The Life Insurance Association, Singapore (LIA Singapore) announced a set of industry results for the period January 2020 to December 2020 (YTD 4Q2020).
Singapore’s life insurance industry recorded a total of S$4.38 billion in weighted new business premiums for YTD 4Q2020, a positive 3% growth, compared to 2019. There was a rebound in the second half of the year after the initial fallout from COVID-19 which affected policy uptake most significantly in the second quarter of the year.
Efforts by the industry to provide support for customers amid COVID-19 include:
- Providing complimentary COVID-19 coverage to Integrated Shield Plans (IPs) and IP rider policyholders,
- Implementing two windows of Deferred Premium Payment (DPP) scheme to allow affected policyholders more time to pay their premiums,
- Pro-actively engaging policyholders to consider right-sizing policies on DPP with a holistic review of policy coverage and premium commitment to ensure sustainability going forward, and
- Extending IP coverage to COVID-19 vaccination complications resulting in hospitalisation.
Tremendous growth in uptake of policies online
The uptake of new policies purchased online saw a significant increase to 206,679 in 2020 compared to 9,971 in 2019. Most of the policies purchased online were single premium products such as short-term non-par endowment plans, par whole life plans, and universal life plans.
Contributing factors leading to increased uptake of such policies online include:
- Simple online purchasing process,
- Simple and easy to understand features,
- Short-term commitment period, especially appealing to consumers amid uncertain financial security, and
- Reasonable returns, which are attractive to consumers seeking safe assets amid a low interest rate environment and uncertain economy.
Single premium products continue to shine
Sales of single premium products recorded a 47% year-on-year increase in weighted premiums amounting to S$1.84 billion in total for YTD 4Q2020.
a. Single premium par and non-par products comprised 80% of all single-premium sales; single premium linked products made up the remaining 20%
b. CPFIS-included products comprised 12%; cash-funded products accounted for the remaining 88%
Strong uptake of single premium products cushioned the decreased uptake of annual premium policies for the year.
Sales of annual premium products remain slow
Sales of annual premium products recorded a 15% drop from the same period last year, amounting to S$2.55 billion in total weighted annual premiums.
Life insurance industry continues to expand its workforce
Image: by Life Insurance Association, Singapore (LIA Singapore)
Employment in the life industry rose by 4%, compared to the corresponding period in 2019, with 320 net new hires.
This brings Singapore’s life insurance industry’s workforce to 8,768 employees as at 31 December 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.
The demand for digital specialists is expected to continue unabated in the foreseeable future as the industry presses on with digital transformation efforts.
In the same period, 15,201 representatives held exclusive contracts with companies that operate a tied-agency force.
Integrated Shield Plans (IPs) remain a significant component of health insurance
33,000 more Singaporeans and Permanent Residents were covered by IPs and riders as at 31 December 2020. In total, 2.82 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 4Q2020 amounted to S$377.7 million. Overall, IPs and IP rider premiums accounted for 88% (S$331.2 million), and the remaining 12% (S$46.5 million) comprised of other medical plans and riders.
Uptake of retirement policies continues to decrease
There was a 23% dip in the uptake of retirement policies in YTD 4Q2020 compared to the same period last year. A total of 39,302 retirement policies were purchased as at 31 December 2020.
Accounting for approximately 8% of total weighted premiums for YTD 4Q2020, retirement policies totalled S$341.4 million in weighted premiums for the year.
The contribution of new business by the different channels is as follows:
Mr Khor Hock Seng, President, LIA Singapore said, “In 2021, life insurers will continue rallying behind the government’s efforts to bring COVID-19 under control through mass vaccinations. All seven Integrated Shield Plan insurers have extended hospitalisation coverage to policyholders experiencing complications resulting from regulator-approved vaccines.”
“Digitalisation remains a key focus for life insurers as demand for online services continues to grow exponentially. A Memorandum of Understanding11 was signed between the LIA and Singapore FinTech Association (SFA) in December 2020 to facilitate mutual synergy between the InsurTech, FinTech and life insurance industries, within the push to becoming a Smart Nation,” Mr Khor added.
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