Life Insurance industry achieved 0.4 per cent growth in 2019 uplifted by sustained trajectory of annual premium business

06 Feb 2020

Industry continued expanding workforce and increasing take-up of retirement policies amid a challenging macroenvironment last year

The Life Insurance Association, Singapore (LIA Singapore) today announced a set of industry results for the period January to December 2019 (YTD 4Q2019).

Singapore’s life insurance industry recorded a total of S$4.3 billion in weighted new business premiums1 for YTD 4Q2019, a 0.4 per cent increase from the corresponding period in 2018.

Total sum assured for new business continued to increase, recording a seven per cent growth year-on-year, amounting to S$149.5 billion.

The industry’s continued growth is set against the backdrop of the nation’s muted economic growth for the year2 which was the slowest in a decade.

The industry continued to make headway in narrowing the protection gap in Singapore with an increase in uptake of annual premium policies which recorded a seven per cent increase from the same period last year. This amounted to S$3.0 billion in total weighted annual premiums.

However, primarily due to global market volatility, there was an overall 12 per cent decline in single premium business with weighted single premiums amounting to S$1.2 billion for the year.

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 10 per cent; Cash-funded products took the remaining 90 per cent

     

    Increased uptake of retirement policies

    There is increasing recognition and actions taken by consumers, encouraged by the industry and government, to take more pro-active efforts in planning for retirement.

    The industry recorded a 34 per cent increase in the uptake of retirement policies3 in YTD 4Q2019 compared to a year ago based on policy count. A total of 51,040 policies were purchased as at 31 December 2019, a significant 12,920 more policies compared to the same period in 2018.

    Making up about 11 per cent of total weighted premiums for YTD 4Q2019, retirement policies totalled S$469 million in weighted premiums for the year.

      

    Life insurance industry continues to expand its workforce

    Employment in the life industry rose by six per cent as a result of 441 new hires, compared to the corresponding period in 2018, to reach a workforce of 8,448 employees, as of 31 December 2019. Among new types of jobs being created in the industry, expertise in digitalisation transformation remains highly sought after.

    14,844 representatives held exclusive contracts with companies that operate a tied agency force as at 31 December 2019, a four per cent decrease compared to the corresponding period in 2018. The role of financial advisory representatives in Singapore remains essential in providing personalised advisory based on each individual’s circumstances as well as protection, investments, and savings needs.

    The Association is also exploring ways to support the industry’s workforce transformation as expertise in digitalisation remains highly sought after.

     

    Integrated Shield Plans (IPs) remain a significant component of health insurance

    58,000 more Singaporeans and Permanent Residents were covered by IPs and riders as at 31 December 2019. 2.79 million lives approximately 69 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 YTD 4Q2019 amounted to S$465.7 million. Overall, IPs and IP rider premiums accounted for 90 per cent (S$419.7 million) and the remaining 10 per cent (S$46.0 million) comprised other medical plans and riders.

    All IP insurers have rolled out new rider policies with mandatory co-payment of 5% or more from April 2019. This feature will encourage consumers and providers to choose cost-effective treatments, and reduce the buffet syndrome which arises when there is no out-of-pocket cost.

    The new riders will also have a cap on the co-payment amount each year for treatments they are pre-authorised or provided by doctors on IP insurer’s respective approved panel. IP insurers may also set a co-payment cap of S$3,000 or more per policy year.

    Consumers continue to have access to IP insurers existing rider plans. New policyholders will be informed that they will be transited to the new riders with co-payment from 1 April 2021.5

    Following recommendations put forth by the Health Insurance Task Force (HITF) in 20166,  LIA Singapore and IP insurers continue to take pro-active efforts to keep health and health insurance accessible for Singapore Residents with more initiatives in 2019.

    This includes the introduction of the LIA Pre-Authorisation Form7, which will help to standardise the process for policyholders to obtain approval from their insurer for a medical treatment and its estimated bill size prior to the actual procedure.

    The standardised approach serves to guard against unnecessary treatments, any unexpected out-of-pocket payments, and possible denial of claim, and addresses feedback from doctors regarding differing requirements of different insurers for their pre-authorisation application prior to the implementation of the Form from October 2019.

    IP insurers are gradually rolling out this standardised form, which will be fully implemented by 31 March 2020.

    Pre-authorisation is an important measure for our healthcare system to bring healthcare cost inflation under control in the long term. LIA is committed to working with providers to improve this process over time.

