2015 year of growth and implementation of key initiatives for Singapore's life insurance industry

Protection cover increased by S$12.6 billion, up 14 per cent in 2015
Singapore, 10 February 2016

The Life Insurance Association Singapore (LIA Singapore) today announced industry results for the period January to December 2015 (YTD 4Q2015).

Overall, the industry achieved a total of almost $3 billion in weighted new business premiums1 for the year ended 31 December 2015.

Weighted annual premium sales saw a seven per cent increase to S$2 billion when compared to 2014.
 
Weighted single premium sales saw a nine per cent increase to S$940.8 million, of which single premium linked sales comprised 26 per cent. CPFIS-included policies comprised 16 per cent of single premium business.

Dr. Khoo Kah Siang, President of LIA Singapore said, "I am pleased to highlight that the life insurance industry saw healthy growth across all types of businesses and provided new protection cover totalling S$101.2 billion compared to 2014, which represents a 14 per cent increase in new business sum assured."

"2015 has been a purposeful year for life insurers in Singapore as we focused on implementation of the key Financial Advisory Industry Review (FAIR) initiatives - compareFIRST, Direct Purchase Insurance (DPI) products and Balanced Scorecard for financial adviser representatives."

"Insurers that issue Integrated Shield Plans (IPs) have been working closely with the Ministry of Health to implement Medishield Life in November 2015. A top priority remains to work on achieving more effective management of ever rising healthcare costs in Singapore, if health insurance is to remain largely affordable."

DPI products drew approximately S$550,000 of weighted new premiums since it was launched on 7 April 2015. DPIs are regular premium plans offering protection benefits.

Total annual premiums in-force for group insurance business rose by seven per cent compared with a year ago, amounting to S$975 million.

HIGHLIGHTS FOR 2015

Total Sum Assured

The total sum assured for new business increased by 14 per cent to S$101.2 billion for 2015 compared to the same period in 2014.

Distribution Channels

The contribution of new business by the different channels of distribution is as follows:

Distribution channel By weighted premium (%) By number of policies (%)
Tied Representatives 40 60
Bank Representatives 37 12
Financial Adviser Representatives 19 12
Others (products sold without intermediaries, e.g. DPI, ElderShield) 4 16

By weighted premiums and policy count, tied representatives continue to be the main channel of distribution for life insurance in Singapore.

Product Classification

Par products accounted for 53 per cent of new sales while non-par products accounted for 28 per cent. Investment-linked products made up the remaining 19 per cent.

Product License Classification

As at 31 December 2015, insurers holding “Normal” licenses contributed 94 per cent of new sales, while the “Defined Market Segments” (DMS) insurers2 made up the remaining six per cent.

Claims Payout

As at 31 December 2015, the life insurance industry paid out S$5.97 billion to policyholders and beneficiaries. Of this amount, S$5.20 billion was for policies that matured. The remaining S$771 million was for death, critical illness or disability claims, which represented a 28 per cent increase from 2014.

Life insurance plays a unique role in providing policyholders and their families with peace of mind, knowing that insurance payouts will alleviate the financial burdens arising from sickness, death or simply a long retirement.

Surrender Rate

The surrender rate for 2015 went up to 2.19 per cent from 1.82 per cent in 2014, largely due to Standard Life’s closure of its Singapore Branch.

Assets

As at end September 2015, the life insurance industry was managing assets3 of approximately S$155.8 billion, up six per cent compared with a year ago. Assets of non-investment linked business accounted for S$128.8 billion, while the remaining S$27.0 billion were assets held for investment-linked business.

Manpower in the Industry

As at 31 December 2015, a total of 6,371 office staff were employed by member companies of the LIA and 14,669 representatives held exclusive contracts with companies that operate a tied agency force.

LOOKING FORWARD

Dr. Khoo Kah Siang, President of LIA Singapore said, "In 2016, the industry will continue to monitor and fine-tune the implementation of FAIR initiatives, if necessary, to ensure that the objectives and outcomes are aligned. For insurers with Integrated Shield Plans (IPs), the key priority remains to work on achieving more effective management of ever rising healthcare costs in Singapore, if health insurance is to remain largely affordable."

HEALTH INSURANCE

Introduction of Medishield Life and Integrated Shield Plans (IPs)

New health insurance premiums in 2015 totalled S$231 million, of which 88 per cent went to IPs and IP riders.

There was a 13 per cent dip in 2015 compared to the same period in 2014. The 2014 performance (specifically the first quarter’s results) had carried the impact of insurers’ pricing revisions in March 2013.

Approximately one in two individuals in Singapore (2.83 million lives) have health cover with total premiums amounting to S$1.75 billion as at 31 December 2015. This reflects steady growth over the years, with an increase from 2.75 million insured lives and total premium of $1.58 billion over the corresponding period in 2014.

IP insurers continue to work closely with the Ministry of Health (MOH) to ensure that Singaporeans have an understanding of MediShield Life and the complementary role of the top-up portion comprising a private IP plan.

All IP insurers have in place training programmes, guidebooks with Frequently Asked Questions (FAQs) and other reference points to ensure that financial adviser representatives are trained on the changes and able to assist policyholders. They are well-placed to clearly explain the changes to policyholders and advise on IP plans.

IP policyholders enjoy the benefits of MediShield Life as well as additional benefits from their IP portion such as personal choice of doctors and pre- and post-hospitalisation coverage.

IPs provide cover to 64 per cent of Singaporeans and Permanent Residents and have paid out claims amounting to S$488 million for the financial year 20144.

The industry will continue to review initiatives and, where appropriate, introduce more efforts to inform and educate Singaporeans.

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan – Dec 2015
S$

Jan – Dec 2014
S$

Change
Single Premium 940.8 million 860.8 million 9%
  Linked 244.0 million 200.6 million 22%
  Non-linked 696.8 million 660.2 million 6%
Annual Premium 2,057.2 million 1,928.0 million 7%
Total 2,998.0 million 2,788.8 million 8%
Comparison with Corresponding Quarter Oct – Dec 2015
S$

Oct – Dec 2014
S$

Change
Single Premium 281.9 million 219.8 million 28%
  Linked 61.0 million 59.0 million 3%
  Non-linked 220.9 million 160.8 million 37%
Annual Premium 550.3 million 544.5 million 1%
Total 832.2 million 764.3 million 9%
Comparison with Last Quarter Oct – Dec 2015
S$

Jul – Sep 2015
S$

Change
Single Premium 281.9 million 271.1 million 4%
  Linked 61.0 million 60.6 million 1%
  Non-linked 220.9 million 210.5 million 5%
Annual Premium 550.3 million 541.9 million 2%
Total 832.2 million 813.0 million 2%

1  Weighted new business premiums measures premiums collected on new policies by taking into account (1) 10 per cent of the value of single premium products, (2) all of a year’s premiums for annual premium products, and (3) adjusted value for products with premium payment durations of less than 10 years.

 The figure is calculated as follows: 10% Single Premium Insurance + 100% Annual Premium Insurance + Adjusted premium for Insurance with premium payment durations of less than 10 years

2 DMS insurers are registered by MAS to conduct only non-CPF business and with minimum policy size.

 

3 www.mas.gov.sg 

 

4 Source: Ministry of Health. (2015 April 30). Government Health Expenditure and Healthcare Financing. Retrieved from https://www.moh.gov.sg/content/moh_web/home/statistics/Health_Facts_Singapore/Healthcare_Financing.html