Life insurance industry achieves seven per cent growth to date with strong increases in uptake of annual premium and investment-linked (single premium) policies in the third quarter

Singapore, 05 November 2015

The Life Insurance Association, Singapore (LIA Singapore) today announced industry results for the period January to September 2015 (YTD 3Q2015) with a total of S$2.166 billion achieved in weighted1 new business premiums, recording a seven per cent increase over the same period in 2014.

There was a significant 21 per cent increase in the uptake of annual premium products in 3Q2015 compared to the corresponding period in 2014, as well as a 13 per cent boost in the purchase of single premium investment-linked policies. This is also higher than the 2Q2015 results, and is largely attributed to three factors namely:

  • New product launches
  • Sales and marketing initiatives
  • Increased uptake in savings-oriented products through bancassurance

Overall, the industry achieved a nine per cent growth to S$1.51 billion of weighted annual premium products, and a three per cent growth to S$658.9 million of weighted single premium products for YTD 3Q2015. 17 per cent of the weighted single premium products comprised CPF-funded policies. Investment-linked products contributed S$434 million in the first three quarters of 2015, accounting for 20 per cent of total weighted new business premiums. At S$1.14 billion, participating (par) products continue to provide the largest contribution of 53 per cent for the period.

3Q015 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$347,000 of weighted new premiums to date.

For the period between 7 April and 30 September 2015, a total of 420 DPI policies were sold, of which 96 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.

Financial Highlights (for period January to September 2015)

Total Sum Assured

The total sum assured for new business increased by nine per cent to S$70.2 billion for the first three quarters of 2015 compared to the same period in 2014.

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 60
Bank Representatives 38 13
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 53 per cent of new sales while non-par products accounted for 27 per cent. Investment-linked products made up the remaining 20 per cent. The composition mix remained constant.

Product License Classification

As at 30 September 2015, insurers holding Normal licenses contributed 94 per cent of new sales, while the Defined Market Segments (DMS) insurers3 made up the remaining six per cent.

Claims Payout

As at 30 September 2015, the life insurance industry paid out a total of S$4.51 billion to policyholders and beneficiaries. Of this amount, S$3.94 billion was for policies that matured and the remaining S$565 million was for death, critical illness or disability claims.

Surrender Rate

The surrender rate for 3Q015 went up to 2.34 per cent from 1.84 per cent in 3Q2014, largely due to the Standard Life’s closure of its Singapore branch. This rate is expected to return to normal in the subsequent quarters.

Health Insurance, Introduction of MediShield Life and Integrated Shield Plans (IP)

The amount of new health insurance premiums in the first three quarter of 2015 totalled S$146 million, of which 87 per cent went to IPs and IP riders.

There was a 24 per cent dip in the first three quarters of 2015 compared to the same period in 2014. The 2014 performance (specifically the first quarter’s results) had carried the impact of insurers’ pricing revisions in March 2013.

Stripping off this factor, sales of IPs recorded for the second and the third quarters of 2015 were at levels similar to the corresponding period in 2014.  Consumers are likely to adopt a wait-and-see approach, in view that MediShield Life was just launched on 1 November 2015.

Approximately one in two individuals in Singapore (2.82 million lives) have health cover with total premiums amounting to S$1.67 billion as at 30 September 2015. This reflects continued steady growth over the years with an increase from 2.74 million insured lives and total premium of $1.55 billion over the corresponding period in 2014.

IP insurers continue to work closely with the Ministry of Health (MOH) to ensure that Singaporeans have an understanding of MediShield Life and the complementary role of the top-up portion comprising a private IP plan.

All IP insurers have in place training programmes, guidebooks with Frequently Asked Questions (FAQs) and other reference points to ensure that financial adviser representatives are trained on the changes and able to assist policyholders. They are well-placed to clearly explain the changes to policyholders and advise on IP plans.

IP policyholders enjoy the benefits of MediShield Life as well as the benefits provided by their IP portion such as choice of their own doctors and pre- and post-hospitalisation coverage.

IPs provide cover to 64 per cent of Singapore residents and have paid out claims amounting to S$488 million for the financial year 20144. Moving forward, the industry will continue to review initiatives and, where appropriate, introduce other efforts to inform and educate Singaporeans.

Other Highlights (In force as at September 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$964 million.

Assets

As at end June of 2015, the life insurance industry was managing assets5 of approximately S$156.1 billion, up eight per cent compared with a year ago.

Assets of non-investment linked business accounted for S$127.4 billion, while the remaining S$28.7 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 6,245 office staff were employed by member companies of the LIA Singapore and 14,797 representatives held exclusive contracts with companies that operate a tied agency force, as at 30 September 2015.

These reflect a 10 per cent and six per cent increase compared to the previous year and is attributed to new companies and expansion activities.

Looking Forward

In the coming year, the life insurance industry will continue to work hand-in-hand with regulators to ensure a smooth transition and implementation of all FAIR initiatives and Integrated Shield Plans, including the introduction of Standard B1 Plans. The industry is also committed to ensuring that the evolving needs of consumers are met through a wide range of products.

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan – Sep 2015
S$

Jan – Sep 2014
S$

Change
Single Premium 658.9 million 640.9 million 3%
  Linked 182.9 million 141.6 million 29%
  Non-linked 476.0 million 499.3 million -5%
Annual Premium 1,506.9 million 1,383.5 million 9%
Total 2,165.8 million 2,024.4 million 7%
Comparison with Corresponding Quarter Jul – Sep 2015
S$

Jul – Sep 2014
S$

Change
Single Premium 271.1 million 259.2 million 5%
  Linked 60.6 million 53.8 million 13%
  Non-linked 210.5 million 205.4 million 2%
Annual Premium 541.9 million 446.2 million 21%
Total 813.0 million 705.4 million 15%
Comparison with Last Quarter Jul – Sep 2015
S$

Apr – Jun 2015
S$

Change
Single Premium 271.1 million 183.3 million 48%
  Linked 60.6 million 69.3 million -13%
  Non-linked 210.5 million 114.0 million 85%
Annual Premium 541.9 million 520.0 million 4%
Total 813.0 million 703.3 million 16%

1 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

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

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

4 Source: Ministry of Health. (2015 April 30). Government Health Expenditure and Healthcare Financing. Retrieved from https://www.moh.gov.sg/content/moh_web/home/statistics/Health_Facts_Singapore/Healthcare_Financing.html

5 Source: www.mas.gov.sg