Life insurance industry starts 2011 on a high note

Straight from closing the previous year on a high note, the life insurance industry continued the uptrend in similar fashion into the first quarter of 2011.  It recorded a total of $460.0 million in weighted* new business premiums, which represented an impressive 45 per cent increase over the corresponding quarter in 2010.
 
The strong performance was boosted by robust sales across all products. Weighted regular premiums sales reached $294.0 million in the first quarter of 2011, registering a 35 per cent growth over the same period of last year.  Single premium sales fared even better, soaring by 65 per cent over the same period of last year to $166 million.  Of this amount, 17 per cent comprised CPF-funded sales.

"Robust growth for the industry has come on the back of strong consumer confidence," noted Mr Tan Hak Leh, the President of the Life Insurance Association.  "The economy is in good shape and we are optimistic that the life insurance industry will remain strong throughout the rest of 2011."

Health insurance sales continued to fare reasonably well.  As at 31 March 2011, a total of 2.38 million lives were covered by health insurance with paid up premiums amounting to $778 million.   However, new business health insurance sales dropped by 13 per cent to $35 million compared to the same quarter of last year.  The bulk of this - 86 per cent - went to Integrated Shield Plans and riders.  "Despite the dip in sales, we are seeing increasing consumer awareness of the need for medical coverage in the face of rising medical costs," said Mr Tan.

Other Highlights (January to March 2011)

Distribution Channels

Tied agents contributed to nearly half of the new business, bringing in 48 per cent of weighted new business sales for the first quarter of the year.

New business sold through banks gained notable ground, registering 37 per cent of sales for the current quarter, up by 14 percentage points from that achieved in the same period of previous year.  This is a record high in five years.  Financial Advisers contributed 12 per cent of sales whilst other channels, which include direct sales, made up the remaining 3 per cent.

Product Classification

Of the new sales, participating ("par") products accounted for 57 per cent while non-par products accounted for 21 per cent.  Investment-linked products made up the remaining 22 per cent.

Product License Classification

As at 31 March 2011, 95 per cent of new sales were contributed by insurers holding "Normal" licenses. The "Defined Market Segments" (DMS) insurers, represented by four companies, contributed the remaining 5 per cent. 

(Explanatory note: DMS insurers are registered with the MAS to conduct only non-CPF business and with minimum policy sizes.)

Claims Payout

Up to end March 2011, the life insurance industry paid out a total of $1.39 billion to policyholders and beneficiaries. Of this, $88 million was in respect of death, critical illness or disability claims whilst the remaining $1.30 billion was for policies that matured.

Fact-Find Experience

During the first quarter of this year, 77 per cent of life insurance applications were completed with a full or partial fact-find, an improvement of 11 per cent over the preceding period.  Observing that the fact find experience has been improving since 2010, the industry was heartened to know that consumers appreciate the value and benefit of going through a fact find exercise with their financial advisers when considering appropriate policies for their needs.

Other Highlights (In force as at March 2011)

Group Insurance

Total annual premiums in force for group insurance business rose by 9 per cent, amounting to $607 million.

Assets

As at end of 2010, the life insurance industry was managing assets** of approximately $117.7 billion, up 8 per cent compared with a year ago.  Assets of non-linked business accounted for $92.9 billion, whilst the remaining $24.8 billion were assets held for investment-linked policies.

Manpower In The Industry

A total of 4,910 office staff were employed by member companies of the LIA and 12,869 representatives held exclusive contracts with companies that operate a tied agency force.

The Year Ahead

This year marks the return of a special event for the life insurance industry.  The LIA and Singapore will play host to the 25th Pacific Insurance Conference (PIC), a biennial forum for chief executives helming life insurance, retirement savings or wealth management businesses from the Asia Pacific region, Europe and North America to network and present their perspectives on current and future industry concerns and opportunities.

With the theme "Back from the Brink: Seizing Today's Opportunities; Conquering Tomorrow’s Challenges", the Conference will be held from 11 - 14 September at the Marina Bay Sands. 

Mr Tan said, "This is only the second time in the 50 years of The Pacific Insurance Conference Limited’s history that its conference is being held in Singapore.  The LIA is proud to be organising the 25th Conference of what is considered to be a highly regarded and long established conference brand.  The Singapore Conference will deliver a slate of distinguished speakers who will address key issues of the day."

"It will provide an excellent opportunity for local practitioners to hear and interact with some of the world’s top executives on building and sustaining successful business operations.  A meeting of minds at the PIC is another major milestone for us."

In Summary

New Business Sales (Weighted Basis)

*   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