Singapore life insurance growth still strong

Singapore

SINGAPORE'S life insurance business continued on its strong growth momentum for the three months ended June, even as it faces economic uncertainties, fast ageing population and slow labour market.

Total weighted new business premiums for the second quarter rose 3 per cent year-on-year to S$871 million, lifted by sales in annual-premium plans.

Weighted new business sales in annual-premium plans rose 7 per cent to S$605 million for the quarter, but this growth was partly offset by the results of single-premium products, which fell 6 per cent to S$266 million.

The decline in weighted new sales of single-premium plans was largely due to a fall in sales of non-linked products, despite a jump in sales of linked plans. Weighted new sales of single-premium linked products jumped 44 per cent to S$74.7 million but that of non-linked plans fell 17 per cent to S$191.3 million.

Naveed Irshad, deputy president of the Life Insurance Association (LIA) Singapore, noted that the sales of non-linked plans reflects the low interest rate environment, which in turn affects what insurers can offer and "probably that's one of the main reasons why there's been a bit of a slowdown on the non-linked side".

Ken Ng, also LIA's deputy president, added that the better performance in the stock market year-to-date also fuelled the rise in sales of linked plans.

In the first half of 2017, total weighted new business sales grew 10 per cent year-on-year to S$1.7 billion.

LIA on Monday said at a briefing that new health insurance premiums rose 33 per cent year-on-year to S$88 million in Q2, bringing the total premiums in H1 2017 to S$154 million.

Of the total premiums in the first half, 90 per cent or S$139 million comprised Integrated Shield Plan (IP) premiums and IP riders. The remaining S$15 million came from other medical plans and riders. Some 2.92 million lives or about one in two individuals here are insured with IPs as at end June, LIA said.

It added that in H1 2017, there was an uptake of 10,680 policies that provide regular payouts to policyholders during retirement years, with about S$84 million weighted new premiums recorded.

These plans accounted for about 5 per cent of total weighted premiums in the first half.

Patrick Teow, president of LIA, said: "We see a steady take-up of products designed to provide regular payouts from retirement age. This shows that people are appreciating the importance of preparing ahead for their future years."

In terms of distribution channel, banks continued to dominate in the first half of 2017 by contributing 43 per cent of weighted new sales premiums. Tied agents followed at 35 per cent and financial advisers accounted for 18 per cent. The remaining 4 per cent came from products sold without intermediaries including direct purchase insurance and ElderShield.

Total annual premiums in-force for group insurance business in Q2 rose 7 per cent year-on-year to S$1.05 billion. Mr Teow said LIA is expected to release before 2018, results of its protection gap study which was last conducted five years ago.

When asked for an update on the implementation of the recommendations of the Health Insurance Task Force (HITF) such as having a benchmark for medical fees and doing away with as-charged IP riders, he said "some announcements" are expected later this year without giving details.

Meanwhile, improvements to the benefit illustration of participating policies are projected to roll out by mid-2018.