However, a Deloitte Center for Financial Services survey of annuity buyers and non-buyers identified several more fundamental, systemic challenges that insurers will need to address if they expect to increase market penetration, widen their prospect base, and propel sales on a steadily upward trajectory over the long term.

Based on our analysis of the Center's survey data, standard industry practices, and recent regulatory changes, there are at least four opportunities for annuity writers to bridge the gap in reaching a broader array of prospects in both traditional and underserved markets:

Increase focus on repeat buyers and cross-selling

Forty-two percent of the annuity buyers Deloitte surveyed already owned at least one other annuity prior to their most recent acquisition. Even more interesting is that 73% of these repeat buyers bought an annuity in addition to—not as a replacement for—their prior purchase, indicating that this segment is prone to stockpile their annuity holdings.

Meanwhile, familiarity with an annuity writer and seller creates cross-selling opportunities to reach first-time buyers. Nearly half of buyers surveyed had already owned at least one other financial product from their annuity company, while about two-thirds said they also had purchased other financial products from the intermediary who sold them their most recent annuity.

Repurpose the product

To capitalize on the high potential for repeat sales, prospects need to first be sold their initial annuity, preferably early in their financial lifecycle. That means building bridges to traditionally overlooked segments, perhaps by augmenting this traditionally retirement-focused product line with innovative elements to appeal to a wider—particularly younger—audience.

Nearly 40% of non-buyer respondents said they wanted to wait until they were closer to retirement to purchase an annuity. Getting this segment interested in annuities earlier may require shifting the focus of the conversation from pure retirement security issues to other potential uses for the product.

For example, a lower-cost, less complex, and more limited "starter" annuity for younger age brackets could provide annuitized outlays for a child's eventual college tuition, or even help recent graduates and/or their parents pay off student loans after graduation.

Appeal directly to consumers

While our survey indicates that insurance agents, financial planners, and other intermediaries are likely to remain the linchpin in annuity prospecting and sales, that finding should not discourage providers from directly communicating more often with consumers.

The goal is not necessarily to disintermediate, as relatively few respondents overall expressed interest in buying annuities on their own over the web (although over one in four in the youngest age segment—30-44—were open to the idea). Instead, carriers should more actively engage prospects directly to better inform them about the benefits annuities offer and thereby develop warm leads for their sales force.

To overcome the lack of awareness and understanding of the product among the vast majority of respondents to Deloitte's survey, carriers need to be more proactive in getting their message out about what annuities can do, how they work, how much they cost, and how they stack up against other investment alternatives.

Options range from a robust social media campaign to more action-oriented advertising—perhaps following the pharmaceutical industry's model, which seeks to prompt consumers to ask for their product, rather than wait for a health care intermediary to suggest it.

Leverage the workplace channel

Carriers with sufficient capital and risk appetite can absorb large numbers of annuity risks via pension risk transfers, which are becoming increasingly popular among employers looking to transition out of defined benefit programs.

Meanwhile, recent federal regulatory actions have bolstered opportunities to market annuities to more individual buyers via the workplace. In July 2014, the Internal Revenue Service (IRS) issued new rules allowing individuals to buy longevity annuities in both their 401(k) and Individual Retirement Accounts. The IRS also put out a notice in 2014 allowing employers to include deferred-income annuities in target date funds used as a default investment option in 401(k) plans.

What else might insurers do to appeal to a wider array of consumers, create a more receptive audience for their messaging, and ultimately make an increasingly compelling case for annuities? Download our full survey report in Deloitte University Press, which I coauthored along with my Center research colleagues, Michelle Canaan and Nikhil Gokhale. Also, listen in on our debrief webcast on June 2, or catch the archived version after that date.

Sam Friedman ([email protected]) is insurance research leader with Deloitte's Center for Financial Services in New York. For many years, he was Editor in Chief of National Underwriter. Follow Sam on Twitter at @SamOnInsurance, as well as on LinkedIn. These opinions are his own.