First half sales for life insurance gets a 24 per cent boost

New health insurance premiums more than double
Singapore, 12 August 2013

The life insurance sector posted strong results for the first half of 2013, hitting $1,298 million in weighted* new business premiums, a 24 per cent increase over the same period in the previous year. The growth was driven by healthy sales across all product lines.

Sales of regular premium products were particularly strong, totaling $983.8 million for the first half of 2013, up by a sizeable 31 per cent over the same period in 2012.

Sales of single premium products also increased by seven per cent to reach $314.2 million of weighted single premiums.  Of this amount, 18 per cent comprised CPF-funded sales.

Ms Annette King, President of the Life Insurance Association (LIA), said, "The industry experienced a challenging start to the year but we have seen a more positive turn into the second quarter with healthy sales across all product lines.  This reflects an improved economic outlook which we hope will continue into the next two quarters.

Other Highlights (January to June 2013)

Total Sum Assured

The total sum assured for new business increased by one per cent to reach $37.0 billion for the first half of 2013.

Health Insurance

New health insurance premiums shot up by a strong 126 per cent in the first half to $191 million compared to the same period last year.  The bulk of this – 94 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.

It can be expected that the sharp increases in new health premiums, first observed during the first quarter, will continue to flow through the remaining months as batches of Integrated Shield plans reach their policy anniversary dates to be renewed based on the revised prices.

As of 30 June 2013, a total of 2.65 million lives were covered with paid up premiums amounting to $1.2 billion.

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 60 per cent and 42 per cent of the business respectively.

Banks made up the other main channel of distribution.  By policy count and weighted premiums, it accounted for 15 per cent and 36 per cent of the business respectively.

Financial Advisers contributed 17 per cent of weighted premium sales whilst other channels, including direct sales, made up the remaining five per cent.  By policy count, Financial Advisers accounted for 12 per cent of the business and the other channels took up the remaining 13 per cent.

In summary:

Distribution channel By weighted premium (%) By number of policies (%)
Tied agents 42 60
Bank Distribution 36 15
Financial Advisers 17 12
Others 5 13

Product Classification

Participating ("par") products accounted for 54 per cent of new sales while non-par products accounted for 29 per cent. Investment-linked products made up the remaining 17 per cent.

Product License Classification

As at 30 June 2013, insurers holding “Normal” licenses contributed 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 June 2013, the life insurance industry paid out a total of $3.31 billion to policyholders and beneficiaries.

Of this, $253 million was in respect of death, critical illness or disability claims, whilst the remaining $3.06 billion was for policies that matured.

Fact-Find Experience

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

  • Comprehensive Planning: 7 per cent
  • Specific Need(s) Planning: 88 per cent
  • No Needs Analysis Purchase: 5 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 June 2013)

Group Insurance

Total annual premiums in force for group insurance business rose by 11 per cent compared with a year ago, amounting to $809 million.

Assets

As at end March of 2013, the life insurance industry was managing assets** of approximately $134.7 billion, up eight per cent compared with a year ago.  Assets of non-linked business accounted for $109.6 billion, while the remaining $25.1 billion were assets held for investment-linked policies.

Manpower in the Industry

As at 30 June 2013, a total of 5,657 office staff were employed by member companies of the LIA and 13,535 representatives held exclusive contracts with companies that operate a tied agency force.

Looking Forward

The Ministry of Trade and Industry of Singapore in its latest report published 23 May 2013 indicated a GDP growth forecast for 2013 at 1.0 to 3.0 per cent as external macroeconomic conditions stabilise. Although Singapore's economic growth eased in the first quarter, it is expected to improve gradually over the course of the year with the finance and insurance sectors taking the lead in fuelling growth.

"We are hopeful that improved market sentiment will augur well for the life insurance sector into the rest of the year.  We see opportunities in areas such as health and retirement planning," Ms King commented.

"Consumer confidence in life insurance solutions continues to grow and our industry remains committed to bolstering our capabilities in tandem with increased demand for specific needs planning and the growing financial sophistication of Singaporeans.

"Our public education initiatives will continue into the year and there are plans to initiate an annual Life Insurance Week in our ongoing efforts to strengthen awareness of life insurance among the broader community."

In Summary

New Business Sales (Weighted Basis)

  Jan – Jun 2013 Jan – Jun 2012 Change
Single Premium $314.2 million $293.5 million 7%
Annual Premium $983.8 million $752.2 million 31%
Total $1,298.0 million $1,045.7 million 24%
  Apr – Jun 2013 Apr – Jun 2012 Change
Single Premium $181.4 million $136.5 million 33%
Annual Premium $554.8 million $396.0 million 40%
Total $736.2 million $532.5 million 38%

*   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