Do you have any idea where the indexed annuity capital of the world is? Believe it or not, Des Moines, Iowa, is the modern day indexed annuity capital. There are many reasons that you can find a large chunk of the insurance industry in Des Moines, and the indexed annuity market is following it’s insurance counterparts. Insurance News Net’s Cyril Tuohy discusses why “Des Moines (is) Becoming (the) Indexed Annuities Hub.” While Hartford and London are known for being their own kinds of annuities and insurance hubs, Des Moines takes the cake with indexed annuities. Over 35% of indexed annuity sales belong to the companies calling Des Moines home, or at least having main offices there.
Aviva, American Equity, Midland National Life, The Principal Life Insurance, EquiTrust Life, ING, North American Co., and Farm Bureau Life have strong presences in the Des Moines-West Des Moines area. They sold $7.8 billion of indexed annuities in just the first quarter of this year between them. There are also many insurance underwriters and brokers that call Iowa, and more precisely Des Moines, home. There are 212 insurance companies registered in the state of Iowa. According to the Greater Des Moines Partnership, 8 large insurance companies have relocated or expanded in Des Moines in the last 5 years. Aviva is one of the main companies to do so.
Iowa’s premium tax rate has a lot to do with the fact that many insurance companies are being drawn there. In 2006, the tax rate was lowered from 2% to 1% for life insurers. That change came to property/casualty insurers one year later. Only 5 states in the U.S. have lower life tax rates and only 6 states have lower health tax rates than Iowa. In addition to the lower tax rates, Iowa has a lower cost of living, a highly skilled workforce, and economic incentives in addition to the low tax rates. As low interest rates have effected insurance companies, the tax rates and low cost of living in Des Moines have made it more attractive. Although Athene Holding Ltd. bought Aviva USA, the annuity business will remain in West Des Moines and not be moved out of the state. The business and political leaders in Iowa will continue to work hard to attract annuity and other insurance business to the state.
Written by Rachel Summit