs. However, this approach requires product integration, a unified customer experience, and tools that enable advisors to build solutions rather than simply sell products.
3. Artificial intelligence: from experiment to necessity
I think artificial intelligence has become a key enabler in the industry. Accenture research shows that 93% of life insurance companies have increased investment in artificial intelligence by at least 5% in the past three years, and 43% plan to increase investment by more than 25% in the next three years. Generative AI is already reshaping operations from underwriting to claims processing, while agentive AI is poised to make autonomous decisions and actions. I believe the economic impact of AI, such as reducing operating costs and enabling scalable solutions, will be revolutionary. However, success requires process redesign, unified data infrastructure, decentralized governance and workforce training.
4. Beyond investing in alpha
While private equity drives sophistication in asset management, I believe sustainable advantage now requires combining investment expertise with actuarial innovation, distribution strength and operational excellence. Artificial intelligence can play a key role in resetting the cost curve and improving efficiency.
5. Regulation as partnership
I believe the next wave of regulation will be even more important, driven by private equity ownership and recent failures. Companies that actively invest in risk infrastructure, such as stress testing and AI compliance monitoring, can turn regulation into an advantage rather than a limitation.
6. Focus on distribution excellence
Distribution is becoming more and more segmented, and I think operators should focus on excelling in specific areas rather than trying to serve all segments equally. For example, dominant RIAs may involve artificial intelligence tools that analyze advisor client books and generate customized recommendations while attracting carrier agent A completely different strategy may be required.
7. Orchestration capabilities
I believe competitive advantage will come from curating best-in-class capabilities rather than building everything in-house. Strategic partnerships can accelerate transformation and innovation, especially as artificial intelligence develops.
8. Mass market opportunities
Two-thirds of baby boomers are financially unprepared After retirement, I thought this represented an opportunity for innovation in product design. Artificial intelligence-driven tools can deliver complex financial advice at scale, allowing professionals to profitably serve clients with few assets.
final thoughts
As you plan for 2026, I think it’s worth asking: How can we gain market share if interest rates stay the same for three years? Investing in better products, quality distribution, AI-driven operations and customer experience transformation may be key. The demographic wave and retirement crisis are permanent, and the AI revolution is accelerating. Preparing for these realities is critical to long-term success.
Many thanks to Ed Sullivan for his valuable contribution to this perspective. Please contact us on LinkedIn: Shay Aaron or Ed Sullivan Talk about the future of insurance.
