Life Insurance industry achieves 20 per cent increase in total sum assured for the first quarter of 2020 as uptake of insurance rises prior to the COVID-19 circuit breaker measures

22 May 2020

Industry remains focused on long-term efforts to ensure a digitally trained workforce.

The Life Insurance Association, Singapore (LIA Singapore) today announced a set of industry results for the period January to March 2020 (1Q2020).

Singapore’s life insurance industry recorded a total of S$965.8 million in weighted new business premiums1 for 1Q2020, a 10 per cent increase from the same period in 2019.

Overall, single premium business recorded a 31 per cent quarter-on-quarter increase in weighted single premiums, amounting to S$293.4 million for 1Q2020, attributed to insurers’ new product launches and associated promotional activities.

a) Single premium par and non-par products comprised 73 per cent; single premium linked products made up the remaining 27 per cent

b) CPFIS-included products comprised 16 per cent; Cash-funded products took the remaining 84 per cent

Annual premium policies recorded a steady three per cent increase from the same period last year. This amounted to S$672.4 million in total weighted annual premiums.

In tandem with the growth in single and annual premium policies, total sum assured for new business rose by a strong 20 per cent quarter-on-quarter, amounting to S$34.6 billion for 1Q2020.

Mr Khor Hock Seng, President, LIA Singapore said: “The industry continues to make headway in bridging protection gaps in the first quarter as more consumers take action to secure their financial future in view of COVID-19’s drastic impact on global and local markets2. However, with circuit breaker measures, climbing unemployment and an impending recession3, the life insurance industry may see the knock-on effect in the coming quarters.”

“Singapore’s life insurance industry remains resilient, united, and committed to providing support for customers and our workforce during these challenging times. We will continue working closely with regulators to facilitate support measures effectively and efficiently,” he added.

Support measures provided by Singapore’s life insurance industry for customers amid COVID-19 include:

- For policyholders in financial difficulties, a grace period of up to six months to make payment on premiums if the policy premium due date or policy renewal date falls on any date between 1 April 2020 and 30 September inclusive4

- Health and group insurance coverage extended to cover COVID-19 patients admitted to a Community Care Facility (CCF) or Community Recovery Facility (CRF) for up to 14 days after they are transferred there from a hospital5

- Outpatient telemedicine claims covered by Integrated Shield Plans (IPs) and relevant group insurance plans during this period6

 

Life insurance industry continues to expand and invest in ensuring a digitally-trained workforce

Employment in the life industry rose by four per cent, as a result of 359 net new hires, compared to the corresponding period in 2019. This brings Singapore’s life insurance industry’s workforce to 8,668 employees as at 31 March 2020.

In addition, 14,604 representatives held exclusive contracts with companies that operate a tied agency force within the same period.

Singapore’s life insurance industry is investing significantly in upskilling employees and financial advisers for an increasingly digitalised Singapore as we go through economic restructuring7.

To remain ahead of these rapid changes, member companies are pursuing initiatives to accelerate the implementation of their digital transformation strategies. This includes upskilling employees as well as providing financial advisers with enhanced digital tools to better engage with and serve customers remotely8.

    Life insurers in Singapore have automated processes which enable the purchase, processing, and general servicing of accounts digitally. Member companies have also enhanced the remote working experience. These have been especially critical amid the COVID-19 pandemic and circuit breaker period.

    In all these efforts, the industry is ensuring that the confidentiality and security of information is not compromised.

     

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

    57,000 more Singaporeans and Permanent Residents were covered by IPs and riders as at 31 March 2020.  2.80 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 premiums9 for individual health insurance for 1Q2020 amounted to S$101.8 million. Overall, IPs and IP rider premiums accounted for 87 per cent (S$88.2 million) and the remaining 13 per cent (S$13.6 million) comprised other medical plans and riders.

      

    Slight dip in the uptake of retirement policies

    While there was an increase in uptake of protection products, there was a slight four per cent decline in the uptake of retirement policies in 1Q2020 compared to the same period last year. A total of 11,713 retirement policies10 were purchased as at 31 March 2020.

    Accounting for approximately 11 per cent of total weighted premiums for 1Q2020, retirement policies totalled S$107 million in weighted premiums for this quarter.

