Life Insurance industry recorded four per cent growth in 2018

12 Feb 2019

Annual premium business undergirds overall growth for the year.

The Life Insurance Association, Singapore (LIA Singapore) today announced a set of industry results for the period January to December 2018 (YTD 4Q2018).

Singapore's life insurance industry recorded growth of four per cent in weighted new business premiumscompared to the same period in 2017. This amounted to S$4.23 billion for YTD 4Q2018.

Sustained sales of annual premium products

The continued growth is attributed primarily to the continued uptake and stable performance of annual premium policies which accounted for a total weighted annual premiums of S$2.82 billion for YTD 4Q2018. This reflects an increase of seven per cent from the corresponding period in 2017.

Dip in sales of single premium plans

The combination of turbulent markets late last year combined with regulatory requirement to reduce the sales charge for purchases of CPF Investment Scheme (CPFIS) products contributed to a three per cent dip in the uptake of single premium plans compared to YTD 4Q2017.

Weighted single premiums amounted to S$1.42 billion for the year of which:

  1. Single premium par and non-par products comprised 74 per cent; Single premium linked products took the remaining 26 per cent
  2. CPFIS-included products comprised 16 per cent; Cash-funded products took the remaining 84 per cent

Changes to the CPFIS significantly impacted the last quarter of 2018 which saw single premium CPFIS-included products recording S$29 million in weighted premiums, a decline of 62 per cent compared to the previous quarter.

This follows from the Government announcement made in March 20182 on the removal of sales charges for products offered under CPFIS. Taking effect on 1 October 2018, sales charges for purchases of CPF Investment Scheme (CPFIS) products were halved from three per cent to 1.5 per cent. Sales charges will be removed entirely from 1 October 2019.

These adjustments are being introduced to reduce the cost of investment for CPFIS members, as well as target the scheme to members with knowledge and time to invest, and are prepared to take investment risk, according to the statement made in Parliament.

Continued demand for protection products and health coverage

Life insurers continued to make progress in supporting individuals in Singapore bridge their protection gap with annual increase of total sum assured for new business achieving year-on-year growth of seven per cent to reach close to S$140 billion in YTD 4Q2018.

Integrated Shield Plans (IPs) continued to be a significant aspect of life insurance in Singapore. IPs and IP rider premiums accounted for 92 per cent (S$388.3 million) of total new business premiums3 for individual health insurance which totalled S$424.0 million for the full year. The remaining eight per cent (S$35.7 million) came from uptake of other medical plans and riders.

An additional 64,000 more Singaporeans and Permanent Residents were covered by IPs, as at the end of December 2018. There are now 2.73 million lives - approximately 68 per cent of Singapore residents - with IP coverage to complement coverage provided under MediShield Life.

Uplift in purchase of policies for retirement

By policy count, the industry recorded a notable year-on-year increase of 48 per cent in the uptake of retirement policies designed to provide regular payouts to policyholders during their retirement years. 38,120 policies were purchased in YTD 4Q2018, a significant 12,345 more policies compared to last year in which there was a total uptake of 25,775 policies as at end December 2017.

Contributing to S$338 million in weighted premiums for YTD 4Q2018, retirement policies accounted for approximately eight per cent of total weight premiums for the year, up from five per cent for YTD 4Q2017.

Growing pool of talent driving the industry’s transformation

The life insurance industry added 578 hires last year to reach a workforce of 8,007 employees as at end December 2018 with recruitment concentrated on data analytics, cyber security, operations, healthcare and marketing as life insurers pursue business expansion and digital innovations.

There were also 15,542 representatives which held exclusive contracts with companies that operate a tied agency force in Singapore.


Implementation of all FAIR initiatives

The industry also implemented two remaining initiatives under the Financial Advisory Industry Review (FAIR)which began in 2012 with the aim of increasing consumers’ understanding of life insurance policies. 

There are now two new point-of-sale documents to be provided to consumers namely:

  • A “Cover Page” to highlight salient features of the life insurance products; and
  • A bundled disclosure document to highlight that bundled products such as endowment and whole life plans have both insurance protection and investment components, and that consumers have the option of purchasing term life policy and investing the premiums saved.

OTHER HIGHLIGHTS FOR YTD 4Q2018

Product Classification

Par products accounted for 46 per cent of new sales while non-par products accounted for 35 per cent. Investment-linked products made up the remaining 19 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 38 53
Bank Representatives 35 11
Financial Adviser Representatives 22 20
Others (products sold without intermediaries, e.g. DPI, ElderShield) 5 16


Product License Classification

As at 31 December 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 YTD 4Q2018.

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$1.17 billion.

Assets

Contributing to Singapore’s position as a financial hub in Asia6, the life insurance industry managed assets of approximately S$211.2 billion, up nine per cent compared with a year ago.

Assets of non-investment linked business accounted for S$175.3 billion, while the remaining S$35.9 billion were assets held for investment-linked business.

Looking Forward

“Singapore’s life insurance industry achieved growth despite a challenging end to 2018 with market volatility particularly pronounced in the last quarter.  As we remain alert to the repercussions of continuing trade frictions and geo-political challenges, I am confident that life insurers will  demonstrate agility and resilience by adapting to the changing environment to deliver solutions to  meet Singaporeans’ insurance, investment and savings needs,” said Mr Patrick Teow, President of LIA Singapore.

- End -

Note to Editor: Industry results of YTD 4Q2018 are available at https://www.lia.org.sg/news-room/industry-performance/


In Summary

New Business Sales (Weighted Basis)

Comparison with Corresponding Period Jan  Dec 2018
S$

Jan – Dec 2017
S$

Change
Single Premium 1,416.4 million 1,463.9 million -3%
  Linked 370.2 million 395.4 million -6%
  Non-linked 1,046.2 million 1,068.5 million -2%
Annual Premium 2,818.3 million 2,624.3 million 7%
Total 4,234.7 million 4,088.2 million 4%

Comparison with Corresponding Quarter Oct  Dec 2018
S$

Oct – Dec 2017
S$

Change
Single Premium 308.2 million 563.2 million -45%
  Linked 62.1 million 173.8 million -64%
  Non-linked 246.1 million 389.4 million -37%
Annual Premium 761.1 million 777.3 million -2%
Total 1,069.3 million 1,340.5 million -20%




Comparison with Last Quarter Oct  Dec 2018
S$

Jul  Sep 2018
S$

Change
Single Premium 308.2 million 430.5 million -28%
  Linked 62.1 million 111.0 million -44%
  Non-linked 246.1 million 319.5 million -23%
Annual Premium 761.1 million 719.8 million 6%
Total 1,069.3million 1,150.3 million -7%



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 https://www.cpf.gov.sg/members/News/news-categories-info/cpf-changes/2346

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 http://www.mas.gov.sg/News-and-Publications/Speeches-and-Monetary-Policy-Statements/Speeches/2018/Strengthening-Trust-in-the-Financial-Advisory-industry.aspx

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

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