Annual premium business continues to be a pillar of growth despite overall dip amid subdued economy
06 Aug 2019
Protection gap calculator to be launched in second half of year as part of long-term efforts to bridge Singapore’s Mortality and Critical Illness (CI) protection gaps
The Life Insurance Association, Singapore (LIA Singapore) today announced a set of industry results for the period January to June 2019 (1H2019).
Singapore’s life insurance industry recorded a total of S$1.97 billion in weighted new business premiums1 for 1H2019, a two per cent decrease from the corresponding period in 2018, in the midst of the nation’s slowing second quarter growth2.
Stable uptake of annual premium products focused on long-term protection
Annual premium policies recorded a seven per cent increase from the same period last year, amounting to S$1.44 billion in total weighted annual premiums. The steady growth augurs well in helping to narrow the protection gaps in Singapore.
Decrease in uptake of single premium products due to subdued economy
Impacted by global market uncertainty and economic slowdown3, the uptake of single premium policies continued on a downturn from the previous quarter. On a year-on-year basis, a 22 per cent decline was recorded.
For 1H2019, weighted single premiums amounted to S$531.9 million, of which:
a) Single premium par and non-par products comprised 81 per cent; Single premium linked products took the remaining 19 per cent
b) CPFIS-included products comprised nine per cent; Cash-funded products took the remaining 91 per cent
Retirement policies continue on an upward trend
By policy count, the industry recorded a 78 per cent increase in the uptake of retirement policies in 1H2019 compared to a year ago. These policies are designed to provide regular payouts during policyholders’ retirement years.
A total of 25,757 policies were purchased as at 30 June 2019, a significant 11,252 more policies compared to the previous year in which 14,505 policies were purchased.
Making up about 12 per cent of total weighted premiums for 1H2019, retirement policies totalled S$236 million in weighted premiums for the first six months of 2019. Retirement policies accounted for only six per cent of total weighted premiums in 1H2018.
Integrated Shield Plans (IPs) remain a significant component of health insurance
60,000 more Singaporeans and Permanent Residents were covered by IPs and riders as at 30 June 2019. 2.76 million lives - approximately 68 per cent of Singapore residents - are protected by IPs and riders, which provide coverage on top of MediShield Life.
Total new business premiums4 for individual health insurance for 1H2019 amounted to S$221.4 million. Overall, IPs and IP rider premiums accounted for 89 per cent (S$197.3 million) and the remaining 11 per cent (S$24.1 million) comprised other medical plans and riders.
Talent pool continues to expand, meeting consumers’ advisory needs and supporting digital transformation
The life insurance industry added 611 hires last year to reach a workforce of 8,282 employees as at 30 June 2019. Recruitment continued to be focused on data analytics, cyber security, customer service and marketing as life insurers pursue digital innovation and operations.
15,117 representatives held exclusive contracts with companies that operate a tied agency force as at 30 June 2019, 352 more than the corresponding period in 2018. The role of financial advisory representatives in Singapore remains essential in giving personalised advisory based on each individual’s circumstances and protection needs.
Protection Gap Study (PGS) qualitative findings
Following the quantitative PGS which revealed that people in Singapore have a mortality protection gap of 20 per cent and critical illness (CI) protection gap of 80 per cent, LIA Singapore embarked on a qualitative study to deep dive and better understand the barriers to bridging these protection gaps.
|Types of protection gaps||Mortality||CI|
|Reasons to why people are not having their protection needs met||Cash savings for protection: People prefer liquidity (savings) to insurance (protection)|
|Intangible and long-term: People perceive insurance premium payments as a loss rather than a gain of insurance coverage||Social safety nets: In general, people have expectations that others, such as family or the government, will be able to provide help and support|
|Financial (over-)confidence: People perceive themselves as financially savvy|
|Wider financial context: Insurance is often not a priority for many, and has to compete with many other purchase decisions|
|Consumer trust: People are cautious about seeking insurance because of experiences and perceptions about the industry|
“Our qualitative study findings revealed that there are several perception barriers that are preventing people from getting their protection needs met. Through ongoing public education efforts as well as the upcoming digital protection calculator, we seek to help individuals here understand the importance of taking a long-term view and having their protection needs adequately met, so that they and their loved ones can have peace of mind. Individual life insurers here will also continue to introduce more innovative and accessible protection policies, helping to bridge the protection gaps and contributing to a more resilient Singapore,” said Mr Khor Hock Seng, President of LIA Singapore.
OTHER HIGHLIGHTS FOR 1H2019
Par products accounted for 53 per cent of new sales while non-par products accounted for 31 per cent. Investment-linked products made up the remaining 16 per cent.
