Life Insurance industry sees increase in new business in 3Q 2020 compared to 2Q 2020

06 Nov 2020

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:

Distribution Channel By Weighted Premium (%) By Number of Policies (%)
Tied Representatives 35.9 47.7
Bank Representatives 29.8 9.2
Financial Adviser Representatives7 26.0 23.1
Online Direct Channel8 4.1 12.1
Others (products sold without intermediaries, e.g. DPI, ElderShield) 4.2 7.9

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)

Comparison with Corresponding Period

Jan  Sep 2020 
S$

Jan – Sep 2019
S$

Change
Single Premium 1,210.9 million 889.2 million 36%
  Linked 282.4 million 166.1 million 70%
  Non-linked 928.5 million 723.1 million 28%
Annual Premium 1,774.7 million 2,149.5 million -17%
Total 2,985.6 million 3,038.7 million

-2%

Comparison with Corresponding Quarter 

Jul – Sep 2020 
S$

Jul – Sep 2019
S$

Change
Single Premium 587.9 million 357.3 million 65%
  Linked 124.3 million 63.1 million 97%
  Non-linked 463.6 million 294.2 million 58%
Annual Premium 736.7 million 767.1 million -4%
Total 1,324.6 million 1,124.4 million

18%

 

Comparison with Last Quarter 

Jul  Sep 2020 
S$

Apr – Jun 2020
S$

Change
Single Premium 587.9 million 329.5 million 78%
  Linked 124.3 million 79.6 million 56%
  Non-linked 463.6 million 249.9 million 86%
Annual Premium 736.7 million 365.6 million 102%
Total 1,324.6 million 695.1 million

91%

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

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]

Louise Lam (Ms.)
Ogilvy Singapore
Tel : +65 6213 6986 / +65 9739 9863
Email: [email protected]

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

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