Positive start to 2018 for the life insurance industry with strong uptake of annual premium products in the first quarter

Singapore, 10 May 2018

The Life Insurance Association, Singapore (LIA Singapore) today announced the industry results for the period January to March 2018 (1Q2018).

Overall, the life insurance industry started 2018 positively, recording a total of S$925.1 million in weighted new business premiums1 for 1Q2018, a 14 per cent growth from the previous year.  Linked policies recorded the highest growth in total weighted premiums of S$208 million, with an 82 per cent increase from 1Q2017.

S$642.8 million in weighted annual premiums were registered during the first three months of the year, reflecting an encouraging 21 per cent increase from the corresponding period in 2017.  This is attributed to increases recorded across all policy types namely; linked, participating and non-participating policies.

For single premium products, the industry recorded S$282.3 million in weighted single premiums, a 0.4 per cent increase from 1Q2017, for which:

a) Single premium par and non-par products comprised 65 per cent, the balance 35 per cent were single premium linked products

b) CPFIS-included products comprised 24 per cent; Cash-funded products took the remaining 76 per cent

Rise in sum assured and uptake of protection-focused policies

The industry continues to make significant progress in supporting individuals in Singapore to better meet their protection needs. There was a significant 23 per cent year-on-year increase in total sum assured for new business, amounting to S$29.9 billion in 1Q2018.

Mr Patrick Teow, President of LIA Singapore, said, “While our Protection Gap Study 2017 found a persistent gap in the level of protection amount in Singapore2, it is heartening to know that more people are taking actions to get better insured. Collectively, the life insurance industry will not only look at continuing ongoing public education efforts, we will also develop more targeted public engagement programmes based on insights from our follow-up qualitative study, so that we can help more individuals in Singapore better protect their loved ones, their future, and their quality of life.”

As at 31 March 2018, the life insurance industry paid out S$1.30 billion to policyholders and beneficiaries. Of this amount, S$1.06 billion was for policies that matured. The remaining S$237 million was for death, critical illness, or disability claims.

LIA Singapore launched the enhanced “Register of Unclaimed Life Insurance Proceeds”3 in April 2018. The register now includes unclaimed monies from a wider range of individual insurance policies, allowing insurance benefits to eventually reach more policyholders and claimants.

Steady uptake of retirement-focused policies

The industry’s results for the first quarter also reflect the increasing awareness and actions taken by individuals to better prepare for retirement.

Within the first three months of 2018, there was an uptake of 6,631 policies that are designed to provide regular payouts to policyholders during retirement years.  This is a notable 30 per cent increase compared to 1Q2017.

These plans account for approximately six per cent of the total weighted premiums, recorded for 1Q2018.

Increased number of lives covered by IPs

Compared with a year ago, 70,000 more Singaporeans and Permanent Residents are covered by Integrated Shield Plans (IPs), leading to a total of 2.68 million lives or approximately 68 per cent of Singapore residents with IP coverage over and above the MediShield Life component.

New business premiums4 for individual health insurance totalled S$105.7 million for 1Q2018, of which IP and IP rider premiums accounted for 90 per cent (S$95.5 million). The remaining 10 per cent (S$10.2 million) came from other medical plans and riders.

OTHER HIGHLIGHTS FOR 1Q2018

Product Classification

Par products accounted for 47 per cent of new sales while non-par products accounted for 31 per cent. Investment-linked products made up the remaining 22 per cent.

Distribution Channels

The contribution of new business by the different channels is as follows:

Distribution channel By weighted premium (%) By number of policies (%)
Tied Representatives 37 52
Bank Representatives 38 12
Financial Adviser Representatives 20 18
Others (products sold without intermediaries, e.g. DPI, ElderShield) 5 18

Product License Classification

As at 31 March 2018, insurers holding “Normal” licenses contributed 98 per cent of new sales, while the “Defined Market Segments” (DMS) insurers5 made up the remaining two per cent of new sales for 1Q2018.

Group Insurance: Total Annual Premiums In-Force

Total annual premiums in-force for group insurance business rose by seven per cent compared to the same period a year ago, amounting to S$1.11 billion.

Assets

In strengthening Singapore’s position as a financial hub in Asia6, the life insurance industry manages assets of approximately S$202.9 billion, up 17 per cent compared with a year ago.

Assets of non-investment linked business accounted for S$167.6 billion, while the remaining S$35.3 billion were assets held for investment-linked business.

Manpower in the Industry

As employment in Singapore continues to grow in the finance and insurance sectors7, we note a 10 per cent increase in the number of employed individuals within the life insurance industry in 1Q2018.

7,594 individuals were employed by member companies, up from 6,883 staff in 1Q2017.

14,817 representatives held exclusive contracts with companies that operate a tied agency force.

LOOKING FORWARD

The industry’s primary focus is on helping more individuals bridge their protection gaps. Findings from the qualitative study are targeted for release in the second half of the year.

Meanwhile, digitalisation efforts by individual insurers to improve the customer experience and journey are gaining momentum.

- End -

Note to Editor: Industry results of 1Q2018 are available at www.lia.org.sg/industry/performance

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan  Mar 2018
S$

Jan – Mar 2017
S$

Change
Single Premium 282.3 million 281.3 million 0.4%
  Linked 99.3 million 62.8 million 58%
  Non-linked 183.0 million 218.5 million -16%
Annual Premium 642.8 million 529.7 million 21%
Total 925.1 million 811.0 million 14%
Comparison with Last Quarter Jan  Mar 2018
S$

Oct – Dec 2017
S$

Change
Single Premium 282.3 million 563.2 million -50%
  Linked 99.3 million 173.8 million -43%
  Non-linked 183.0 million 389.4 million -53%
Annual Premium 642.8 million 777.3 million -17%
Total 925.1 million 1,340.5 million -31%

1 The weighted new business premium figure is calculated as follows: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 Source: Singapore lacks 80% of critical illness protection needs: Life Insurance Association (26 April 2018). TODAY. Available at:
https://www.todayonline.com/singapore/singaporeans-lack-80-critical-illness-protection-needs-life-insurance-association

3 Register of unclaimed insurance proceeds now covers wider range of payouts: LIA (5 April 2018). The Business Times. Available at:
http://www.businesstimes.com.sg/banking-finance/register-of-unclaimed-insurance-proceeds-now-covers-wider-range-of-payouts-lia

4 With effect from 1 January 2016, the MediShield Life premiums have been excluded from LIA statistics. New Business premiums refer to the premium due to the new business sold in the year, as well as incremental premiums from any repricing of plans, and change in age-band of the insureds. 

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

6 Singapore unveils plan to bolster its status as an Asian financial hub (30 October 2017). AsiaOne. Available at:
http://www.asiaone.com/singapore/singapore-unveils-plan-bolster-its-status-asian-financial-hub

7 Unemployment rates in Singapore declined in Q1 2018. (30 April 2018). Human Resources Online. Available at:
http://www.humanresourcesonline.net/unemployment-rates-in-singapore-declined-in-q1-2018/