First quarter sales for life insurance gets a 9 per cent boost

Regular premium products show positive growth
Singapore, 13 May 2013

The life industry achieved a total of $561.8 million in weighted* new business premiums for the first quarter of 2013, a nine per cent increase over the same period in the previous year.

Sales of regular premium products fared well, totaling $428.9 million for the first quarter of 2013, up by a sizeable 19 per cent over the same period in 2012. 

Sales for single premium products however dipped by 15 per cent to total $132.9 million of weighted single premiums, down from $157 million for the same period last year.  Of this amount, 18 per cent comprised CPF-funded sales.

Ms. Annette King, President of the Life Insurance Association (LIA), said, “The industry has sustained a level of growth despite a slowing economy.  It is encouraging to note that life insurance is weathering a cloudy outlook and could possibly be owing to the innovative portfolio of solutions available from industry players.”

Other Highlights (January to March 2013)

Total Sum Assured

The total sum assured for new business dipped six per cent, to reach $16.3 billion for the first quarter of 2013.

Health Insurance

Health insurance sales has been trending up over the years.  As of 31 March 2013, a total of 2.63 million lives were covered with paid up premiums amounting to $1.1 billion. The amount of new health insurance premiums shot up 78 per cent in the first quarter to $65 million compared to the same period last year. The bulk of this – 91 per cent – went to Integrated Shield Plans and riders.  Shield participating members have enhanced their plans to provide more comprehensive benefits for policyholders in response to better coverage provided by the national Medishield scheme which took effect from 1 March 2013.  As a consequence, the premiums of Shield plans have been revised upwards.

Distribution Channels

Tied agents continue to be one of the main channels of distribution for new business.  By policy count and weighted premiums, tied agents contributed 58 per cent and 41 per cent of the business respectively.

Banks made up another main channel of distribution, accounting for 40 per cent of weighted premium sales and contributing 18 per cent of the total number of policies sold.

Financial Advisers contributed 16 per cent of sales whilst other channels, including direct sales, made up the remaining three per cent.  By policy count, Financial Advisers accounted for 11 per cent of the business and the other channels took up the remaining 13 per cent.

Product Classification

Participating (“par”) products accounted for 56 per cent of new sales while non-par products accounted for 28 per cent. Investment-linked products made up the remaining 16 per cent.

Product License Classification

As at 31 March 2013, insurers holding “Normal” licenses contributed to 95 per cent of new sales, while the “Defined Market Segments” (DMS) insurers, represented by six companies, contributed the remaining five per cent.

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

Claims Payout

Up to the end of March 2013, the life insurance industry paid out a total of $1.49 billion to policyholders and beneficiaries.

Of this, $114 million was in respect of death, critical illness or disability claims, whilst the remaining $1.38 billion was for policies that matured.

Fact-Find Experience

For the period January to March 2013, policies were sold based on the following choices of the applicants:

  • Comprehensive Planning: 7 per cent
  • Specific Need(s) Planning: 87 per cent
  • No Needs Analysis Purchase: 6 per cent

(Explanatory Note: Revised LIA Application Types took effect on 1 August 2012

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.)

Other Highlights (In force as at March 2013)

Group Insurance

Total annual premiums in force for group insurance business rose by 14 per cent compared with a year ago, amounting to $817 million.

Assets

As at end of 2012, the life insurance industry was managing assets** of approximately $132.4 billion, up 12 per cent compared with a year ago.  Assets of non-linked business accounted for $107.9 billion, while the remaining $24.5 billion were assets held for investment-linked policies.

Manpower in the Industry

As at 31 March 2013, a total of 5,568 office staff were employed by member companies of the LIA and 13,415 representatives held exclusive contracts with companies that operate a tied agency force.

Looking Forward

The LIA was heartened to note that its consumer confidence index is on the rise.  Earlier this year an independent survey conducted by the Institute of Service Excellence at the Singapore Management University (ISES) found that insurance customers are getting better quality and value. The 2012 Customer Satisfaction Index showed that the life insurance sector’s service rating improved by nearly six per cent over the previous year to score 70.6 points (on a scale of 0 to 100).

“We believe this stems from the industry’s commitment to raise the knowledge and skills of life insurance representatives, both in the technical and consumer-service aspects as these are important to our customers.”

In early 2012, the MAS implemented new examination requirements for all appointed representatives providing advice on or arranging investment-linked policies (ILPs), classified as the CMFAS Module 9A.

Ms King said based on LIA’s latest information, an average of 82 per cent of life agents with the major insurers has passed the module, and that the industry is well on the way to having representatives qualified in this new requirement.

“This examination is another milestone in the learning journey of our advisers, who undertake stringent professional development modules on an ongoing basis.”

This year, the LIA’s public education campaign features radio personality The Flying Dutchman, and marks the first time a non-industry personality has been nominated to champion life insurance to the general public.

The Flying Dutchman will embark on a series of blogs on life insurance matters, and members of the public can pose a series of questions to which he will respond to on the LIA website.

“With increasing consumer confidence in the value of life insurance, we are banking on an uptrend in new sales for the rest of the year,” said Ms King.

In Summary

New Business Sales (Weighted Basis)

  Jan – Mar 2013 Jan – Mar 2012 Change
Single Premium $132.9 million $157.0 million -15%
Annual Premium $428.9 million $360.0 million 19%
Total $561.8 million $517.0 million 9%
  Jan – Mar 2013 Oct – Dec 2012 Change
Single Premium $132.9 million $138.9 million -4%
Annual Premium $428.9 million $441.4 million -3%
Total $561.8 million $580.3 million -3%

*   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