Insurance agents and customers looking to purchase annuities or life insurance policies have experienced significant delays in application processing from the major annuity and insurance carriers over the past several weeks.
According to an article from InsuranceNewsNet, the slowdowns are causing mounting frustration among agents and the consumers who rely on them to access annuity products and insurance coverage.
Annuity carriers are struggling to process applications in a timely manner for several reasons. The most-frequently cited causes of delays are the rippling effects of the COVID-19 pandemic, from the shift to remote work to limited resources and an increasingly volatile investment market.
“It’s no secret that the insurance industry is facing unprecedented challenges due to the global pandemic,” said Linda Chavez, founder and CEO of Seniors Life Insurance Finder. “Carriers are having to adjust to new regulations and demands while dealing with reduced workforces, fewer resources and financial distress. That all adds up to delays in processing applications for annuities and life insurance products.”
Another side effect of the pandemic was a boost to the insurance and annuity market, with InsuranceNewsNet projecting strong sales numbers for multi-year guaranteed annuities and indexed annuities in the last quarter of 2022.
Chartered Financial Analyst Tom Koesternen offered a similar explanation for the delays in annuity application processing. “The pandemic has caused a substantial boom in the insurance market, with people becoming more aware of insurance,” Koesternen said, adding that claims have also increased in recent years. “This boom in sales, coupled with excess work, is one of the principal reasons for delays in processing insurance claims and annuities.”
Chavez cited increased regulatory oversight as having a major impact on carriers’ ability to process annuity and life insurance applications. “The insurance industry is facing increased scrutiny from regulators, resulting in stricter compliance requirements and additional paperwork for carriers to process,” Chavez said.
Under current conditions, experts estimate that annuity applications can take anywhere from four to eight weeks to process, and issues with paperwork or compliance can delay the approval process further. Chavez also advised that more complex annuity products, such as equity-indexed annuities or immediate annuities, can take even longer for carriers to process.
“The best thing customers can do is stay in contact with their carrier throughout the process and be patient while waiting for a decision,” said Chavez. “This will help ensure that the process goes as smoothly as possible and reduce any delays.”
Fortunately, experts believe that the delays will resolve some time soon. Although he cautioned that no one could give a specific timeline, Koesternen said he expected processing times to return to normal by April 2023.