Life insurance sales rise 10 per cent in the first nine months this year

Regular premium sales sustain growth momentum
Singapore, 06 November 2012

The industry achieved a total of $1,608.1 million in weighted* new business premiums for the first nine months of 2012, representing a 10 per cent improvement over the corresponding period in 2011.

The overall performance was driven by the positive quarter-to-quarter growth in the sales of regular premium products. The first three quarters hit $1,160.8 million, registering a 20 per cent growth over the same period last year.

Single premium business, however, dipped 10 per cent at $447.3 million. Of this amount, 14 per cent comprised CPF-funded sales.

Mr Tan Hak Leh, President of the Life Insurance Association said: "Overall, we have seen consistent growth since the start of 2012. We naturally take a restrain view in our target estimates for the next quarter in light of the forces of the economic climate."

Other Highlights (January to September 2012)

Total Sum Assured

The total sum assured for new business stood at $56.9 billion for the first nine months of 2012, a 16 per cent increase over the same period last year.

Health Insurance

As at 30 September 2012, a total of 2.58 million lives were covered by health insurance with paid up premiums amounting to $972 million. New health insurance sales increased by 12 per cent to $138 million compared to the first nine months of last year. The bulk of this - 88 per cent - went to Integrated Shield Plans and riders.

Distribution Channels

Tied agents continue to be the main channel of distribution for new business. By policy count and weighted premiums, tied agents contributed 58 per cent and 44 per cent of the business respectively.

The steady uptrend in bank sales continued, with the bank channel accounting for 37 per cent of weighted premium sales, up by two percentage points from the same period the previous year. It accounted for 16 per cent of the total number of policies sold.

Financial Advisers contributed 15 per cent of sales while other channels, including direct sales, made up the remaining 4 per cent.  By policy count, Financial Advisers accounted for 10 per cent of the business and the other channels took up the remaining 16 per cent.

Product Classification

Of the new sales, participating ("par") products accounted for 52 per cent while non-par products accounted for 29 per cent. Investment-linked products made up the remaining 19 per cent.

Product License Classification

As at 30 September 2012, a total of 96 per cent of new sales were contributed by insurers holding "Normal" licenses. The "Defined Market Segments" (DMS) insurers, represented by five companies, contributed the remaining 4 per cent.

(Explanatory note: DMS insurers are registered with the MAS to conduct only non-CPF business and with minimum policy sizes.)

Claims Payout

Up to the end of September 2012, the life insurance industry paid out a total of $4.51 billion to policyholders and beneficiaries.

Of this, $313 million was in respect of death, critical illness or disability claims, whilst the remaining $4.20 billion was for policies that matured.

Fact-Find Experience

LIA revised its Application Type Options, which took effect on 1 August 2012. The four options of Full Advice, Partial Advice, Product Advice, and No Advice have been replaced with the following three options:

  1. Comprehensive Planning
  2. Specific Need(s) Planning
  3. No Needs Analysis Purchase

Under comprehensive planning, the client completes the full fact-find where he receives the representative's recommendation on product suitability.

For specific need(s) planning, the client completes a full fact-find for at least one of his needs that he wishes to receive the representative's recommendation on the suitability of the product.

Under no needs analysis purchase, the customer does not undergo any needs analysis and is responsible for choosing the product he finds most suitable for himself.  However, the representative is required to explain the product features, its fees and charges to the customer.

Mr Tan said: "The industry has seen sustained growth in the take up rate of the fact-find over the last few quarters as more consumers recognise the value of the fact-find in making informed decisions. With the new changes, consumers will now get a clearer understanding of the type of information and responsibilities required of them for the various options.

"On the other hand, representatives will have to comply with the minimum requirements outlined for each Application Type option where applicable, and they are obligated to gather certain information before they can advise the client on the product," he added.

For the period of August to September 2012,
Comprehensive Planning:  7 per cent
Specific Need(s) Planning: 86 per cent
No Needs Analysis Purchase: 7 per cent

Other Highlights (In force as at September 2012)

Group Insurance

Total annual premiums in force for group insurance business rose by 10 per cent compared with a year ago, amounting to $755 million.

Assets

In the first half of 2012, the life insurance industry was managing assets** of approximately $124.4 billion, up 3 per cent compared with a year ago. Assets of non-linked business accounted for $101.4 billion, while the remaining $23.0 billion were assets held for investment-linked policies.

Manpower in the Industry

As at 30 September 2012, a total of 5,470 office staff were employed by member companies of the LIA and 13,439 representatives held exclusive contracts with companies that operate a tied agency force.

Looking Forward

In its latest review, the Monetary Authority of Singapore indicated that the local economy is likely to see sluggish growth for the rest of the year and for 2013.

Mr Tan commented: "Given the challenging economic environment, the performance of the life insurance industry for 2012 could potentially be impacted. However, it is comforting to note the overall growth as well as the sustained and healthy performance of regular premium sales, which comprised long-term life insurance plans such as participating products which offer protection and savings.

"While the economy remains uncertain, one's financial planning should not be put on hold. The LIA and its members remains committed in educating consumers about the importance of being adequately insured, be it in good times or in times of uncertainty. The industry is determined to further narrow the gap between Singaporeans' protection needs and the existing level of coverage they have," he concluded.

In Summary

New Business Sales (weighted Basis)

  Jan – Sep 2012 Jan – Sep 2011 Change
Single Premium $447.3 million $498.6 million -10%
Annual Premium $1,160.8 million $965.9 million 20%
Total $1,608.1 million $1,464.5 million 10%

  Jul – Sep 2012 Jul – Sep 2011 Change
Single Premium $153.7 million $177.3 million -13%
Annual Premium $408.6 million $345.7 million 18%
Total $562.3 million $523.0 million 8%

*   The weighted new business premium figure is calculated as follows:
    10% SPI + 100% API with adjustment for premium payment terms of less than 10 years.

**  Source: MAS