     

    OTHER HIGHLIGHTS FOR YTD 4Q2019

    Product Classification

    Par products accounted for 48 per cent of new sales while non-par products accounted for 35 per cent. Investment-linked products made up the remaining 17 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 34.0 50.7
    Bank Representatives 36.0 11.3
    Financial Adviser Representatives8 24.7 22.1
    Online Direct Channel9 0.2 0.8
    Others (products sold without intermediaries, e.g. DPI, ElderShield) 5.0 15.1

      

    Product License Classification

    As of 31 December 2019, insurers holding “Normal” licenses contributed 98 per cent of new sales, while the “Defined Market Segments” (DMS) insurers10made up the remaining two per cent of new sales for YTD 4Q2019. 

     

    Group Insurance: Total Annual Premiums In-Force

    Total annual premiums in-force for group insurance business rose by 18 per cent compared to the same period a year ago, amounting to S$1.4 billion.   

     

    LOOKING FORWARD

     “The life insurance industry will continue to take a long-term view to progress Singapore as a thriving insurance hub in the region. We will focus efforts on enhancing the professionalism, culture and conduct in the way we do business, as well as drive more innovations as we invest in grooming the workforce for the future.

     At the same time, we remain committed to supporting the community with ongoing efforts to help narrow the protection gap, ensure continued accessibility of healthcare, support individuals better prepare for retirement,” said Mr Khor Hock Seng, President of LIA Singapore. 

      

    – End –

     

    Note to Editor: Industry results of YTD 4Q2019 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 2019
    S$

    Jan – Dec 2018
    S$

    Change
    Single Premium 1,247.6 million 1,416.4 million -12%
      Linked 237.3 million 370.2 million -36%
      Non-linked 1,010.3 million 1,046.2 million -3%
    Annual Premium 3,006.0 million 2,818.3 million 7%
    Total 4,253.6 million 4,234.7 million 0.4%

    Comparison with Corresponding Quarter

    Oct  Dec 2019 
    S$

    Oct – Dec 2018
    S$

    Change
    Single Premium 358.4 million 308.2 million 16%
      Linked 71.3 million 62.1 million 15%
      Non-linked 287.1 million 246.1 million 17%
    Annual Premium 856.5 million 761.1 million 13%
    Total 1,214.9 million 1,069.3 million 14%

    Comparison with Last Quarter                    

    Oct  Dec 2019 
    S$

    Jul – Sep 2019
    S$

    Change
    Single Premium 358.4 million 357.3 million 0.3%
      Linked 71.3 million 63.1 million 13%
      Non-linked 287.1 million 294.2 million -2%
    Annual Premium 856.5 million 767.1 million 12%
    Total 1,214.9 million 1,124.4million

    8%

     

    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’s GDP Grew by 0.8 Per Cent in the Fourth Quarter of 2019 (2 Jan 2020) Available at: https://www.singstat.gov.sg/-/media/files/news/advgdp4q2019.pdf

    3 These policies are designed to provide regular payouts during policyholders’ retirement years.

    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 COS Factsheet: Keeping Healthcare Costs Sustainable for all Singaporeans (2018) Available at:  https://www.moh.gov.sg/docs/librariesprovider5/pressroom/current-issues/cos-2018-media-factsheet---keeping-healthcare-costs-sustainable-for-all-singaporeans.pdf

    6 https://www.lia.org.sg/media/1521/managingsingaporehealthinsurancecost_hitf_20161013.pdf

    7 https://www.lia.org.sg/news-room/media-releases/2019/life-insurance-industry-launches-standard-pre-authorisation-form-to-simplify-the-pre-authorisation-application-process-for-doctors/

    8 Financial Adviser (FA) Representatives include representatives of “related FA firms”. A related FA firm is a wholly-owned subsidiary of an insurance company.

    9 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”.

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

     

    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

    Unified

    in our resolve to deliver innovative solutions where every individual’s needs are best met.

    Professional

    in the way we conduct ourselves and in the counsel we give.

    Ethical 

    in ensuring our policyholders’ interests are managed with utmost integrity.

    Fair        

    in how we strive to provide favourable outcomes to both our policyholders and shareholders.

    Open & honest

    in all that we do to build an environment of trust and transparency.

    Proactive

    in the steps we take to give our people the skills and knowledge to provide sound solutions at all times.

     

    For more information, please contact:

    Pauline Lim (Ms.)
    Executive Director, LIA Singapore
    Tel: +65 6438 8900 / +65 9648 6407
    Email : [email protected]

    Amanda Chong (Ms.)
    Ogilvy Singapore
    Tel : +65 6213 7781 / +65 8200 5363
     Email: [email protected]



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