The Life and Annuity (L&A) industry is at a pivotal juncture. On the one hand, aging legacy systems continue to hinder agility, escalate costs and constrain innovation. On the other hand, evolving customer expectations, demographic shifts and mounting regulatory scrutiny are intensifying the pressure to rapidly design and launch more personalized, adaptable products.
This dual challenge – modernizing core infrastructure while accelerating innovation – has long seemed irreconcilable. However, the landscape is shifting. Today, digital intelligence, powered by Artificial Intelligence (AI), automation and advanced analytics, offers L&A firms the opportunity to address both priorities simultaneously. The key lies in finding the right partner to co-create a smarter, more resilient future.
Breaking the Dual Agenda Deadlock
Historically, transformation in the L&A space has been hamstrung by legacy systems and manual processes that are expensive to maintain and slow to evolve. As a result, many insurers have struggled to deliver the seamless, customer-centric experiences the market now demands.
The impact is evident in the erosion of productivity. Between 2003 and 2023, Selling, General and Administrative (SG&A) expenses as a percentage of revenue rose 26 percent across US life insurers, the sharpest increase among five major industries. At the same time, unmet demand for life insurance is at a record high: 42 percent of American adults say they need life insurance or more of it, with 37 planning to purchase it within the next 12 months.
Demographic shifts are adding further fuel to the fire. 2025, for instance, marks a peak year where more than four million American citizens will turn 65 – with the ‘Peak 65’ phenomenon driving increased demand for retirement income products and particularly annuities as retirees seek stable income streams.
Crucially, consumer expectations have also shifted, with demands for customer-centric experiences already driving significant growth in areas like embedded insurance and becoming a pre-requisite of engagement across channels. At the same time, private equity firms are increasingly entering the insurance space, leveraging their capital to shift the competitive landscape and influence product offerings.
To remain relevant and resilient, L&A firms are no longer asking if they should partner for transformation – but how fast. Third-party administrators equipped with deep domain knowledge and next-gen platforms are emerging as critical enablers in this shift – helping insurers offload legacy burdens and accelerate digital maturity in parallel.
So what does this transformative shift look like in practice?
Tackling Legacy Complexity Through Digital Transformation
Transitioning from legacy systems to modern, flexible platforms is a crucial first step in breaking the current deadlock, unlocking the ability to respond quickly to changes and disruptions. Incorporating the latest in AI and automation can enable carriers to streamline operations, reduce errors and enhance decision-making processes – crucial tenets in staying competitive in a rapidly evolving market.
More specifically, it enables insurers to automate underwriting decisions, enhance customer experience through the intelligent extraction of relevant insights and provide consistency across the end-to-end administration of L&A products. Leading insurers already embracing such digital transformation efforts – including operating model re-design, digitization, embedded analytics, robotics and business process re-engineering – have successfully driven down costs, improved customer experience and increased efficiencies.
As scrutiny deepens – especially with regulations extending from banking into insurance – breaking down legacy silos improves data transparency, traceability and governance. Partners with experience across regulatory regimes are becoming indispensable in helping insurers meet these demands with confidence.
Accelerating Product Innovation with AI, Automation & Analytics
Once digital foundations are in place, insurers are better positioned to fulfill the second half of their dual agenda: Accelerating product innovation.
Modern platforms enable real-time configurability, making it easier to develop and adapt offerings at speed. AI and predictive analytics bring further value by providing deep, actionable insights into customer behavior, needs and risk profiles. This not only accelerates development timelines but also improves product-market fit – aligning new offerings more closely with evolving preferences.
Generative AI (Gen AI) adds another dimension. Its potential to synthesize customer lifestyles and behavioral patterns allows for hyperpersonalized insurance solutions. With 76 percent of US insurers already deploying Gen AI in some form, the momentum is unmistakable. Integration-ready platforms ensure that insurers can keep pace – and lead – in this fast-moving space.
Co-creating Customer-centric Transformation
Successfully addressing the L&A industry's dual agenda demands a sophisticated blend of modern digital technologies, re-imagined processes and purpose-built solutions. By co-creating smarter businesses, insurers can overcome legacy limitations and unlock a future defined by innovation, agility and meaningful customer engagement.
This means transitioning from legacy systems to modern platforms that support rapid product development, integrating AI to enhance decisions and interactions, and building future-ready operations grounded in compliance and transparency.
With the right strategic partner, L&A carriers can move faster – accessing new markets, launching differentiated offerings and re-defining customer experience at scale. The opportunity is clear: Transform today to lead tomorrow.
Ready to transform your L&A operations? Explore how we’re co-creating smarter L&A businesses with AI-powered, future-ready solutions.