The Life Insurance Association, Singapore (LIA Singapore) reported a notable 90.6% increase in new business premiums recorded in 3Q2020 compared to 2Q2020.
Singapore’s life insurance industry recorded a total of S$2.99 billion in weighted new business premiums for YTD 3Q2020, showing a slip of 2% from the same period in 2019.
Total weighted premiums recorded in the third quarter reached $1,324.6 million, a significant $629.5 million more than the $695.1 million seen in the second quarter.
This is consistent with the country’s economic performance which saw GDP grow by 7.9% in the third quarter, compared to a contraction of 13.2% in the second quarter during the Circuit Breaker, according to LIA Singapore.
Life insurance industry continues to expand its workforce
Employment in the life industry rose by 4%, compared to the corresponding period in 2019, with 357 net new hires. This brings Singapore’s life insurance industry’s workforce to 8,801 employees as at 30 September 2020. New hires have primarily been attributed to insurers expanding their IT and operations teams as well as steady hiring in project and product management roles.
In the same period, 15,286 representatives held exclusive contracts with companies that operate a tied-agency force.
Continued industry employment comes at a time when Singapore is experiencing a higher resident unemployment rate at 4.7% and overall unemployment rate of 3.6% in September 2020.
Sales of annual premium products continue to soften. Sales of Annual premium (AP) products recorded a 17% drop from the same period last year, amounting to S$1.77 billion in total weighted annual premiums. The downward trend is expected to continue for some time until Singapore’s economy further strengthens.
Sales of single premium products continue to increase. Cushioning the decreased uptake of annual premium policies, sales of single premium products recorded a 36% year-on-year increase in weighted premiums amounting to S$1.21 billion in total for YTD 3Q2020.
a) Single premium par and non-par products comprised 77% of all single-premium sales; single premium linked products made up the remaining 23%.
b) CPFIS-included products comprised 16%; cash-funded products accounted for the remaining 84%.
More short-term single premiums products were sold in tranches.
These products are simple to understand, and do not require medical underwriting. The current low interest rate environment is another factor behind why such products are popular with consumers.
New business continues to increase
The total sum assured for new business rose by 13% year-on-year, amounting to S$116.2 billion for YTD 3Q2020.
Health Insurance Plans
Integrated Shield Plans (IPs) remain a significant component of health insurance. 48,000 more Singaporeans and Permanent Residents were covered by IPs and riders as at 30 September 2020. In total, 2.81 million lives – approximately 69% of Singapore residents – are protected by IPs and riders, which provide coverage on top of MediShield Life.
Total new business premiums for individual health insurance for YTD 3Q2020 amounted to S$273.1 million. Overall, IPs and IP rider premiums accounted for 87% (S$238.3 million) and the remaining 13% (S$34.8 million) comprised of other medical plans and riders.
There was a 25% decrease in the uptake of retirement policies in YTD 3Q2020 compared to the same period last year. A total of 28,781 retirement policies were purchased as at 30 September 2020.
Accounting for approximately 8% of total weighted premiums for YTD 3Q2020, retirement policies totalled S$252.2 million in weighted premiums for the first nine months of 2020.
Moving towards a slow recovery
Khor Hock Seng, President, LIA Singapore said, “Barring evolving COVID-19 conditions in other countries, Singapore is moving towards a slow recovery and the life insurance industry remains committed to supporting the population in meeting and maintaining their protection needs. We will continue to monitor the situation and work closely with regulators to get through these challenging times.”
Beyond offering instalment-based payment of deferred premiums, life insurers are also proactively engaging policyholders to right-size their insurance plans to ensure sustainable premium payments in the future.
Stay in the know via our complimentary weekly newsletter
Check these out:
Estate Planning and Wealth Succession: At the crossroads of significant wealth transfer
MediShield enhancements to support larger healthcare transformation
Singapore: National Health Insurance Coverage Will Widen