Life insurance industry's strong first half results bolstered by significant growth in second quarter

Increased take-up in single premium non-linked products over linked products as individuals seek stability amid increased volatility in the investment market
Singapore, 10 August 2016

The Life Insurance Association Singapore (LIA Singapore) today announced industry results for the period January to June 2016 (1H2016). Overall, the life industry achieved a total of $1,522.6 million in weighted new business premiums1 for the first half of 2016, a 13 per cent increase over the same period in 2015.

The preference for non-linked premium products over linked products remained consistent across the first six months of the year against the backdrop of global market uncertainty.

Compared to 1H2015, the industry also recorded:
a) a 28 per cent increase to S$498.0 million in weighted single premiums, of which
    - single premium par and non-par products comprised 80 per cent
    - CPFIS-included products comprised 12 per cent
b) a six per cent increase to S$1,024.6 million in weighted annual premiums

Strong first half results were bolstered by the industry's significant growth in the second quarter. This can be attributed to an overall increase in uptake of single premium non-linked products over single premium linked products as consumers seek more risk-averse options amidst the current market volatility. There has also been an increase in uptake of Integrated Shield Plans (IPs) and IP riders in the second quarter of the year compared to the first quarter following the introduction of MediShield Life in November 2015.

Dr. Khoo Kah Siang, President of LIA Singapore, said, “We are encouraged by the strong first half results which reflects the industry’s ability to adapt and introduce innovative products for policyholders in today’s fast-changing macro-economic environment. The total sum assured for new business rose strongly by 15 per cent, totalling S$50.8 billion as compared to the same period in 2015 as life insurers help individuals better meet their protection needs.

The results also show that Singaporeans recognise the value of health insurance and we, as an industry, are committed to ensuring that medical coverage remains affordable for all.

Accordingly, we continue to focus efforts on collaborating with multiple stakeholders to better manage rising healthcare costs in Singapore. An example of this was our support of The Good Life Co-operative Conference 2016 themed 'Cost of a Sustainable Healthcare Ecosystem - Who Pays What'. The conference held in June brought together representatives from the government as well as medical and insurance sectors to discuss the matter.

New health insurance premiums2 totalled S$106 million for the first half of 2016, recording a 25 per cent increase in take-up from the previous quarter. A sizeable portion of this comes from new sales which is indicative of more Singaporeans understanding and appreciating the complementary role of IPs to MediShield Life.

Overall, IP premiums and IP riders accounted for S$89 million of new health insurance premiums for the first six months of the year, with other medical plans and riders contributing the remaining S$17 million.

As at 30 June 2016, approximately one in two individuals in Singapore (2.86 million lives) are covered by health insurance with total premiums amounting to S$1,317 million. 

OTHER HIGHLIGHTS FOR 1H2016

Direct Purchase Insurance (DPI) Products

A total of 435 DPI policies were sold and drew approximately S$371,000 of weighted new premiums for the first half of 2016. Based on premiums, eighty five per cent of the new sales comprised regular premium term life policies.  Since its launch on 7 April 2015, 1,081 policies have been purchased to date.

Product Classification

Par products accounted for 55 per cent of new sales while non-par products accounted for 32 per cent. Investment-linked products made up the remaining 13 per cent.

Distribution Channels

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

Distribution channel By weighted premium (%) By number of policies (%)
Tied Representatives 36 58
Bank Representatives 41 13
Financial Adviser Representatives 19 13
Others (products sold without intermediaries, e.g. DPI, ElderShield) 4 16

Product License Classification

As at 30 June 2016, insurers holding "Normal" licenses contributed 97 per cent of new sales compared to 95 per cent in 1H2015. The DMS "Defined Market Segments" (DMS) insurers3 made up the remaining three per cent of new sales for the first half of 2016.

Claims Payout

As at 30 June 2016, the life insurance industry paid out S$2.99 billion to policyholders and beneficiaries. Of this amount, S$2.56 billion was for policies that matured. The remaining S$429 million was for death, critical illness or disability claims, which represented a 15 per cent increase from the same period in 2015.

Life insurance plays a key 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.

Group insurance: Total annual premiums in-force

Total annual premiums in-force for group insurance business rose by three per cent compared with a year ago, amounting to S$983 million.

Assets

As at end March of 2016, the life insurance industry was managing assets4 of approximately S$163.8 billion, up four per cent compared with a year ago. Assets of non-investment linked business accounted for S$136.5 billion, while the remaining S$27.3 billion were assets held for investment-linked business.

Manpower in the Industry

As at 30 June 2016, a total of 6,328 office staff were employed by member companies of the LIA and 14,103 representatives held exclusive contracts with companies that operate a tied agency force.

LOOKING FORWARD

The life insurance industry is expected to be resilient amidst continuing economic challenges and uncertainties faced by major economies and a sluggish domestic economy as individuals should be seeking to ensure that they are adequately protected and remain protected as a priority in managing their finances.

– End –

Note to Editor: Industry results of 1H2016 are available at: www.lia.org.sg/industry/performance

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan Jun 2016
S$

Jan – Jun 2015
S$

Change
Single Premium 498.0 million 387.8 million 28%
  Linked 97.5 million 122.3 million -20%
  Non-linked 400.5 million 265.5 million 51%
Annual Premium 1,024.6 million 964.9 million 6%
Total 1,522.6 million 1,352.7 million 13%
Comparison with Corresponding Quarter Apr  Jun 2016
S$

Apr – Jun 2015
S$

Change
Single Premium 282.1 million 183.3 million 54%
  Linked 51.9 million 69.3 million -25%
  Non-linked 230.2 million 114.0 million 102%
Annual Premium 562.8 million 520.0 million 8%
Total 844.9 million 703.3 million 20%
Comparison with Last Quarter Apr  Jun 2016
S$

Jan – Mar 2016
S$

Change
Single Premium 282.1 million 215.9 million 31%
  Linked 51.9 million 45.7 million 14%
  Non-linked 230.2 million 170.2 million 35%
Annual Premium 562.8 million 466.2 million 21%
Total 844.9 million 682.1 million 24%

1Weighted 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

2With effect from 1 January 2016, the MediShield Life premiums has been excluded from LIA statistics.

3DMS insurers are registered by MAS to conduct only non-CPF business and with minimum policy size.

4www.mas.gov.sg