Life insurance industry posts 28 per cent growth in 2013

Annual premium business remains as pillar of sustained growth
Singapore, 12 February 2014

The life insurance industry posted strong results for 2013, hitting $2.8 billion in weighted* new business premiums, a gain of 28 per cent over the previous year’s record.

Sales of annual premium products were particularly strong, totaling $2.1 billion for 2013, up by a sizeable 31 per cent over the same period in 2012.

Sales of single premium products also increased by 20 per cent to reach $0.7 billion of weighted single premiums.  Of this amount, 16 per cent comprised CPF-funded sales.

“Despite a slight dip in the fourth quarter, we maintained sales momentum to end the year with improved growth over the previous year,” said Dr. Khoo Kah Siang, President, Life Insurance Association.  “Annual premium products were the biggest drivers of growth for the year, echoing a more stable market environment and improved consumer sentiment.”

Other Highlights (January to December 2013)

Total Sum Assured

The total sum assured for new business increased by five per cent to reach $82.9 billion for 2013.

Health Insurance

New health insurance premiums went up by 145 per cent to $456 million compared to the previous year.  The bulk of this – 94 per cent – went to Integrated Shield Plans and riders.

In line with the upward revision to the benefits and premium rate of the basic MediShield plan in March 2013, participating Integrated Shield insurers also enhanced their plans.

As of 31 December 2013, a total of 2.68 million lives were covered with paid up premiums amounting to $1.4 billion.

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 agents 46 62
Bank Distribution 34 15
Financial Advisers 16 9
Others 4 14

By weighted premiums and by policy count, tied agents continue to be the main channel of distribution for new business.

Product Classification

Participating (“par”) products accounted for 51 per cent of new sales while non-par products accounted for 32 per cent. Investment-linked products made up the remaining 17 per cent.

Product License Classification

As at 31 December 2013, insurers holding “Normal” licenses contributed 96 per cent of new sales, while the “Defined Market Segments” (DMS) insurers, represented by six companies, contributed the remaining four 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 December 2013, the life insurance industry paid out a total of $7.57 billion to policyholders and beneficiaries.

Of this, $534 million was in respect of death, critical illness or disability claims, whilst the remaining $7.04 billion was for policies that matured.

Fact-Find Experience

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

  • Comprehensive Planning: 8 per cent
  • Specific Need(s) Planning: 86 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 December 2013)

Group Insurance

Total annual premiums in force for group insurance business rose by nine per cent compared with a year ago, amounting to $850 million.

Assets

As at end September of 2013, the life insurance industry was managing assets** of approximately $134.4 billion, up four per cent compared with a year ago.  Assets of non-linked business accounted for $109.3 billion, while the remaining $25.1 billion were assets held for investment-linked policies. 

Manpower in the Industry

As at 31 December 2013, a total of 5,375 office staff were employed by member companies of the LIA and 13,799 representatives held exclusive contracts with companies that operate a tied agency force.

Looking Forward

The uptrend of the industry is expected to maintain its momentum into 2014 against a more resilient economic outlook.

Two milestones are expected to impact the evolution of the industry this year: the launch of MediShield Life and the implementation of the direct-to-consumer distribution channel recommended by the Financial Industry Review (FAIR) panel.

Dr Khoo said that the industry will be resourceful in delivering sustainable healthcare to Singaporeans with options that address the varying needs of individuals.

“The life insurance industry will continue to support government initiatives so every Singaporean can continue to enjoy affordable healthcare services,” he said.

“With regards the direct-to-consumer channel, we will be working very closely with the MAS to ensure best outcomes for both consumers and the industry.”

In Summary

New Business Sales (Weighted Basis)

  Jan – Dec 2013 Jan – Dec 2012 Change
Single Premium $0.7 billion $0.6 billion 20%
Annual Premium $2.1 billion $1.6 billion 31%
Total $2.8 billion $2.2 billion 28%
  Oct – Dec 2013 Oct – Dec 2012 Change
Single Premium $178.2 million $138.9 million 28%
Annual Premium $562.5 million $441.4 million 27%
Total $740.7 million $580.3 million 28%

*   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