At IBM Think 2025, Frédéric Vasseur—Team Principal of Scuderia Ferrari shared insights on managing 1,600 high-performance team members across 18-20 "pillars of performance," each obsessing over hundredths of seconds. The math is simple: 10 improvements of 1/100th second each = 1/10th second total improvement. In F1, that's the difference between victory and defeat.
As he spoke, I realized we'd been instinctively applying Ferrari's philosophy to the annuity market.
The Annuity Market's Performance Paradox
The numbers tell a remarkable story. Annuity sales hit a record $434.1 billion in 2024, with investment-linked products driving unprecedented growth. Fixed Indexed Annuities reached $127.7 billion, while Registered Index-Linked Annuities exploded to $65.6 billion—the 10th consecutive record year and the first time RILAs outperformed traditional variable annuities.
Multiple forces align behind this secular growth trend: demographic changes, market penetration needs, retirement security demands, and increasing 401K adoption. Yet here's the paradox: despite explosive growth, the industry runs on what one expert called "a bowl of legacy spaghetti"—complex systems created by decades of mergers, each with its own data silos and disconnected processes.
It's like competing with a 1990s Formula 1 car in today's race. While carriers debate upgrades, asset managers like BlackRock are redefining the game entirely. BlackRock's LifePath Paycheck—which reached $16 billion in assets within months—uses select insurance partners as manufacturers while controlling the customer experience, pricing, and distribution. Traditional carriers face a choice: become efficient manufacturing partners in someone else's Ferrari, or build their own precision operation.
Why Marginal Gains Multiply in Annuities
Ferrari's genius isn't optimizing individual parts—it's making all components work seamlessly together, with hundreds of sensors tracking performance in real-time for millisecond decisions.
The performance gap in annuities mirrors F1: some teams operate with precision while others burn budgets with little to show. McKinsey research reveals top annuity carriers achieve expense ratios roughly half that of bottom-quartile peers—and this gap is widening.
Here's the opportunity: while the industry grew total revenues 4.4% to $1.2 trillion (driven largely by 14% annuity growth), overall profitability still declined 9.6%. The culprit? General expenses and commissions jumped 11% to $157 billion, far outpacing the 4.4% revenue growth.
For mid-size carriers, closing even half the performance gap between top and bottom quartiles represents significant basis points of improvement—creating substantial capacity for growth investment and competitive advantage while competitors struggle with legacy constraints.
The Cultural Shift: Making Impact Visible
Ferrari's challenge: energizing 1,600 people about hundredths of seconds. The solution isn't motivation—it's visibility. When agents see real-time process updates, back-office teams understand how their configurations affect customer experience, and customers receive transparent progress tracking, everyone naturally optimizes their part.
What if your IT and Operations teams aren't cost centers—but profit drivers with clear visibility into their impact? With annuity shoppers increasingly researching digitally before engaging advisors, this transparency delivers competitive advantage, not just operational efficiency. Does your team have visibility into how they impact performance?
Your First Basis Point
Ferrari didn't become legendary overnight. They built a culture of systematic improvement that compounds race after race, season after season. And they are pushing the envelope every day to get better.
The question isn't whether you can match Ferrari's speed. It's whether you're willing to match their precision, measurement obsession, and belief that everyone contributes to victory.
Here's the uncomfortable truth: While traditional carriers debate digital transformation timelines in a record-breaking growth market, someone is quietly implementing their own Ferrari Formula for annuities. The race is already on.
The most dangerous competitor isn't the InsurTech startup that might disrupt you someday. It's the annuity carrier that decides to treat operational excellence like Ferrari treats racing: with the precision and urgency a $434 billion market deserves.
Ready to see what Ferrari-level precision looks like in investment-linked annuities?
