The annuity industry finds itself at a crossroads, grappling with fears of an impending recession while embracing artificial intelligence to reshape products and strategies.
According to Goldman Sachs’ latest survey of over 100 insurance professionals, the sector is undergoing a transformation driven by economic uncertainty and technological advancements.
Economic Jitters and Recession Fears
The specter of an economic downturn looms large for annuity providers. Seventy-six percent of survey respondents cited a potential recession as the primary macroeconomic risk, with 79% predicting a downturn within the next two years. These concerns are compounded by market volatility, such as the turbulence seen during the survey period from late March to late April, marked by shifting trade policy and fluctuating tariffs.
“Insurers are not remaining passive in the face of these challenges,” says Marci Green, head of Goldman Sachs Asset Management’s Americas retirement distribution and insurance unit. “They’re proactively revising their annuity platforms to address market uncertainty, longevity risks, and the growing demand for investor engagement.”
A Shift Toward Lifetime Income
As part of this recalibration, more insurers are focusing on products that provide lifetime income. Registered index-linked annuities remain foundational, but the appeal of guaranteed variable annuities is surging. Sixty percent of respondents identified these as a key product focus, up sharply from 44% the previous year. This trend underscores the growing appetite for stability amid economic unpredictability.
The AI Revolution in Annuities
Artificial intelligence is playing an increasingly pivotal role in reshaping the annuity landscape. Ninety percent of survey participants believe AI will be critical in educating investors about annuities and guaranteed income solutions. Nearly half (47%) expect AI to significantly enhance investor education and engagement in the variable annuity market, while a quarter see AI as a tool for delivering tailored investment advice.
“AI’s potential to demystify annuities and drive deeper investor connections is transforming how we approach financial education,” Green notes. “It’s more than a tool—it’s a bridge to personalization.”
Retirement Plans and In-Plan Annuities
The integration of annuities within retirement plans is another priority for the industry. Sixty-four percent of respondents placed the addition of annuitization options to existing retirement offerings among their top three business objectives. Goldman’s report emphasizes that this shift is no longer a long-term aspiration but a present-day priority.
Expanding Investment Horizons
Macroeconomic pressures are pushing portfolio managers to diversify internationally. While AI-driven strategies remain dominant, 29% of respondents plan to increase exposure to equities in developed markets abroad, reflecting a need to hedge against domestic economic risks. Only 2% intend to scale back on international investments, indicating a clear preference for global diversification.
Purposeful Transformation
“This is not a year of incremental change,” Green observes. “The industry is advancing decisively toward a future defined by guaranteed income solutions and personalized, AI-driven strategies. The commitment to these objectives is evident, and the path forward is unmistakable.”
The survey highlights a dynamic industry adapting to economic pressures while leveraging AI’s transformative potential. By prioritizing innovation and diversification, annuity providers aim to navigate current uncertainties and align with the evolving needs of investors.
