Robust sales for life insurance boosts half year results

The life insurance industry experienced a 28 per cent sales boost in the first half of 2010 with total weighted* new business premiums at $671 million, up from $524 million in the corresponding period in 2009.

Backed by strong economic conditions and positive market sentiments, sales were robust for all products.  Regular premiums sales reached $518 million, registering a 26 per cent growth over the figures achieved for the same period in 2009.  Single premium sales soared to $2.09 billion in the first half of 2010, marking a significant 36 per cent improvement over the same period last year. 

The CPF Investment Scheme (CPFIS) accounted for 22 per cent ($464 million) of total single premium sales.

Health insurance for the first half of 2010 increased by 10 per cent over the same period last year to reach $77 million.  The unabated growth indicates that consumers are acting on their awareness of the need for health insurance to pay for the costs of treating serious illnesses and to cope with rising medical costs in general.

The share of investment-linked sales increased by 6 percentage points over the corresponding period in 2009 to 30 per cent. Sales of linked products are gaining momentum in tandem with improving market sentiments.

“Another robust quarter is welcome news for the industry,” said Mr Tan Hak Leh, President of the Life Insurance Association.  “We expect to build on this momentum into the second half and close the year on a high note.”

Other Highlights (January to June 2010)

Distribution Channels

Tied agency contributed to the bulk of new business, with tied representatives responsible for 57 per cent of weighted new business sales for the first half of the year.

New business sold through banks accounted for 24 per cent of sales. Financial Advisers contributed 14 per cent whilst other channels, which include direct sales, made up the remaining 5 per cent.

Claims Payout

Up to end June 2010, the life insurance industry paid out a total of $1.85 billion to policyholders and beneficiaries.  Of this, $210 million was in respect of death, critical illness or disability claims whilst the remaining $1.64 billion was on policies that matured.

The average death benefit payout was $44,514 per policy in the second quarter of 2010.

Average Sum Insured

In the second quarter of 2010, the average sum insured was $53,308 for single premium and $53,535 for regular premium policies.

Fact-Find Experience

During the second quarter of this year, 72 per cent of life insurance applications were completed with a full or partial fact-find, registering an improvement of 6 per cent over the preceding quarter. This suggests that more consumers are appreciating the importance and value of the fact-finding process with their financial advisers when considering appropriate policies for their needs.  The upward trend, first observed during the first quarter of 2010, continues for the second quarter.

Assets

In the first quarter of 2010, the life insurance industry was managing assets** of approximately $111.1 billion, up by 22 per cent compared with a year ago.  Assets of non-linked business accounted for $87.1 billion, whilst the remaining $24.0 billion were assets held for investment-linked policies.

Manpower In The Industry

As at 30 June 2010, a total of 4,687 office staff were employed by member companies of the LIA and 13,356 representatives held exclusive contracts with companies that operate a tied agency force. The human resource has remained largely stable despite financial shocks and volatile economic trends.

Looking Forward

The industry, rebounding from a low in 2009, looks poised to sustain robust sales for the rest of the year.  The LIA’s president said that, with many products to choose from, Singaporeans should be sure that the plan or plans they are considering are the right ones to meet their needs.

Said Mr Tan, “The LIA cannot emphasise enough that the onus is as much on the consumer as it is on the financial adviser to diligently undergo a comprehensive fact-finding process before deciding which product to purchase for their need.  It is very heartening to observe that this message is getting through and gaining wider acceptance, as shown in the latest number of full and partial fact-finds.”

Mr Tan said that this weekend the LIA will launch a series of seminars to give people a clearer understanding of what it is like to buy insurance according to one’s own needs.  The series – Know Your Financial Health – covers healthcare, family protection, and savings and investment.  Partnering with experts from related fields, such as medical specialists, the talks will give insights on managing key aspects of life such that emotional and financial stress may be mitigated.

The series of seminars kicks off this Saturday at Suntec City.  Dr Tan Chong Hiok from Mount Elizabeth Hospital will discuss causes, prevention and treatments for hypertension, including serious consequences such as heart attacks. 

An LIA representative will help consumers to be clear about the types of plans that cover costs of hospitalisation, medical treatments, and loss of income resulting from more serious medical conditions.

Admission to the seminars is free, however prior reservations are required, which can be made via phone on 6438 8900 or email to: lia@lia.org.sg

In Summary

New Business Sales

*   The weighted new business premium figure is calculated as follows:
    10% SPI + 100% API with adjustment for premium payment terms of less than 10 years.

**  Source: MAS