     

    OTHER HIGHLIGHTS FOR 1Q2020

    Product Classification

    Par products accounted for 48 per cent of new sales while non-par products accounted for 32 per cent. Investment-linked products made up the remaining 20 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 32.5 51.6
    Bank Representatives 38.6 12.9
    Financial Adviser Representatives11 24.0 24.8
    Online Direct Channel12 0.6 1.6
    Others (products sold without intermediaries, e.g. DPI, ElderShield) 4.3 9.1

      

    Product License Classification

    As of 31 March 2020, insurers holding “Normal” licenses contributed 98 per cent of new sales, while the “Defined Market Segments” (DMS) insurers13 made up the remaining two per cent of new sales for 1Q2020. 

     

    Group Insurance: Total Annual Premiums In-Force

    Total annual premiums in-force for group insurance business rose by 12 per cent compared to the same period a year ago, amounting to S$1.4 billion.   

     

    LOOKING FORWARD

    “We maintain a conservative outlook as the life insurance sector continues to navigate headwinds brought forth from economic instability. The COVID-19 pandemic and ensuing lockdown measures across the world have caused a domino effect resulting in a global economic downturn. Until a vaccine is discovered, it is difficult to gauge how long the headwinds will last,” concluded Mr Khor Hock Seng, President of LIA Singapore.

      

    – End –

     

    Note to Editor: More details of the life insurance industry results for 1Q2020 available at https://www.lia.org.sg/news-room/industry-performance/

     

    In Summary

    New Business Sales (Weighted Basis)

    Comparison with Corresponding Period

    Jan  Mar 2020 
    S$

    Jan – Mar 2019
    S$

    Change
    Single Premium 293.4 million 224.7 million 31%
      Linked 78.5 million 48.3 million 63%
      Non-linked 214.9 million 176.4 million 22%
    Annual Premium 672.4 million 653.1 million 3%
    Total 965.8 million 877.8 million

    10%

    Comparison with Last Quarter 

    Jan  Mar 2020 
    S$

    Oct – Dec 2019
    S$

    Change
    Single Premium 293.4 million 358.4 million -18%
      Linked 78.5 million 71.3 million 10%
      Non-linked 214.9 million 287.1 million -25%
    Annual Premium 672.4 million 856.5 million -21%
    Total 965.8 million 1,214.9 million

    -21%

     

    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 COVID-19 Consumer Survey Singapore. Swiss Re (29 April 2020). Available at: https://www.swissre.com/dam/jcr:5235c471-991f-4857-bd29-5973cfaa8270/covid19-infographic-apac-singapore.pdf

    3 'MAS expects more job losses, wage cuts as economy deals with ‘large abrupt shock’ from COVID-19’. CNA (28 April 2020). Available at: https://www.channelnewsasia.com/news/singapore/covid-19-mas-more-job-losses-wage-cuts-large-abrupt-shock-12683068

    4 Refer to the LIA Singapore announcement ‘Measures by Life Insurers to Support Customers Financially Impact by COVID-19’ (31 March 2020) for more details: https://www.lia.org.sg/media/2485/lia-media-release-on-covid-19-support-31mar2020.pdf

    5 Refer to LIA Singapore announcement 'Health and group insurance to extend daily hospital cash benefit cover to patients in Community Card Facilities and Community Recovery Facilities’ (5 May 2020) for more details: https://www.lia.org.sg/media/2550/200505_lia-gia-release_extend-daily-hospital-cash-benefit-cover.pdf

    6 Refer to LIA Singapore announcement 'Health and group insurance to extend daily hospital cash benefit cover to patients in Community Card Facilities and Community Recovery Facilities’ (5 May 2020) for more details: https://www.lia.org.sg/media/2550/200505_lia-gia-release_extend-daily-hospital-cash-benefit-cover.pdf

    7 May Day Message 2020 by PM Lee Hsien Loong (30 April 2020) Available at: https://www.pmo.gov.sg/Newsroom/PM-Lee-Hsien-Loong-May-Day-Message-2020

    8 Refer to announcement by the Monetary Authority of Singapore (MAS) ‘MAS Urges Customers to Minimise Visits to Premise of Financial Institutions’ (17 April 2020) on circuit breaker measures impacting the industry: https://www.mas.gov.sg/news/media-releases/2020/mas-urges-customers-to-minimise-visits-to-premises-of-financial-institutions

    9 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.

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

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

    12 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”.

    13 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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