Life industry starts year on a high note

Overall sales shoot up by 24 per cent
Singapore, 06 May 2014

The life industry got off to a good start for 2014, achieving a total of $698.7 million in weighted* new business premiums for the first quarter of 2014.  This represents a 24 per cent growth over the same period in 2013.

The robust performance was due to growth in sales of both single and annual premium products.  Weighted single premium sales galloped 27 per cent to reach $168.2 million for the period under review.  Of this amount, 15 per cent comprised CPF-funded sales.

Sales of annual premium products similarly fared well, totaling $530.5 million for the first quarter of 2014, up by a sizeable 24 per cent over the same period in 2013.

“This boost in sales has given us an encouraging start to the year,” said Dr. Khoo Kah Siang, President, Life Insurance Association. “This growth momentum follows closely from a positive year in 2013, when we closed 28 per cent higher than the preceding year.  We are pleased to see that annual premium products have remained consistent key drivers for industry growth despite continuing shifts in local market sentiment.

Other Highlights (January to March 2014)

Total Sum Assured

The total sum assured for new business increased by 17 per cent, to reach $19.1 billion for the first quarter of 2014.

Health Insurance

As of 31 March 2014, a total of 2.71 million lives were covered with paid up premiums amounting to $1.5 billion.  The amount of new health insurance premiums rose 24 per cent in the first quarter to $81 million compared to the same period last year.  The bulk of this – 93 per cent – went to Integrated Shield Plans and riders.

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 42 59
Bank Distribution 40 18
Financial Advisers 14 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 60 per cent of new sales while non-par products accounted for 26 per cent. Investment-linked products made up the remaining 14 per cent.

Product License Classification

As at 31 March 2014, insurers holding “Normal” licenses contributed to 96 per cent of new sales, while the “Defined Market Segments” (DMS) insurers, represented by six companies, took 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 March 2014, the life insurance industry paid out a total of $1.68 billion to policyholders and beneficiaries.

Of this, $143 million was in respect of death, critical illness or disability claims, whilst the remaining $1.53 billion was for policies that matured.

Fact-Find Experience

For the period January to March 2014, policies were sold based on the following choices of the applicants:

  • Comprehensive Planning: 11 per cent
  • Specific Need(s) Planning: 85 per cent
  • No Needs Analysis Purchase: 4 per cent

Explanatory Note:

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 2014)

Group Insurance

Total annual premiums in force for group insurance business rose by six per cent compared with a year ago, amounting to $867 million.

Assets

As at end of 2013, the life insurance industry was managing assets** of approximately $136.3 billion, up three per cent compared with a year ago.  Assets of non-linked business accounted for $110.4 billion, while the remaining $25.9 billion were assets held for investment-linked policies.

Manpower in the Industry

As at 31 March 2014, a total of 5,532 office staff were employed by member companies of the LIA and 13,609 representatives held exclusive contracts with companies that operate a tied agency force.

Looking Forward

With a stable economic environment both globally and locally, the life insurance industry is optimistic about its performance into 2014.  Dr Khoo said that in a fast-changing landscape, the industry has to be resourceful in addressing customer concerns and expectations.

“The impending launch of MediShield Life and the direct-to-consumer distribution channel recommended by the Financial Advisory Industry Review (FAIR) panel will remain a focus for the LIA and its members,” he said.

“We will be working closely with the respective government agencies to ensure that best outcomes for consumers and the industry are met.  As a responsive industry, we expect our members to continue to be innovative in addressing consumers’ evolving needs and expectations by giving them a gamut of choices that will allow them to select plans that best suit their individual needs and means.”

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Quarter Jan – Mar 2014 Jan – Mar 2013 Change
Single Premium $168.2 million $132.9 million 27%
Annual Premium $530.5 million $428.9 million 24%
Total $698.7 million $561.8 million 24%
Comparison with Last Quarter Jan – Mar 2014 Oct – Dec 2013 Change
Single Premium $168.2 million $178.2 million -6%
Annual Premium $530.5 million $562.5 million -6%
Total $698.7 million $740.7 million -6%

*   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