Life insurance industry starts 2015 on a good note, achieving strong growth in sales of single premium products for the first quarter

Singapore, 07 May 2015

The Life Insurance Association, Singapore (LIA Singapore) today announced industry results for the period January to March 2015. The life insurance industry in Singapore saw a significant 22 per cent increase in sales of single premium products, totalling S$204.4 million, of which 16 per cent were CPF-funded policies.

In the first quarter of 2015, the total sum assured for new business saw a healthy four per cent increase, totalling S$19.9 billion compared to 2014. In the same period, the industry achieved a total of S$649.4 million in weighted new business premiums1, a marginal one per cent dip compared to the first quarter of 2014. 

Dr. Khoo Kah Siang, President of LIA Singapore said, “Grounded by strong foundations and quality growth, we are confident that the life insurance industry is in good stead to continue contributing to our nation’s growth and improved well-being of the community.”

Starting from April 2015, the five insurers providing Integrated Shield Plans (IPs) are partnering the Ministry of Health (MOH) to provide existing policyholders with information about the distinct yet integrated nature of MediShield Life and the additional benefits from private IPs. Letters from MOH are currently being posted to Singapore citizens and permanent residents to inform them to update their household information in order to receive the correct amount of subsidies they may be entitled to for the MediShield Life portion.

LIA Singapore and IP insurers are working closely with policymakers and other stakeholders to ensure that IPs will continue to be relevant and offer value-add when MediShield Life is rolled out at the end of 2015.

The 12 life insurers offering the Direct Purchase Insurance (DPI) products have been receiving queries from the public following the launch in April 2015.

As at end March 2015, the life insurance industry paid out a total of S$1.41 billion to policyholders and beneficiaries. Of this amount, S$1.23 billion was for policies that matured and the remaining S$175 million was for death, critical illness or disability claims.

On health insurance, approximately one in two individuals in Singapore (2.78 million lives) have health cover with total premiums amounting to S$1.62 billion as at 31 March 2015.

Financial Highlights (for period January to March 2015)

Total Sum Assured

The total sum assured for new business increased by four per cent to S$19.9 billion for the first quarter of 2015 compared to the same period in 2014.

Health Insurance

The amount of new health insurance premiums in the first quarter of 2015 totalled S$41 million, of which 87 per cent went to IPs and IP riders. There was a 49 per cent dip in the first quarter of 2015 compared to the same period in 2014. This can be attributed to a slow-down in the sales of IPs as consumers are adopting a wait-and-see approach before making a decision on their purchases of new policies.

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 Representatives 39 60
Bank Representatives 41 14
Financial Adviser Representatives 17 10
Others (products sold without intermediaries, e.g. ElderShield) 3 16

Bank distribution is fast becoming an important channel of distribution for new business, based on weighted premiums while tied representatives continue to be the main channel of distribution for life insurance in Singapore.

Product Classification

Par products accounted for 55 per cent of new sales while non-par products accounted for 25 per cent. Investment-linked products made up the remaining 20 per cent. The variation of figures remains consistent.

Product License Classification

As at 31 March 2015, insurers holding “Normal” licenses contributed 94 per cent of new sales, while the “Defined Market Segments” (DMS) insurers2 made up the remaining six per cent.

Other Highlights (In force as at March 2015)

Group Insurance

Total annual premiums in force for group insurance business rose by seven per cent compared with a year ago, amounting to S$930 million.

Assets

As at end December of 2014, the life insurance industry was managing assets3 of approximately S$151.4 billion, up 11 per cent compared with a year ago. Assets of non-investment linked business accounted for S$123.3 billion, while the remaining S$28.1 billion were assets held for investment-linked business. This can be attributed to the increase in linked and non-linked fund asset values.

Manpower in the Industry

A total of 5,970 office staff were employed by member companies of the LIA Singapore and 14,194 representatives held exclusive contracts with companies that operate a tied agency force, as at 31 March 2015. The increase in number of office staff and representatives recruited by insurance companies is an upward trend seen over the past three years.

Looking Forward

Dr. Khoo Kah Siang, President of LIA Singapore said, “Our priority for 2015 is preparing for a smooth implementation of MediShield Life, working closely with the government to further improve public education on health insurance and how MediShield Life and IPs work, and their relationship with one another. We also need to ensure that the entire ecosystem fosters a stronger spirit of collaboration to address industry concerns such as Singapore’s rising healthcare costs. This includes policymakers, the insurance industry, healthcare providers and practitioners, as well as individuals. LIA Singapore will continue spearheading efforts to develop a progressive life insurance industry focused on enhancing consumer understanding and promoting industry best practices as we nurture a society where every individual is prepared for life’s changing cycles.”

In Summary

New Business Sales (Weighted Basis)

 Comparison with Corresponding Period Jan – Mar 2015
S$

Jan – Mar 2014
S$

Change
Single Premium 204.4 million 168.2 million 22%
Annual Premium 445.0 million 487.2 million -9%
Total 649.4 million 655.4 million -1%
Comparison with Last Quarter Jan – Mar 2015
S$

Oct – Dec 2014
S$

Change
Single Premium 204.4 million 219.8 million -7%
Annual Premium 445.0 million 544.5 million -18%
Total 649.4 million 764.3 million -15%

1Weighted 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

2DMS insurers are registered by MAS to conduct only non-CPF business and with minimum policy size.

3www.mas.gov.sg