Singapore's life industry sees new biz sales grow 9% in Q1

01 July 2013

Singapore’s life insurance industry saw total weighted new business premiums in the first quarter grow by 9% over the same period last year, but the results were impacted by a 15% drop in new business sales of single-premium products, the Life Insurance Association of Singapore (LIA) said today.

The Southeast Asian city-state’s insurance industry saw new business premiums total  S$561.8m ($452.8m, £294.7m) , compared with S$517m in the first three months of 2012 (see table, below).

Regular premium products set the pace, totalling S$428.9m in the quarter, a gain of 19% over the comparable 2012 period, and accounting for 76% of the total, according to LIA.

Of the S$132.9m in weighted single premium sales realised in the period, sales made under the auspices of Singapore's Central Provident Fund (CPF) – a government scheme aimed at encouraging Singaporeans to save for their retirement – accounted for around 18%, the association said.

The so-called defined market segment (DMS) of Singapore's insurance industry, which is comprised of just six companies, including the likes of Friends Provident International, Generali, Royal Skandia, Transamerica and Zurich International, accounted for 5% of sales in the first three months of 2013, while companies with "normal" licenses generated the remaining 95%, a percentage that has remained relatively consistent for some time.

The defined market segment is so-called because it caters for a high net worth market that is defined by a minimum premium size, and its members are not permitted, under their licences, to handle CPF business.

Boom in health insurance

Health insurance  was among the insurance industry's best-performing market segments in the quarter, with new health insurance premiums leaping 78% compared to the same period last year, to S$65m. Most of this amount – 91% – went to so-called “Integrated Shield Plans and riders”, according to LIA.

LIA president Annette King noted that the data released today showed the industry had “sustained a level of growth despite a slowing economy”, and suggested that “the innovative portfolio of solutions available from industry players” may have helped.

With respect to the decline in single premium sales, King noted that these are “largely of investment-linked policies (ILPs), which are sensitive to market sentiments”, and tend to fall off when investors are being cautious, as they have been recently. By contrast, “annual [regular] premium sales are largely of long-term protection type plans”, she noted, a type of product that Singapore’s regulator and insurers have been promoting, in order to close “the protection gap”.

 

Weighted* new business sales by Singapore’s insurance industry, first quarter

 

Jan – March 2013

Jan – March 2012

Percent change

Single premium

S$132.9m

S$157.0m

- 15%

Regular premium

S$428.9m

S$360.0m

+19%

Total

S$561.8m

S$517.0m

+ 9%

 Source: Life Insurance Association of Singapore

*The weighted new business premium figure is calculated as follows: 10% SPI + 100% API, with adjustment for premium payment terms of less than 10 years

Singapore's life insurance industry saw sales grow by 8% in 2012 over the previous year, and topping the S$2bn mark for the second year running. As was the case in the first quarter of this year, however, single premium business fell in 2012 – 11% on the year, compared with 2011 – due, the LIA said at the time, to "weak market sentiments and a more subdued economy".

Other key points contained in the LIA data for Q1: 

•    The total sum assured for new business slid by 6% to reach S$16.3bn

•    Tied agents continue to be one of the main channels of distribution for new business in Singapore. By policy count and weighted premiums,, they accounted for 58% and 41% of the new business in the quarter, respectively

•    Banks made up another main channel of distribution, accounting for 40% of weighted premium sales,  and contributing 18% of the total number of policies sold

•    Financial advisers contributed 16% of sales, while other channels, including direct sales, made up the remaining 3%. This represents a gain by the advisory sector, which was reported to have contributed just 14% of sales in 2011. By policy count, advisers accounted for 11% of the business, and the other channels took up the remaining 13%

Source: International Adviser

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