Life insurance industry achieves growth in sales of single premium products for the first three quarters of 2014

Singapore, 06 November 2014

The Life Insurance Association Singapore (LIA Singapore) today announced industry results for the period January to September 2014 with a significant 23 per cent increase in sales of single premium products, totaling S$640.9 million in weighted1 new business premiums, and of which 14 per cent were CPF-funded policies. This is largely due to increased uptake in participating (“par”) and non-par products during the period under review.

Weighted annual premium sales totaling S$1,383.5 million continues to be the largest contributor to new business despite registering a nine per cent dip over the same period in 2013. The spike in premiums due to re-pricing of Integrated Shield Plans conducted from March 2013 over the following 12 months for renewal business has tapered off.

Overall, the industry achieved a total of S$2,024.4 million in weighted new business premiums, a marginal one per cent dip over the same period in 2013.

The life insurance industry paid out S$5.33 billion to policyholders and beneficiaries as at end September 2014. Of this, S$439 million was for death, critical illness or disability claims, and the remaining S$4.89 billion for policies that matured. A larger number of policies had matured in the third quarter of 2014.

Approximately one in two individuals in Singapore (2.74 million lives) has health insurance cover with total paid up premiums amounting to S$1.5 billion as at 30 September 2014.

Dr. Khoo Kah Siang, President of LIA Singapore said, “The life insurance industry continues to mature as we introduce initiatives to cater to the evolving needs of Singapore’s population and contribute to national progress. We are at the frontline working closely with policymakers and relevant bodies to effectively develop, review and implement these changes.”

At present, LIA Singapore is focusing on numerous initiatives which include the revision of the Risk-based Capital (“RBC2”) framework and introduction of directly purchased products.

A web aggregator allowing consumers to research features of life insurance products is expected to be launched in the first quarter of 2015.

Other Highlights (for period January to September 2014)

Total Sum Assured

The total sum assured for new business increased by nine per cent to S$64.5 billion for the first three quarters of 2014 compared to the same period in 2013.

Health Insurance

The amount of new health insurance premiums in the first three quarters of 2014 totaled S$193 million. There was a 40 per cent dip in the first three quarters of 2014 compared to the same period in 2013, stabilising after a significant increase last year due to a re-pricing exercise of the Integrated Shield Plans (IPs), following from MediShield enhancements earlier in the year.

91 per cent of new health insurance premiums went to IPs and IP 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 43 60
Bank Distribution 37 15
Financial Advisers 17 11
Others (without intermediaries, e.g. ElderShield) 3 14

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

Product Classification

Par products accounted for 53 per cent of new sales while non-par products accounted for 29 per cent. Investment-linked products made up the remaining 18 per cent.

Product License Classification

As at 30 September 2014, insurers holding “Normal” licenses contributed 95 per cent of new sales, while the “Defined Market Segments” (DMS) insurers2 made up the remaining five per cent.

The six companies are: 

  • Friends Provident International Ltd (Singapore Branch)
  • Generali International Limited, Singapore Branch
  • Royal Skandia Life Assurance Ltd, Singapore Branch
  • Standard Life International Limited, Singapore Branch
  • Transamerica Life (Bermuda) Ltd. (Singapore Branch)
  • Zurich International Life Limited (Singapore Branch) 

Fact-Find Experience

For the period January to September 2014, policies taken up were based on the following choices of the customers:

  • Comprehensive Planning3: 11 per cent
  • Specific Need(s) Planning4: 84 per cent
  • No Needs Analysis Purchase5: 5 per cent

Other Highlights (In force as at September 2014)

Group Insurance

Total annual premiums in force for group insurance business rose by nine per cent compared with a year ago, amounting to S$904 million.

Assets

As at end June of 2014, the life insurance industry was managing assets6 of approximately S$144.3 billion, up 10 per cent compared with a year ago. Assets of non-investment linked business accounted for S$117.2 billion, while the remaining S$27.1 billion were assets held for investment-linked business.

Manpower in the Industry

A total of 5,664 office staff were employed by member companies of the LIA and 14,020 representatives held exclusive contracts with companies that operate a tied agency force, as at 30 September 2014.

New Member

In August 2014, Etiqa Insurance Pte. Ltd. (“Etiqa”) joined LIA Singapore as the association’s 20th Ordinary Member. Etiqa, the insurance arm of the Maybank Group, is registered with MAS to conduct life and general insurance business in Singapore.

Looking Forward

Dr. Khoo Kah Siang, President of LIA Singapore said, “The life insurance industry is gearing up for the introduction of FAIR recommendations, which are all expected to be implemented over the course of 2014. Working with the MAS, we will closely monitor the impact of changes and do our best to ensure that they are well aligned to the purposes and objectives of the reforms.”

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period

Jan – Sep 2014
S$

Jan – Sep 2013
S$
Change
Single Premium 640.9 million 522.4 million 23%
Annual Premium 1,383.5 million 1,525.7 million -9%
Total 2,024.4 million 2,048.1 million -1%
Comparison with Corresponding Quarter

Jul – Sep 2014
S$

Jul – Sep 2013
S$
Change
Single Premium 259.2 million 209.0 million 24%
Annual Premium 446.2 million 541.9 million -18%
Total 705.4 million 750.9 million -6%
Comparison with Last Quarter

Jul - Sep 2014
S$

Apr - Jun 2014
S$

Change
Single Premium 259.2 million 210.2 million 23%
Annual Premium 446.2 million 450.1 million -1%
Total 705.4 million 660.3 million 7%

  Weighted new business premiums measures premiums collected on new policies by taking into account (1) 10 per cent of the value of single premium products, (2) all of a year’s premiums for annual premium products, and (3) adjusted value for products with premium payment durations of less than 10 years.
The figure is calculated as follows: 10% Single Premium Insurance + 100% Annual Premium Insurance + Adjusted premium for Insurance with premium payment durations of less than 10 years

  DMS insurers are registered by MAS to conduct only non-CPF business and with minimum policy size.

3   Under comprehensive planning, the customer completes the full fact-find and he receives the representative’s recommendation on suitable product(s).

4   For specific need(s) planning, the customer completes full fact-find for at least one of his needs that he wishes to receive the representative’s recommendation on suitable product.

5   Under no needs analysis purchase, the customer does not undergo any needs analysis and is responsible for choosing the product(s) he finds suitable for himself. However, the representative is required to explain product features, its fees and charges to the customer.
6   www.mas.gov.sg