Life insurance industry sees sustained momentum of healthy growth from first quarter

Singapore, 07 August 2017

The Life Insurance Association Singapore (LIA Singapore) today announced that the industry continues on a momentum of strong growth from the first quarter, having achieved a total of S$1,682.0 million in weighted new business premiums1  for the first half of 2017. Accordingly, the industry recorded a significant 10 per cent increase in sum assured for new business compared to the corresponding period in 2016, totalling S$55.9 billion. This is a positive development in the context of economic uncertainties, an ageing population and a soft labour market2.

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

Compared to the same period in 2016, the industry recorded:

a) a 10 per cent increase to S$ 547.3 million in weighted single premiums:
- Single premium par and non-par products comprised 75 per cent, the balance 25 per cent were single premium linked products
- CPFIS-included products comprised 15 per cent; Cash-funded products took the remaining 85 per cent
b) a 11 per cent increase to S$ 1,134.7 million in weighted annual premiums

Health insurance premiums3 totalled S$154 million for 1H2017, of which Integrated Shield Plans (IP) premiums and IP riders accounted for 90 per cent (S$139 million). The remaining ten percent (S$15 million) came from other medical plans and riders. As at 30 June 2017, 2.92 million lives (approximately one in two individuals in Singapore) are insured.

Mr. Patrick Teow, President of LIA Singapore, said, “We are encouraged that the industry continues to grow from strength to strength. While we tirelessly work towards narrowing Singapore’s protection gap, helping Singaporeans to be better prepared for retirement is also a priority.  We see a steady take up of products designed to provide regular payouts from retirement age.  This shows that people are appreciating the importance of preparing ahead for their future years.

Retirement planning is an ongoing concern for both pre-retirees and their children because by 2030, there will only be two working adults supporting one retiree, as compared to about five per retiree last year4. The younger generation will be shouldering a greater financial burden of supporting the ageing population and ensuring that they have enough for other milestones, such as marriage and setting up their own families.”

Notably, there was an uptake of 10,680 policies designed to provide regular payouts to policyholders during retirement years, with approximately S$84 million of weighted new premiums recorded over the half year. Such plans accounted for approximately five per cent of the total weighted premiums for 1H2017.

OTHER HIGHLIGHTS FOR 1H2017

Product Classification

Par products accounted for 53 per cent of new sales while non-par products accounted for 32 per cent. Investment-linked products made up the remaining 15 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 35 55
Bank Representatives 43 13
Financial Adviser Representatives 18 17
Others (products sold without intermediaries, e.g. DPI, ElderShield) 4 15

Product License Classification

As at 30 June 2017, insurers holding “Normal” licenses contributed 97 per cent of new sales, while the “Defined Market Segments” (DMS) insurers5 made up the remaining three per cent of new sales for 1H2017.

Claims Payout

As at 30 June 2017, the life insurance industry paid out S$2.82 billion to policyholders and beneficiaries. Of this amount, S$2.38 billion was for policies that matured. The remaining S$440 million was for death, critical illness or disability claims.

Life insurance continues to play 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 Inforce

Total annual premiums in-force for group insurance business rose by seven per cent compared with a year ago, amounting to S$1.05 billion.

Assets

In strengthening Singapore’s position as one of the leading global financial hubs6, the life insurance industry manages assets of approximately S$182.4 billion, up 11 per cent compared with a year ago.

Assets of non-investmet linked business accounted for S$151.3 billion, while the remaining S$31.1 billion were assets held for investment-linked business.

Manpower in the Industry

As employment in Singapore continues to grow in the finance and industry sector7, we note an eight per cent increase in the number of employed individuals within the life insurance industry in 1H2017.

6,857 individuals were employed by member companies, up from 6,328 staff in 1H2016. The industry continues to seek talent in all areas, including underwriting and specialised digital technologies.

14,355 representatives held exclusive contracts with companies that operate a tied agency force.

LOOKING FORWARD

We aim to release the results of LIA’s Protection Gap Study before 2018.  The industry and individual life insurers are actively aligned to make Singapore a digitised nation.

- End -  

Note to Editor: Industry results of 1H2017 are available at www.lia.org.sg/industry/performance

In Summary

New Business Sales (Weighted Basis) 

Comparison with Corresponding Period Jan  Jun 2017
S$

Jan – Jun 2016
S$ 

Change
Single Premium 547.3 million 498.0 million 10%
  Linked 137.5 million 97.5 million 41%
  Non-linked 409.8 million 400.5 million 2%
Annual Premium 1,134.7 million 1,024.6 million 11%
Total 1,682.0 million 1,522.6 million 10%
Comparison with Corresponding Quarter Apr  Jun 2017
S$

Apr – Jun 2016
S$

Change
Single Premium 266.0 million 282.1 million -6%
  Linked 74.7 million 51.9 million 44%
  Non-linked 191.3 million 230.2 million -17%
Annual Premium 605.0 million 562.8 million 7%
Total 871.0 million 844.9 million 3%
Comparison with Last Quarter Apr  Jun 2017
S$

Jan – Mar 2017
S$

Change
Single Premium 266.0 million 281.3 million -5%
  Linked 74.7 million 62.8 million 19%
  Non-linked 191.3 million 218.5 million -12%
Annual Premium 605.0 million 529.7 million 14%
Total 871.0 million 811.0 million 7%

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   S’pore economy on track  to pick up pace: IMF, The Straits Times, Jul 30, 2017,
     http://www.straitstimes.com/business/economy/spore-economy-on-track-to-pick-up-pace-imf?login=true
 

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

4   Housing choice linked to retirement comfort (30 Nov 2016). AsiaOne. Available at:
     http://www.asiaone.com/singapore/housing-choice-linked-retirement-comfort
  
  

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

6  Singapore ‘third-best financial centre’ (9 April 2016). The Straits Times. Available at:
    http://www.straitstimes.com/business/companies-markets/singapore-third-best-financial-centre?login=true
  

7   Fewer layoffs, unemployment situation improves in Q2: Manpower Ministry (28 July 2017). Channel NewsAsia. Available at:
    http://www.channelnewsasia.com/news/singapore/fewer-layoffs-unemployment-situation-improves-in-q2-manpower-9072274