The contribution of new business by the different channels is as follows:
|Distribution Channel||By Weighted Premium (%)||By Number of Policies (%)|
|Financial Adviser Representatives||22.4||21.3|
|Online Direct Channel5||0.2||0.5|
|Others (products sold without intermediaries, e.g. DPI, ElderShield)||4.9||14.6|
Product License Classification
As at 30 June 2019, insurers holding “Normal” licenses contributed 98 per cent of new sales, while the “Defined Market Segments” (DMS) insurers made up the remaining two per cent of new sales for 1H2019.
Total Sum Assured
There was a year-on-year decrease of total sum assured for new business of two per cent, amounting to S$64.9 billion.
Group Insurance: Total Annual Premiums In-Force
Total annual premiums in-force for group insurance business rose by 14 per cent compared to the same period a year ago, amounting to S$1.3 billion.
Contributing to Singapore’s position as a leading global financial centre7, the life insurance industry managed assets of some S$221.6 billion, up 10 per cent compared with a year ago.
Assets of non-investment linked business accounted for S$185.0 billion, while the remaining S$36.6 billion were assets held for investment-linked business.
The life insurance industry maintains a conservative outlook for the rest of the year, against the backdrop of an uncertain global and local economy. The Association will continue efforts that support Singapore’s progress, particularly in workforce transformation, driving innovations to support industry growth, and bridging the mortality and CI protection gaps.
– End –
Note to Editor: Industry results of 1H2019 are available at https://www.lia.org.sg/news-room/industry-performance/
New Business Sales (Weighted Basis)
|Comparison with Corresponding Period||
Jan – Jun 2019
Jan – Jun 2018
|Single Premium||531.9 million||677.7 million||-22%|
|Linked||103.0 million||197.1 million||-48%|
|Non-linked||428.9 million||480.6 million||-11%|
|Annual Premium||1,440.1 million||1,341.7 million||7%|
|Total||1,972.0 million||2,019.4 million||-2%|
|Comparison with Corresponding Quarter||
Apr – Jun 2019
Apr – Jun 2018
|Single Premium||307.2 million||395.4 million||-22%|
|Linked||54.6 million||97.7 million||-44%|
|Non-linked||252.6 million||297.7 million||-15%|
|Annual Premium||759.6 million||696.4 million||9%|
|Total||1,066.8 million||1,091.8 million||-2%|
|Comparison with Last Quarter||
Apr – Jun 2019
Apr – Mar 2019
|Single Premium||307.2 million||224.7 million||37%|
|Linked||54.6 million||48.3 million||13%|
|Non-linked||252.6 million||176.4 million||43%|
|Annual Premium||759.6 million||680.5 million8||12%|
|Total||1,066.8 million||905.2 million9||
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 Singapore growth forecast risks sharper downgrade as Q2 GDP scrapes in at 0.1% (12 July 2019). The Business Times. Available at: https://www.businesstimes.com.sg/government-economy/singapore-growth-forecast-risks-sharper-downgrade-as-q2-gdp-scrapes-in-at-01
3 Singapore economic growth to slow down amid weaker global prospects: MAS (26 April 2019). Yahoo Finance. Available at: https://sg.finance.yahoo.com/news/singapore-economic-growth-slow-amid-weaker-global-prospects-mas-063313954.html
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 Online Direct Channel is a new data point from January 2019, and it refers to “any web portal or application in the internet created, developed and maintained or operated by a life insurer, on which a client may purchase a life policy”.
6 DMS insurers are registered by MAS to conduct only non-CPF business and with minimum policy size.
7 Singapore and Hong Kong remain among top global financial centres (15 September 2018). Insurance Business Asia. Available at: https://www.insurancebusinessmag.com/asia/news/breaking-news/singapore-and-hong-kong-remain-among-top-global-financial-centres-111368.aspx
8 Updated, due to revisions made after release of Q1 results
9 Updated, due to revisions made after release of Q1 results
Life Insurance Association, Singapore (LIA Singapore)
Established in 1962, the Life Insurance Association, Singapore (LIA Singapore) is the not-for-profit trade body of life insurance product providers and life reinsurance providers based in Singapore and licensed by the Monetary Authority of Singapore (MAS).
Vision and Mission
The vision of member companies is to provide individuals with peace of mind and to promote a society where every person is prepared for life’s changing cycles and for those situations unforeseen.
They are committed to being a progressive life insurance industry by collectively enhancing consumer understanding, promoting industry best practices, and through the association fostering a spirit of collaboration and mutual respect with government and business leaders.
Values underpinning the association and its members
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