New player riding on insurtech joins local life insurance market
Singapore
RIDING on the fintech and insurtech wave sweeping Singapore shores, newcomer Singapore Life harbours hope it would be able to make headway in an already intensely competitive life insurance market.
The insurtech company has received the green light from the Monetary Authority of Singapore (MAS) to be a fully licensed direct life insurer, making it the first local life insurance company to be licensed here in 47 years.
Operated by a team with experience in financial services and led by chief executive Walter de Oude, a former boss at HSBC Insurance, the newcomer aims to tap Singapore's reputation as the financial hub in the region.
Describing Singapore Life as a "boutique insurance company", Mr de Oude told The Business Times it would offer products to those "who value the security Singapore provides as a foundation for their financial services and wealth".
Singapore Life's quest for success now hinges largely on two pillars - the high net worth (HNW) segment and retail customers. It aims to break even in two years, one-third of the typical seven years needed.
The newcomer said it would start offering Universal Life to the HNW segment through major private banks, as well as one of the key brokerage firms, JLT, before rolling out a Universal Life variable at a later stage. Singapore Life would be the only insurer in town to offer both Universal Life and the variable product.
Asked about how some bigger life insurers have been moving away from the Universal Life space because of low returns and taxing capital requirements, Mr de Oude said those players "have a broader wealth management spectrum". In Asia, about US$5 billion worth of Universal Life premiums are recorded per annum, he said.
"We, in Singapore Life, see that continuing and wealthy people are still going to need more life insurance as time goes by. The (Universal Life) market will not grow as fast as it has in the past but it will continue to generate plenty of opportunities for people in their portfolios."
That aside, Mr de Oude noted there are HNW clients looking for the security of MAS, local authority and local decision making in their applications. He added that Singapore is expected to supersede Switzerland as the largest private wealth centre in the world by 2020 and industry players have said Singapore Life is "well-placed to capture that flow of funds into the Singapore marketplace".
As for the retail segment, the new insurer plans to roll out its direct purchase insurance (DPI), term life policy and critical illness product in August.
Mr de Oude said he expects about 60 per cent of retail sales to come from financial advisers, while the remaining 40 per cent would be from products sold directly to customers through digital means.
Sales of life insurance through the digital channel have not yet taken off in Singapore. Based on the Life Insurance Association Singapore's data, products sold without intermediaries such as DPI and ElderShield contributed a mere 4 per cent by weighted new business premium, or 15 policies for the first three months of the year.
When asked, Mr de Oude said "we know the take-up of online insurance is low", but he cited the example of car insurance and said "the trend is going to continue".
"I think with more players acting in that space, more players making it easier and convenient for people to buy stuff, all of a sudden it's going to move in the way of car insurance. Ten years ago nobody would have dreamed of buying a car insurance online because they would have thought it was complicated. You'd go through a broker. And what will happen in life insurance is going to be exactly the same thing - all of a sudden people will say 'well, actually this is pretty straightforward and easy' and everyone's going to be there."
In terms of reining in expenses, Mr de Oude said the insurer's processes are designed in such a way that the cost of using technologies is on a "pay-as-you-go basis" so "it's not a major spend".
In April, Singapore Life said it managed to raise US$50 million in its Series A funding round - one of the largest fund-raising activity of its type in Singapore and the region. Its majority shareholders are Hong Kong-listed Credit China FinTech Holdings, which provides online financial services to businesses, merchants and individuals, as well as United Kingdom-based private equity firm IPGL.
The developments came after Mr de Oude and his team started building the company in 2014, where at one point, Italian insurer Generali was a potential partner in the HNW space.
The insurer has partnered Munich Re Group and Pacific Life Re for reinsurance purposes.
