Strong start to 2017 for life insurance industry

Positive growth in single premium and annual premium business due to new products and distribution channels
Singapore, 08 May 2017

Singapore’s life insurance industry started the year strongly with a total of S$811.0 million in weighted new business premiums1 for the period January to March (1Q2017), a 19 per cent increase compared to 1Q2016. The industry continued to contribute to Singapore’s economy which expanded by two per cent in 2016, beating initial forecasts2. Results for 1Q2017 were announced by the Life Insurance Association Singapore (LIA Singapore) today.
 
The continued healthy growth can be attributed to the industry’s agility in responding to consumers’ fast-changing needs. Life insurers are providing consumers more options in the form of new products and multiple channels to buy insurance policies from. This is also reflected in increased engagement through activities across the different distribution channels, including tied agents, banks and financial advisers.

There was an increase in uptake across both single and annual premiums.  

Compared to same period in 2016, the industry recorded:

a) a 30 per cent increase to S$281.3 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 14 per cent increase to S$529.7 million in weighted annual premiums
 
Mr. Patrick Teow, President of LIA Singapore, said, “The encouraging results in the first quarter point to our core focus of bridging Singapore’s protection gap. Work is underway on a fresh Protection Gap Study this year. Ensuring adequate protection is especially critical at a time of economic uncertainty and rapid demographic shifts in Singapore. Life insurers are increasingly leveraging digitalisation to innovate and respond to these fundamental changes.”

Accordingly, the industry recorded sum assured for new business totalling S$24.3 billion. This was a significant 10 per cent increase compared to the corresponding period in 2016 as the industry continues to better meet the protection needs of society.

On top of this, approximately 20,000 Singapore residents bought additional health insurance coverage to complement MediShield Life in the first quarter of the year.

In all, new health insurance premiums3 totalled S$66 million for 1Q2017, of which Integrated Shield Plans (IP) premiums and IP riders accounted for 90 per cent (S$59 million). The remaining S$7 million was contributed by other medical plans and riders.  

As at 31 March 2017, 2.91 million lives (approximately one in two individuals in Singapore) are insured.  

OTHER HIGHLIGHTS FOR 1Q2017

Product Classification

Par products accounted for 55 per cent of new sales while non-par products accounted for 31 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 is as follows: 

Distribution channel By weighted premium (%) By number of policies (%)
Tied Representatives 33 53
Bank Representatives 46 16
Financial Adviser Representatives 17 16
Others (products sold without intermediaries, e.g. DPI, ElderShield) 4 15

Product License Classification

As at 31 March 2017, insurers holding “Normal” licenses contributed 97 per cent of new sales, while the “Defined Market Segments” (DMS) insurers4 made up the remaining three per cent of new sales for 1Q2017.

Claims Payout

As at 31 March 2017, the life insurance industry paid out S$1.39 billion to policyholders and beneficiaries. Of this amount, S$1.18 billion was for policies that matured. The remaining S$212 million was for death, critical illness or disability claims.  

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

There was an uptake of 5,092 policies designed to provide regular payout to policyholders during retirement years, with approximately S$40 million of weighted new premiums recorded over the quarter.

Such plans accounted for approximately five per cent of the total weighted premiums for 1Q2017. 

Insurers are increasing efforts to help Singaporeans better plan and prepare for retirement.

This is especially critical because of Singapore’s rapidly ageing population which, if not effectively managed, will increase the financial burden placed on our smaller economically active workforce and the government.

Singapore has the highest proportion of older residents and the fastest ageing population in South-east Asia, according to the World Bank5. In fact, the number of those aged 65 and above will nearly double from 220,000 in 2000 to approximately 900,000 in 20306.

Currently, one in three working adults is not planning for their retirement7.

Group Insurance: Total Annual Premiums Inforce

Total annual premiums in-force for group insurance business rose by five per cent compared with a year ago, amounting to S$1.03 billion.

Assets

Contributing to Singapore as a leading insurance hub in Asia, the life insurance industry manages assets of approximately S$173.0 billion, up eight per cent compared with a year ago.

Assets of non-investment linked business accounted for S$143.5 billion, while the remaining S$29.5 billion were assets held for investment-linked business.

Manpower in the Industry

There was a six per cent increase in the number of employed individuals within the life insurance industry in 1Q2017.

14,269 representatives held exclusive contracts with companies that operate a tied agency force.

6,883 individuals were employed by member companies, up from 6,503 staff in 1Q2016. The industry continues to seek talent in all areas, including underwriting and specialised digital technologies.

Continued employment opportunities in the life industry contrasts with rising unemployment rates in Singapore, which climbed to 2.3 per cent8 in 1Q2017, and is expected to creep up further this year as the workforce ages and older workers who lose their jobs take longer to find new ones9.

LOOKING FORWARD

“Moving ahead, the industry is re-defining ‘protection’ with people-centric initiatives that include championing preventive healthcare for a healthier population because prevention is better and cheaper than cure. In this, Singapore's life insurance industry aspires to be the catalyst for change within our nation’s healthcare eco-system,” added Mr Teow. 

Key initiatives in 2017 include:

  • Launch of a fresh Protection Gap Study
  • Progress updates on industry efforts following the Health Insurance Task Force recommendations

- End -

Note to Editor: Industry results of 1Q2017 are available at www.lia.org.sg/industry/performance

In Summary

New Business Sales (Weighted Basis)   

Comparison with Corresponding Period Jan  Mar 2017
S$

Jan – Mar 2016
S$

Change
Single Premium 281.3 million 215.9 million 30%
  Linked 62.8 million 45.7 million 38%
  Non-linked 218.5 million 170.2 million 28%
Annual Premium 529.7 million 466.2 million 14%
Total 811.0 million 682.1 million 19%
Comparison with Last Quarter Jan  Mar 2017
S$

Oct – Dec 2016
S$

Change
Single Premium 281.3 million 294.2 million -4%
  Linked 62.8 million 67.3 million -7%
  Non-linked 218.5 million 226.9 million -4%
Annual Premium 529.7 million 661.1 million -20%
Total 811.0 million 955.3 million -15%

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   Singapore economy grows 2% in 2016, helped by strong Q4 (17 Feb 2017). Channel NewsAsia. Available at:
    http://www.channelnewsasia.com/news/singapore/singapore-economy-grows-2-in-2016-helped-by-strong-q4-7586978

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

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

5   Fast-ageing Singapore, fewer to support aged; Trend worries experts (27 Sep 2013). The Straits Times. Available at:
    http://www.straitstimes.com/singapore/fast-ageing-singapore-fewer-to-support-aged-trend-worries-experts
 

6  Singapore feeling impact of rapidly ageing population (1 Jul 2015). TODAY. Available at:
    http://www.todayonline.com/singapore/singapore-feeling-impact-rapidly-ageing-population

7   1 in 3 working Singaporean adults not planning for retirement: Survey (15 Feb 2016). Channel NewsAsia. Available at:
    http://www.channelnewsasia.com/news/singapore/1-in-3-working-singaporean-adults-not-planning-for-retirement-su-8175450

8   May Day Rally: Singapore has to work hard to tackle rising unemployment, says PM Lee (1 May 2017). Channel NewsAsia. Available at:
    http://www.channelnewsasia.com/news/singapore/may-day-rally-singapore-has-to-work-hard-to-tackle-rising-8808356

9   May Day Rally: Singapore has to work hard to tackle rising unemployment, says PM Lee (1 May 2017). Channel NewsAsia. Available at:
    http://www.channelnewsasia.com/news/singapore/may-day-rally-singapore-has-to-work-hard-to-tackle-rising-8808356