Singapore is one of two places in Asia where the market share of large multinationals in life insurance shrank, a study by McKinsey has found.
The 2023 global insurance report released on 6 November found that multinational corporation (MNC) insurers dominated emerging markets, while developed markets were dominated by local insurers such as Japan Post Insurance in Japan and Samsung Life Insurance in South Korea.
It found that large MNCs posted market share gains of between 2 percentage points and 15 percentage points from 2016 to 2021 in seven of nine markets in the region.
The seven markets are China, Japan, India, Indonesia, Thailand, Malaysia and Hong Kong.
Singapore recorded a 9 percentage point fall during the period, while South Korea shrank by 2 percentage points.
On the reduced share in Singapore, McKinsey senior partner Bernhard Kotanko said that the Republic is home to strong domestic insurers, notably Income, Great Eastern and Singlife.
“In other markets, MNC insurers have taken a stronger position, while in Singapore, domestic champions are expanding and leveraging their unique distribution franchises and bank relationships,” Mr Kotanko said, referring to AIA, Prudential, Manulife, HSBC and Chubb as MNC insurers in Singapore.
Asia’s life insurance distribution channels are heavily dominated by tied agents and bancassurance.
Together, these two sales channels make up 80% of total life insurance gross written premiums in the region.
Specifically, distribution via banks accounts for 48% of global bancassurance premiums, said the report.
It added that more than 50% of premiums come from bancassurance in markets like Hong Kong, India, Indonesia and Taiwan.
Mr Kotanko said Singapore’s life insurance distribution channels are more diverse, compared with the rest of Asia.
Here, financial advisers, agents and bancassurance represent around 30% of new business in 2022.
He added that there has been a growing trend towards financial advisers, and that many insurers have built their own financial adviser teams.
“Singaporean customers seek more professional, independent advice. This is why the financial adviser channel has been growing and is expected to gain more share,” he noted, reported The Straits Times.