No sickness for Singapore's Life insurers as sales grow 18% in 3Q11

The industry registered an amazing $523m in new business premiums.

Following a 38 per cent growth in sales for the first half of this year compared to the same period in 2010, the life insurance sector saw new business increasing at a more moderate pace, registering 18 per cent in the third quarter of 2011 compared to the corresponding period last year. During the period under review, the industry registered a total of $523 million in weighted new business premiums.

The performance was driven mostly by the bancassurance channel, selling mostly savings oriented products. Weighted regular premiums sales hit $345.7 million, marking a 19 per cent growth over the same quarter last year, while single premium business rose by 16 per cent to $177.3 million. Of this amount, 16 per cent comprised CPF-funded sales.

Mr Tan Hak Leh, President of the Life Insurance Association, said: “Against the backdrop of intensified global economic uncertainties in the third quarter, the life insurance industry achieved a growth in new business of 18 per cent. It is critical that life insurance companies remain vigilant and proactively manage our business to safeguard the long term financial soundness of the industry.”

Other Highlights (January to September 2011)

Health Insurance

New health insurance sales for the first three quarters of 2011 amounted to $123 million, an increase of 7 per cent over the same period last year. The bulk of this - 87 per cent - went to Integrated Shield Plans and riders. As at 30 September 2011, a total of 2.45 million lives were covered by health insurance with paid up premiums of $842 million.

Distribution Channels

Tied agents contributed to nearly half of the new business, bringing in 48 per cent of weighted new business sales for the first three quarters of the year.

The uptrend of business sold through banks continued in the third quarter, accounting for 35 per cent of sales, up by 8 percentage points from the same period the previous year.

Financial Advisers contributed 13 per cent of sales whilst other channels, including direct sales, made up the remaining 4 per cent.

Product Classification

Of the new sales, participating products accounted for 54 per cent while non-par products accounted for 24 per cent. Investment-linked products made up the remaining 22 per cent.

Consumers’ preferences for the different types of products have remained fairly constant over the past three years.

Product License Classification

As at 30 September 2011, 95 per cent of new sales were contributed by insurers holding “Normal” licenses. The “Defined Market Segments” insurers, represented by five companies, contributed the remaining 5 per cent.

Claims Payout

Up to end September 2011, the life insurance industry paid out a total of $3.69 billion to policyholders and beneficiaries.

Of this, $342 million was in respect of death, critical illness or disability claims, whilst the remaining $3.34 billion was for policies that matured.

Fact-Find Experience

During the third quarter of this year, 80 per cent of life insurance applications were completed with a full or partial fact-find, an improvement of 9 per cent over the preceding period.

Other Highlights (In force as at September 2011)

Group Insurance

Total annual premiums in force for group insurance business rose by 18 per cent compared with a year ago, amounting to $697 million.

Assets

As at the second quarter of 2011, the life insurance industry was managing assets of approximately $120.7 billion, up 9 per cent compared with a year ago. Assets of non-linked business accounted for $96.4 billion, while the remaining $24.3 billion were assets held for investment-linked policies.

Manpower in the Industry

As at 30 September 2011, a total of 5,108 office staff were employed by member companies of the LIA and 12,976 representatives held exclusive contracts with companies that operate a tied agency force.

Looking Forward

As the global economy remains uncertain, performance of the life insurance industry for the year 2012 could potentially be impacted. In its latest review, the Monetary Authority of Singapore indicated that the local economy will be sluggish for the first half of 2012, and may improve only in the latter half of the year.

“While we may not face a financial meltdown similar to that in 2008, we can see consumers exercising more caution in taking on additional financial commitments,” said Mr Tan. “Nonetheless we strongly advise that consumers do not shelve plans for life insurance, as it becomes particularly essential in times of uncertainty.”