Double digit growth for the first nine months of 2018 as Singapore's life insurance industry continues focus on bridging the protection gap

Singapore, 08 November 2018

The Life Insurance Association, Singapore (LIA Singapore) today announced a strong set of industry results for the period January to September 2018 (YTD 3Q2018).

Continuing the growth momentum from the start of 2018, Singapore's life insurance industry achieved a 15 per cent increase in weighted new business premiums1 compared to the same period last year. This amounted to S$3.17 billion for YTD 3Q2018.

The industry continues to focus efforts on meeting the protection needs of individuals in Singapore, and will provide more details of industry-wide initiatives aimed at bridging the protection gap. This follows from the recent completion of its qualitative study to understand the barriers, and opportunities to getting more individuals in Singapore adequately protected. Economically active individuals in Singapore have an approximate 40 per cent mortality and critical illness gap totalling approximately S$893 billion in all, according to findings of the Association's Protection Gap Study (PGS) 2017.2

Mr. Patrick Teow, President of LIA Singapore, said, "Even though we are experiencing some headwinds due to the trade wars, it is reassuring that more Singaporeans are taking active measures to have their protection needs met. As an industry, we aim to develop more targeted public programmes so that we can continue to narrow the underinsurance gap and help Singaporeans adequately protect their quality of life for themselves and that of their loved ones. There is much more we can do for the betterment of society".

Continued demand for protection products and health coverage

Individuals are making good progress in getting more adequate protection. Year-on-year, total sum assured for new business increased by 10 per cent to reach S$101.8 billion in YTD 3Q2018.

New business premiums3 for individual health insurance amounted to S$318.7 million for YTD 3Q2018, of which IP and IP rider premiums accounted for 92 per cent (S$292.2 million). The remaining eight per cent (S$26.5 million) came from other medical plans and riders.

70,000 more Singaporeans and Permanent Residents are now covered by Integrated Shield Plans (IPs) compared to YTD2017, adding to a total of 2.7 million lives, or approximately 68 per cent of Singapore residents, with IP coverage, which is over and above the MediShield Life component.

Strong uptake of single premium products

The industry recorded a 23 per cent increase from YTD 3Q2017, amounting to S$1.11 billion in weighted single premiums of which:
a) Single premium par and non-par products comprised 72 per cent; Single premium linked products took the remaining 28 per cent
b) CPFIS-included products comprised 18 per cent; Cash-funded products took the remaining 82 per cent

Annual premium products accounted for weighted annual premiums totalling S$2.06 billion in the first three quarters of the year, an encouraging 12 per cent increase from the corresponding period in 2017.

The steady robust performance of single premium products reflects the introduction of new and targeted plans, heightened promotional activities of insurers, and a more positive economic sentiment.

Uplift in purchase of policies for retirement

By policy count, the industry recorded a notable year-on-year 36 per cent increase in the uptake of retirement policies designed to provide regular payouts to policyholders during retirement years.  More individuals took action to provide for their retirement as reflected in the purchase of 24,610 policies in the first nine months of 2018, compared to 18,054 policies purchased over the same period last year.

By weighted premiums (YTD S$226 million), it accounts for approximately seven per cent of the total weighted premiums recorded for YTD 3Q2018, up from five per cent for YTD 3Q2017.

Growing pool of talent driving the industry's transformation

The life insurance industry expanded its workforce with a net increase of 330 employees and 306 tied representatives in the third quarter of 2018 alone to reflect a quarter-on-quarter increase of four per cent and two per cent respectively.

Member companies employed a total of 8,001 individuals as at the end of the third quarter of 2018, increasing its workforce by 954 employees over a 12-month period. Positions being filled are in data analytics, cyber security, and business operations as Singapore's life industry drives digital innovation and overall business expansion.

OTHER HIGHLIGHTS FOR YTD 3Q2018

Product Classification

Par products accounted for 44 per cent of new sales while non-par products accounted for 36 per cent. Investment-linked products made up the remaining 20 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 37 12
Financial Adviser Representatives 21 20
Others (products sold without intermediaries, e.g. DPI, ElderShield) 5 16

Product License Classification

As at 30 September 2018, insurers holding "Normal" licenses contributed 98 per cent of new sales, while the "Defined Market Segments" (DMS) insurers4 made up the remaining two per cent of new sales for YTD 3Q2018.

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$1.16 billion.

Assets

In strengthening Singapore's position as a financial hub in Asia5, the life insurance industry manages assets of approximately S$205.0 billion, up nine per cent compared with a year ago.

Assets of non-investment linked business accounted for S$169.8 billion, while the remaining S$35.2 billion were assets held for investment-linked business.

LOOKING FORWARD

Strong growth has been achieved so far and 2018 will likely end on a positive note.

The forecast for the global economic outlook warns of negative impact kicking in from protectionist measures and counter-measures. However, life insurance is a resilient industry and the value of having financial protection offered by our products during challenging times becomes better appreciated by individuals.

- End -  

Note to Editor: Industry results of 3Q2018 are available at www.lia.org.sg/industry/performance

In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan  Sep 2018
S$

Jan – Sep 2017
S$

Change
Single Premium 1,108.3 million 900.7 million 23%
  Linked 308.1 million 221.6 million 39%
  Non-linked 800.2 million 679.1 million 18%
Annual Premium 2,061.4 million 1,847.0 million 12%
Total 3,169.7 million 2,747.7 million 15%
Comparison with Corresponding Quarter Jul  Sep 2018
S$

Jul – Sep 2017
S$

Change
Single Premium 430.5 million 353.4 million 22%
  Linked 111.0 million 84.1 million 32%
  Non-linked 319.5 million 269.3 million 19%
Annual Premium 719.8 million 712.3 million 1%
Total 1,150.3 million 1,065.7 million 8%
Comparison with Last Quarter Jul  Sep 2018
S$

Apr  Jun 2018
S$

Change
Single Premium 430.5 million 395.4 million 9%
  Linked 111.0 million 97.7 million 14%
  Non-linked 319.5 million 297.7 million 7%
Annual Premium 719.8 million 696.4 million 3%
Total 1,150.3 million 1,091.8 million 5%

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 details on findings of LIA Singapore’s Protection Gap Study 2017 available at: http://www.lia.org.sg/node/195941

3 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. 

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

5 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