Life insurance industry maintains steady performance for the first half of 2015

Increased uptake of Investment-Linked Products seen
Singapore, 06 August 2015

The Life Insurance Association, Singapore (LIA Singapore) today announced industry results for the period January to June 2015 (1H2015) with a total of S$1,352.7 million achieved in weighted1 new business premiums, recording a three per cent increase over the same period in 2014.

The industry achieved a three per cent growth to S$964.9 million of weighted annual premium products, and a two per cent growth to S$387.8 million of weighted single premium products.

19 per cent of the weighted single premium products comprised CPF-funded policies.

There has been a shift from single premium non-linked to single premium linked products. Given the low interest environment, yields for shorter term non-linked single premium plans may be less attractive to customers. 

Dr. Khoo Kah Siang, President of LIA Singapore said, “The first half 2015 performance is about level compared to first half of 2014. There is slight growth in both single premium and regular premium business. With relatively low interest rate, sales of traditional (i.e. non-linked) single premium plans dropped while sales of investment linked plans, both single premium and regular premium, picked up amidst the positive but volatile equity market.”

Overall, investment-linked products contributed S$272 million in the first half of 2015 (1H2015), accounting for 20 per cent of total weighted new business premiums. At S$739 million, participating (par) products continue to provide the largest contribution of 55 per cent for the period.

2Q2015 also saw Direct Purchase Insurance2 (DPI) products contributing to the industry’s suite of product offerings. Implemented on 7 April 2015, the scheme drew almost S$0.2 million of weighted new premiums.

For the period between 7 April and 30 June 2015, 193 DPI policies were sold, of which 97 per cent comprised regular premium term life policies. Term policies provide insurance protection at affordable premiums, and can serve those seeking to provide basic protection for the family.

Through DPI products, we are pleased that the industry is able to meet the basic protection needs of families in Singapore.  We also see some demand for whole life insurance which offers lifelong protection and some savings element.
 
DPI products are basic life insurance plans sold without financial advice and are purchased directly from customer service centres or websites of life insurance companies in Singapore.

As at end June 2015, the life insurance industry paid out a total of S$2.96 billion to policyholders and beneficiaries. Of this amount, S$2.59 billion was for policies that matured and the remaining S$373 million was for death, critical illness or disability claims.

On health insurance, approximately one in two individuals in Singapore (2.79 million lives) have health cover with total premiums amounting to S$1.63 billion as at 30 June 2015.

LIA Singapore continues to take a pro-active role in working closely with policymakers and relevant stakeholders to provide Integrated Shield Plans (IP) to complement MediShield Life which will be rolled out on 1 November 2015.

Financial Highlights (for period January to June 2015) 

Total Sum Assured

The total sum assured for new business increased by nine per cent to S$44.3 billion for the first half of 2015 compared to the same period in 2014.

Health Insurance

The amount of new health insurance premiums in the first half of 2015 totalled S$91 million, of which 87 per cent went to IPs and IP riders.

There was a 34 per cent dip in the first half of 2015 compared to the same period in 2014. A slow-down in the sales of IPs has been observed as consumers adopt a wait-and-see approach in view that MediShield Life will be implemented on 1 November 2015.

Distribution Channels

The contribution of new business by channels of distribution is as follows:

Distribution channel By weighted premium (%) By number of policies (%)
Tied Representatives 40 61
Bank Representatives 38 12
Financial Adviser Representatives 18 11
Others (products sold without intermediaries, e.g. DPI, ElderShield) 4 16

By weighted premiums and by policy count, 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 composition mix remained constant.

Product License Classification

As at 30 June 2015, insurers holding Normal licenses contributed 95 per cent of new sales, while the Defined Market Segments (DMS) insurers3 made up the remaining five per cent.

Other Highlights (In force as at June 2015)

Group Insurance

Total annual premiums in force for group insurance business rose by eight per cent compared with a year ago, amounting to S$951 million.

Assets

As at end March of 2015, the life insurance industry was managing assets4 of approximately S$157.3 billion, up 13 per cent compared with a year ago.

Assets of non-investment linked business accounted for S$128.1 billion, while the remaining S$29.2 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 6,017 office staff were employed by member companies of the LIA Singapore and 14,350 representatives held exclusive contracts with companies that operate a tied agency force, as at 30 June 2015.

Looking Forward

Looking forward, we expect industry growth for 2015 to be stable compared to last year. We believe that there are still gaps in the protection space, not just the coverage for death but also coverage for long term care, disability, critical illnesses as well as accidents.

As for penetration of health insurance, we believe that as more people gain clarity on the benefits provided by MediShield Life, there will be those who will seek to satisfy their needs for higher levels of coverage and additional benefits through Integrated Plans and other health insurance plans available in the market.

The industry will work hand-in-hand with Ministry Of Health, Monetary Authority of Singapore and other relevant authorities to find innovative solutions and continue to play an important role for the good of the society.

The industry will continue to exercise prudence to ensure that it is financially strong and well able to fulfil its promises to policyholders over the long run.

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan – Jun 2015
S$

Jan – Jun 2014
S$

Change
Single Premium 387.8 million 378.4 million 2%
Annual Premium 964.9 million 937.3 million 3%
Total 1,352.7 million 1,315.7 million 3%
Comparison with Corresponding Quarter Apr – Jun 2015
S$

Apr – Jun 2014
S$

Change
Single Premium 183.3 million 210.2 million -13%
Annual Premium 520.0 million 450.1 million 16%
Total 703.3 million 660.3 million 7%
Comparison with Last Quarter Apr – Jun 2015
S$

Jan – Mar 2015
S$

Change
Single Premium 183.3 million 204.4 million -10%
Annual Premium 520.0 million 445.0 million 17%
Total 703.3 million 649.4 million 8%

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

2More information on DPI can be found on www.moneysense.gov.sg/dpi.

3DMS insurers are registered by MAS to conduct only non-CPF business and with minimum policy size.

4www.mas.gov.sg