Industry employment rose by four per cent amid higher national unemployment rates.

The Life Insurance Association, Singapore (LIA Singapore) today announced a set of industry results for the period January 2020 to September 2020 (YTD 3Q2020).

Singapore’s life insurance industry recorded a total of S$2.99 billion in weighted new business premiums¹ for YTD 3Q2020, a decline of two per cent from the same period in 2019. There was a notable 90.6 per cent increase in new business premiums recorded in 3Q2020 compared to 2Q2020. Total weighted premiums recorded in the third quarter reached $1,324.6 million, a significant $629.5 million more than the $695.1 million recorded in the second quarter.

This is consistent with Singapore’s economic performance which saw the nation’s Gross Domestic Product (GDP) grow by 7.9 per cent in the third quarter compared to a contraction of 13.2 per cent in the second quarter² during the Circuit Breaker.

Mr. Khor Hock Seng, President, LIA Singapore said, “Barring evolving COVID-19 conditions in other countries, Singapore is moving towards a slow recovery and the life insurance industry remains committed to supporting the population in meeting and maintaining their protection needs. We will continue to monitor the situation and work closely with regulators to get through these challenging times.”

Beyond offering instalment-based payment of deferred premiums, life insurers are also proactively engaging policyholders to right-size their insurance plans to ensure sustainable premium payments in the future.³

Life insurance industry continues to expand its workforce 

Employment in the life industry rose by four per cent, compared to the corresponding period in 2019, with 357 net new hires. This brings Singapore’s life insurance industry’s workforce to 8,801 employees as at 30 September 2020. New hires have primarily been attributed to insurers expanding their IT and operations teams as well as steady hiring in project and product management roles.

In the same period, 15,286 representatives held exclusive contracts with companies that operate a tied-agency force.

Continued industry employment comes at a time when Singapore is experiencing a higher resident unemployment rate at 4.7 per cent and overall unemployment rate of 3.6 per cent in September 2020.⁴

Sales of annual premium products continue to soften

Sales of Annual premium (AP) products recorded a 17 per cent drop from the same period last year, amounting to S$1.77 billion in total weighted annual premiums. The downward trend is expected to continue for some time until Singapore’s economy further strengthens.

Sales of single premium products continue to increase

Cushioning the decreased uptake of annual premium policies, sales of single premium products recorded a 36 per cent year-on-year increase in weighted premiums amounting to S$1.21 billion in total for YTD 3Q2020.

a) Single premium par and non-par products comprised 77 per cent of all single-premium sales; single premium linked products made up the remaining 23 per cent

b) CPFIS-included products comprised 16 per cent; cash-funded products accounted for the remaining 84 per cent

More short-term single premiums products were sold in tranches. These products are simple to understand, and do not require medical underwriting. The current low interest rate environment is another factor behind why such products are popular with consumers.

Total sum assured new business continues to increase

The total sum assured for new business rose by 13 per cent year-on-year, amounting to S$116.2 billion for YTD 3Q2020.

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

48,000 more Singaporeans and Permanent Residents were covered by IPs and riders as at 30 September 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 premiums⁵ for individual health insurance for YTD 3Q2020 amounted to S$273.1 million. Overall, IPs and IP rider premiums accounted for 87 per cent (S$238.3 million) and the remaining 13 per cent (S$34.8 million) comprised of other medical plans and riders.

Reduced uptake of retirement policies

There was a 25 per cent decrease in the uptake of retirement policies in YTD 3Q2020 compared to the same period last year. A total of 28,781 retirement policies⁶ were purchased as at 30 September 2020.

Accounting for approximately eight per cent of total weighted premiums for YTD 3Q2020, retirement policies totalled S$252.2 million in weighted premiums for the first nine months of 2020. 

OTHER HIGHLIGHTS FOR YTD 3Q2020

Product Classification

Par products accounted for 42 per cent of new sales while non-par products accounted for 38 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:

Product License Classification

As of 30 September 2020, insurers holding “Normal” licenses contributed for 98 per cent of new sales, while “Defined Market Segments” (DMS) insurers⁹ made up for the remaining two per cent of new sales for YTD 3Q2020.

Group Insurance: Total Annual Premiums In-Force

Total annual premiums in-force for group insurance business rose by 10 per cent compared to the same period a year ago, totalling S$1.48 billion.  

LOOKING FORWARD

“Life insurers are continuing to accelerate digitalisation efforts to future-proof our businesses. Workforce transformation remains a priority for life insurers to ensure our employees receive the training needed to utilise next-generation technologies such as artificial intelligence, data analytics, and machine learning; leveraging their benefits to improve customer experience and product innovation,” said Mr Khor.

– END –

Note to Editor: More details of the life insurance industry results for YTD 3Q 2020 available at https://www.lia.org.sg/news-room/industry-performance/

In Summary

New Business Sales (Weighted Basis)

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 GDP contraction slows to 7% in Q3, propped up by manufacturing’ (Oct 14, 2020) The Business Times. Sharon See. Available at: https://www.businesstimes.com.sg/government-economy/singapore-gdp-contraction-slows-to-7-in-q3-propped-up-by-manufacturing

³ ‘Media release: Life insurance industry announces further initiatives to assist policyholders financially impacted by COVID-19’ (Sep 18, 2020) Life Insurance Association, Singapore. Available at: https://www.lia.org.sg/media/2661/20200918_lia-media-release_further-initiatives-to-assist-policyholders_for-covid-19.pdf

⁴ ‘Labour market remains soft despite promising signs’ (Oct 31, 2020) The Straits Times. Choo Yun Ting. Available at: https://www.straitstimes.com/singapore/jobs/labour-market-remains-soft-despite-promising-signs

⁵ 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.

⁶ These policies are designed to provide regular payouts during policyholders’ retirement years.

⁷ Financial Adviser (FA) Representatives include representatives of “related FA firms”. A related FA firm is a wholly-owned subsidiary of an insurance company.

⁸ 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”.

⁹ 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

For more information, please contact: