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Strong growth in 2016 amidst challenging macro-economic environment
Life insurance industry drives efforts to combat factors contributing to medical claims escalation
Singapore, 14 February 2017
The Life Insurance Association Singapore (LIA Singapore) today announced industry results for the period January to December 2016 (YTD 4Q2016).
Total weighted new business premiums1 for YTD 4Q2016 saw healthy growth of a 10 per cent increase compared to the same period in 2015, with increased interest in non-participating products.
Compared to the national Gross Domestic Product (GDP) for 2016 of 1.8 per cent2, the industry's growth of 10 per cent is more than five times the rate at which the economy expanded. Total weighted new business premiums amounted to S$3,286.2 million for the year.
Dr. Khoo Kah Siang, President of LIA Singapore, said, "The life insurance industry consistently made good progress quarter on quarter, as more Singapore residents took a long-term perspective to financial planning and got better protected. The industry also reached out to claimants or beneficiaries of unclaimed proceeds by launching the LIA Register of Unclaimed Life Insurance Proceeds a year ago.
With long-term consumer interests in mind, the industry undertook proactive action to address Singaporeans' concern with escalating healthcare costs through the formation of the Health Insurance Task Force (HITF).
Compared to the same period in 2015, the total sum assured for new business rose strongly by 15 per cent, totalling S$117 billion as the industry continues to help individuals better meet their protection needs.
In all, new health insurance premiums3 totalled S$241 million for YTD 4Q2016, of which Integrated Shield Plans (IP) premiums and IP riders accounted for 86 per cent (S$208 million). The remaining S$33 million was contributed by other medical plans and riders.
In 2016, more than 50,000 Singapore residents took up health insurance coverage primarily through IPs and IP riders. As at 31 December 2016, 2.89 million lives (approximately one in two individuals in Singapore) were covered with total premiums amounting to S$1,416 million.
In the face of Singapore's employment growth in 2016 hitting a 13-year low4, the life insurance industry however experienced an expansion in headcount. As at 31 December 2016, 6,663 individuals were employed by member companies, representing a five per cent increase from 6,371 staff for YTD2015. 14,420 representatives held exclusive contracts with companies that operate a tied agency force.
Contributing to Singapore as a leading insurance hub in Asia, the life insurance industry manages assets of approximately S$173.1 billion, up 11 per cent compared with a year ago. Assets of non-investment linked business accounted for S$143.8 billion, while the remaining S$29.3 billion were assets held for investment-linked business.
Looking ahead, industry initiatives in 2017 are likely to include consumer education and strengthening the sustainability of the healthcare financing system. Following the HITF recommendations released in October last year, LIA is facilitating the implementation of relevant recommendations by industry players.
Industry players continue to work on digital innovation to increase choice and lower costs for consumers. LIA Singapore, along with stakeholders such as the Monetary Authority of Singapore (MAS), signed the Statement of Intent to pledge their support.
The election of the Association's Management Committee and officers will be held in early March 2017.
OTHER HIGHLIGHTS FOR YTD 4Q2016
Compared to YTD 4Q2015, the industry also recorded:
a) a nine per cent increase to S$1,025.1 million in weighted single premiums:
- Single premium par and non-par products comprised 78 per cent, the balance 22 per cent were single premium linked products
- CPFIS-included products comprised 13 per cent; Cash-funded products took the remaining 87 per cent
b) a 10 per cent increase to S$2,261.1 million in weighted annual premium
Par products accounted for 52 per cent of new sales while non-par products accounted for 34 per cent. Investment-linked products made up the remaining 14 per cent.
The contribution of new business by the different channels of distribution remained consistent as follows:
|Distribution channel||By weighted premium (%)||By number of policies (%)|
|Financial Adviser Representatives||21||15|
|Others (products sold without intermediaries, e.g. DPI, ElderShield)||4||16|
Product License Classification
As at 31 December 2016, insurers holding "Normal" licenses contributed 97 per cent of new sales compared to 94 per cent in YTD 4Q2015. The "Defined Market Segments" (DMS) insurers5 made up the remaining three per cent of new sales for YTD 4Q2016.
As at 31 December 2016, the life insurance industry paid out S$6.07 billion to policyholders and beneficiaries. Of this amount, S$5.23 billion was for policies that matured. The remaining S$835 million was for death, critical illness or disability claims, which represented an eight 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.
Products Providing Regular Payouts from Retirement Age
In respect of those products that are designed to provide regular payout to policyholders during retirement years, data showed that such plans accounted for approximately five per cent of the total weighted premiums for YTD 4Q2016.
A total of 17,927 policies were sold, with approximately S$163 million of weighted new premiums recorded over the year.
Group Insurance: Total Annual Premiums Inforce
Total annual premiums in-force for group insurance business rose by 0.4 per cent compared with a year ago, amounting to S$979 million.
- End -
New Business Sales (Weighted Basis)
|Comparison with Corresponding Period||Jan – Dec 2016
Jan – Dec 2015
|Single Premium||1,025.1 million||940.8 million||9%|
|Linked||226.1 million||244.0 million||-7%|
|Non-linked||799.0 million||696.8 million||15%|
|Annual Premium||2,261.1 million||2,057.2 million||10%|
|Total||3,286.2 million||2,998.0 million||10%|
|Comparison with Corresponding Quarter||Oct – Dec 2016
Oct – Dec 2015
|Single Premium||294.2 million||281.9 million||4%|
|Linked||67.3 million||61.0 million||10%|
|Non-linked||226.9 million||220.9 million||3%|
|Annual Premium||661.1 million||550.3 million||20%|
|Total||955.3 million||832.2 million||15%|
|Comparison with Last Quarter||Oct – Dec 2016
Jul – Sep 2016
|Single Premium||294.2 million||232.8 million||26%|
|Linked||67.3 million||61.2 million||10%|
|Non-linked||226.9 million||171.6 million||32%|
|Annual Premium||661.1 million||575.4 million||15%|
|Total||955.3 million||808.2 million||18%|
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 Source: Channel NewsAsia. (3 January 2017). Singapore’s economy grows 1.8% in Q4; 2016 GDP at 1.8%. Retrieved from: http://www.channelnewsasia.com/news/business/singapore/singapore-s-economy-grows-1-8-in-q4-2016-gdp-at-1-8/3408294.html
3 With effect from 1 January 2016, the MediShield Life premiums has been excluded from LIA statistics.
4 Source: The Straits Times. (27 Jan 2017). Economic uncertainty puts squeeze on job market. Retrieved from: http://www.straitstimes.com/singapore/manpower/economic-uncertainty-puts-squeeze-on-job-market
5 DMS insurers are registered by MAS to conduct only non-CPF business and with minimum policy size.
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