In the midst of global market uncertainty and economic slowdown, Singapore's life insurance industry saw a significant 2% drop in weighted new business premiums for 1H2019 from the corresponding period in 2018 according to results released by the Life Insurance Association, Singapore (LIA).
In regards to weighed new business premiums, 1H2019 recorded a total of S$1.97bn ($1.43bn) while 1H2018 posted S$2.02bn. The figures measure premiums collected on new policies by adding up 10% single premium insurance, 100% annual premium insurance and adjusted premium for insurance with premium payment durations of less than 10 years.
At the same time, the uptake of single premium policies continued downwards from the previous quarter with a 22% decline recorded on a year-on-year basis. LIA also highlighted how par products continue to grow, although there is a drop in the uptake of investment-linked plans.
However, annual premium policies recorded robust growth with a 7% increase from the same period last year, amounting to S$1.44bn in total weighted annual premiums. A sizeable proportion of this amount was from bancassurance as LIA notes that policies taken up through bank representatives generally have higher premium value compared to tied agents.
“The good thing is that the annual premium (policies) continued to show growth even if it is in the first six months,” said LIA president and Great Eastern Life Assurance group CEO Khor Hock Seng during a media briefing yesterday.
Outlining the 1H2019 results, LIA deputy president and Aviva CEO Nishit Majmudar said that in terms of distribution channels, banks are doing well and online direct channels, which are a relatively new distribution channel, will see further growth even though online has started with a modest contribution of 1.7% of the total sum assured.
When it comes to healthcare protection, Mr Majmudar noted that 60,000 more Singaporeans and permanent residents are now being covered by Integrated Shield Plans as at 30 June 2019.
In line with the increasing ageing population in Singapore, the association also notes that retirement policies continue to be popular, with a year-on-year 78% increase in the uptake of retirement policies, totalling S$236m in weighted premiums for 1H2019.
Bridging protection gaps
According to LIA, the steady growth in annual premium products focused on long-term protection augurs well in helping to narrow the protection gaps in Singapore.
“Our priority is on bridging the protection gap so LIA will be launching the protection gap calculator as a standard (tool) for consumers to find out more about their protection needs based on their life stage, number of dependants and financial portfolio,” said Mr Khor.
He said that the calculator will be introduced probably in September/October and is one of the numerous initiatives to be launched by the industry. Other initiatives include proactive public education efforts and introducing more innovative and accessible protection plans.
Outlook for FY2019
When asked on his FY19 outlook for the industry, Mr Khor said that it would not be possible to forecast if the industry will slow down as the business environment is challenging and the life insurance industry maintains a conservative outlook for the rest of the year.
Despite that, LIA will continue efforts, particularly in workforce transformation, driving innovations to support industry growth and bridging the mortality and critical illness protection gaps.