Life insurance industry records 13 per cent decline in sales due to COVID-19 pandemic
11 Aug 2020
Supporting Singaporeans through pandemic remains foremost priority for industry; accelerating digital and workforce transformation key to adapting to new normal.
The Life Insurance Association, Singapore (LIA Singapore) today announced a set of industry results for the period January to June 2020 (1H2020).
Singapore’s life insurance industry recorded a total of S$1.66 billion in weighted new business premiums1 for 1H2020, a drop of 13 per cent from the same period in 2019.
The ongoing recession stemming from the COVID-19 pandemic has resulted in demand- and supply-side shocks to the Singapore economy. The life insurance sector was not exempted from subsequent economic repercussions, which has impacted results for the period of April – June 2020 (2Q2020).
1H2020 encompassed both ‘Circuit-Breaker’ and ‘Phase 1’ periods where strict social distancing measures were enforced. As a result, annual premium business recorded a 25 per cent drop from the same period last year. This amounted to a total S$1.04 billion in total weighted annual premiums. Sales for the second quarter was significantly impacted – the amount of premiums collected was only half of the level in the same period last year.
The silver lining came in the form of increased single premium sales which helped cushion the impact caused by the decrease in annual premium business. In 1H2020, a 17 per cent year-on-year increase in weighted single premiums amounting to S$622.9 million in total was achieved.
a) Single premium par and non-par products comprised 75 per cent; single premium linked products made up the remaining 25 per cent
b) CPFIS-included products comprised 16 per cent; cash-funded products took the remaining 84 per cent
More short-term single premiums products were sold in tranches. These products are simple to understand, and they do not require medical underwriting. Representatives were able to bring customers through the sales process electronically and close sales despite the challenging situation.
The total sum assured for new business rose by one per cent year-on-year, amounting to S$65.7 billion in 1H2020.
“Since the beginning of the COVID-19 outbreak in Singapore, the life insurance sector has and continues to work closely with the relevant authorities to ensure Singaporeans receive the protection they need during this challenging period,” said Mr. Khor Hock Seng, President, LIA Singapore.
“Proactive support measures such as the Deferred Premium Payment scheme which allows premium payments to be deferred up to six months, complimentary access to telemedicine services, and supplementary activities to encourage healthy living during the circuit-breaker period are just some of the initiatives put in place to help Singaporeans cope with the changes to their financial situation and lifestyle needs,” he added.
Integrated Shield Plans (IPs) remain a significant component of health insurance
51,000 more Singaporeans and Permanent Residents were covered by IPs and riders as at 30 June 2020. In total, 2.81 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 premiums2 for individual health insurance for 1H2020 amounted to S$173.0 million. Overall, IPs and IP rider premiums accounted for 87 per cent (S$149.9 million) and the remaining 13 per cent (S$23.1 million) comprised other medical plans and riders.
Life insurance industry doubles down on workforce transformation efforts
Employment in the life industry rose by four per cent, compared to the corresponding period in 2019, with 368 net new hires. This brings Singapore’s life insurance industry’s workforce to 8,650 employees as at 30 June 2020. New hires have primarily been attributed to the expansion of Distribution and Sales teams, as well as project and product management roles.
Member companies are working together at the industry-level to provide selected training for their staff.
With growing and sustained demand for talent in the technology and digital space, member companies are leveraging on the SG United Traineeships Programmes to provide internship placement opportunities for tertiary students, including career opportunities in data science and digital analytics.
Within the same period, 14,787 representatives held exclusive contracts with companies that operate a tied-agency force.
Reduced uptake of retirement policies
There was a 36 per cent decrease in the uptake of retirement policies in 1H2020 compared to the same period last year, reversing the upward trend in recent years. A total of 16,582 retirement policies3 were purchased as at 30 June 2020.
Accounting for approximately nine per cent of total weighted premiums for 1H2020, retirement policies totalled S$148.8 million in weighted premiums for the first six months of 2020.
OTHER HIGHLIGHTS FOR 1H2020
Par products accounted for 40 per cent of new sales while non-par products accounted for 39 per cent. Investment-linked products made up the remaining 21 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 Representatives4||26.7||26.3|
|Online Direct Channel5||2.6||6.0|
|Others (products sold without intermediaries, e.g. DPI, ElderShield)||4.3||8.8|
Product License Classification
As of 30 June 2020, insurers holding “Normal” licenses contributed 98 per cent of new sales, while “Defined Market Segments” (DMS) insurers6 made up for the remaining two per cent of new sales in 1H2020.
Group Insurance: Total Annual Premiums In-Force
Total annual premiums in-force for group insurance business rose by 13 per cent compared to the same period a year ago, totalling S$1.46 billion.
“In conjunction with the Fourth Industrial Revolution, Singapore is undergoing an unprecedented and indeterminate period of uncertainty caused by the pandemic. Life insurers need to accelerate their digitalisation efforts as these are crucial to maintain business continuity, optimise efficiency, improve customer servicing standards and enable the innovation of new products,” said Mr. Khor Hock Seng, President, LIA Singapore.
“To ensure employees benefit from this digital transformation, life insurers are investing in training and upskilling their workforce for the future,” he added.
– End –
Note to Editor: More details of the life insurance industry results for 1H2020 available at https://www.lia.org.sg/news-room/industry-performance/
New Business Sales (Weighted Basis)
|Comparison with Corresponding Period||
Jan – Jun 2020
Jan – Jun 2019
|Single Premium||622.9 million||531.9 million||17%|
|Linked||158.1 million||103.0 million||53%|
|Non-linked||464.8 million||428.9 million||8%|
|Annual Premium||1,038.0 million||1,382.4 million||-25%|
|Total||1,660.9 million||1,914.3 million||
|Comparison with Corresponding Quarter||
Apr – Jun 2020
Apr – Jun 2019
|Single Premium||329.5 million||307.2 million||7%|
|Linked||79.6 million||54.6 million||46%|
|Non-linked||249.9 million||252.6 million||-1%|
|Annual Premium||365.6 million||729.3 million||-50%|
|Total||695.1 million||1,036.5 million||
|Comparison with Last Quarter||
Apr – Jun 2020
Jan – Mar 2020
|Single Premium||329.5 million||293.4 million||12%|
|Linked||79.6 million||78.5 million||1%|
|Non-linked||249.9 million||214.9 million||16%|
|Annual Premium||365.6 million||672.4 million||-46%|
|Total||695.1 million||965.8 million||
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 With effect from 1 January 2016, 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.
3 These policies are designed to provide regular payouts during policyholders’ retirement years.
4 Financial Adviser (FA) Representatives include representatives of “related FA firms”. A related FA firm is a wholly-owned subsidiary of an insurance company.
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.
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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