Insurers roll out solutions to tap growing high-net-worth population in Singapore

SINGAPORE’S growing pool of high-net-worth (HNW) individuals is creating new opportunities for insurers looking to offer targeted products and services for this segment of the population.

The number of ultra-HNW individuals in Singapore rose 6.9 per cent to 4,498 in 2022, indicated a Knight Frank report, and is expected to grow to about 5,300 between 2022 and 2027.

At the same time, the number of single family offices – entities that manage the wealth of a family – grew to 1,100 at end-2022, up from 700 at end-2021, said the Monetary Authority of Singapore.

“In addition to Singapore residents, many HNW individuals choose Singapore as their preferred wealth management hub due to the country’s safety and security,” said Adrian Vincent, chief executive of FWD Singapore.

A unit of FWD Group, which was founded as the insurance business of Hong Kong-based conglomerate Pacific Century Group, FWD Singapore is one of several insurers edging its way into the HNW space here.

Last July, the company launched its first HNW plan for accredited investors. In August, it began providing insurance solutions to private bank clients.

Sun Life Singapore in November also partnered Prudential Financial Advisers (PFA) Singapore to launch a universal life insurance solution that will be made available to PFA’s clients.

“We see growing entrants into the HNW space, as more insurers are channelling their focus into this growing segment amid record wealth inflows into Singapore in recent years,” said Michael Wei, chief partnership and marketing officer of Sun Life Singapore.

Needs of the high-net-worth

Wei said many HNW individuals think of life insurance solutions as an alternative asset class for portfolio diversification and legacy planning, especially in light of recent market volatility and high inflation.

“HNW individuals tend to favour products that combine stability with growth potential, to ensure their wealth is protected for future generations,” Wei said.

HNW individuals also like products that are resilient and come with a high cash value, said Goh Chye Huat, regional CEO of insurance broker Howden Asia.

Single-premium life policies are one such example. Howden brokers such policies to allow benefactors to cash out following a death.

“We know that death is a certainty, although the timing is uncertain. Upon death, you get an absolute certainty of what you’re going to cash out,” Goh said.

Howden Group’s founder and CEO David Howden added that HNW individuals are unique in the assets they would like to insure.

These range from private jets to businesses, and houses to horses. Insurance requirements often cover multiple jurisdictions.

“The reason people are buying isn’t just the cash value. At the end, it’s the flexibility that the policies have that allows them to plan properly, whether it’s around cross-border assets, family inheritance or tax planning,” Howden said.

Indeed, single-premium life insurance policies have become increasingly popular in Singapore.

According to data and analytics company GlobalData, the share of single-premium policies in overall life insurance, based on gross written premiums, increased to 49.7 per cent in 2022 from 32.3 per cent in 2019, driven by the presence of a large affluent population.

Whole life insurance is the largest segment within the Singapore life insurance market. Of this, GlobalData said a large proportion consists of single-premium policies.

Sun Life’s Wei also noted rising interest in indexed universal life plans among Asian clients.

These plans are linked to the performance of a stock market index, and have attracted investors who want to combine insurance protection with potential returns.

Access

The HNW market is a tough one to crack, though. Howden’s Goh said access to HNW individuals is one of the largest challenges.

There is also a shortage of trained financial consultants. FWD’s Vincent said the company’s focus has been on training and educating its financial adviser representatives on the benefit of a differentiated HNW solution in the market, as this is a relatively new product segment.

Brokers and banks form FWD’s core distribution channel for the HNW segment – the insurer partnered with a global life insurance broker to tap its expertise in insurance advisory and liquidity planning.

Some insurers train their financial consultants themselves. In 2019, AIA Singapore said it would send its financial consultants for private banking training.

At the time, it claimed to be the first insurance organisation to benchmark training against private banking standards set out by the Institute of Banking and Finance Singapore.

Sun Life’s Wei said the insurer develops bespoke training programmes and workshops for its distribution representatives.

Experts in the space cannot be mentored overnight, said Howden’s Goh. It takes years to train staff and build trust with clients, he added.

The effort is worthwhile, however, given the “humongous” opportunities in the space, he said. “If you look at the sheer statistics of minting the HNW and ultra-HNW, I think (the growth potential) is phenomenal.”

While Hong Kong still makes up a bulk of Howden’s HNW business, its founder said Singapore is quickly catching up.

“We like (the Singapore) market because it’s an extremely well-regulated market,” Howden said.

FWD’s Vincent anticipates greater customer interest in innovative legacy planning solutions with multiple investment instruments and currencies.

Meanwhile, Sun Life’s Wei expects protection-focused insurance products to remain in demand following the recent pandemic.

Said Wei: “With increasing levels of wealth in Singapore, across Asia and being in a global generational wealth transfer, we continue to expect to see strong growth in HNW insurance solutions.”