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).

Resilient Community

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.

Resilient Economy

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.

Resilient Future

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

Product Classification

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.

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 37 57
Bank Representatives 38 12
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.

Claims Payout

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 -

Note to Editor: Industry results of YTD 4Q2016 are available at www.lia.org.sg/industry/performance

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan  Dec 2016
S$

Jan – Dec 2015
S$

Change
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
S$

Oct – Dec 2015
S$

Change
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
S$

Jul – Sep 2016
S$

Change
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

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