Life insurance sales in Singapore up 12.8% in first nine months of 2022

Investment-linked products accounted for 22 per cent of the industry’s new sales. ST PHOTO: LIM YAOHUI

SINGAPORE - Singapore’s life insurance industry recorded 1.5 million new policies taken up in the first nine months of 2022, representing a 12.8 per cent year-to-date increase.

This was despite the industry posting a 5.9 per cent fall in weighted new business premiums for the period to $3.87 billion, from $4.1 billion a year ago. 

In a business update on Thursday, the Life Insurance Association Singapore (LIA) said single premium products saw a 31.7 per cent fall in weighted premiums in the third quarter of the 2022 financial year compared with the same period in 2021. The value fell to $514.2 million from $752.9 million, leading to a 3.9 per cent year-to-date dip in single weighted premiums.

The primary cause of the decline was global market volatility affecting investment-linked products, said the not-for-profit trade body. It added that rising interest rates intensified the competition for shorter-term endowment products.

Investment-linked products accounted for 22 per cent of the industry’s new sales. Participating and non-participating products made up 43 per cent and 35 per cent respectively. Participating funds pool premiums paid under participating policies, and policyholders receive “dividends” or “bonuses” through investment profits made by the life insurer.

Policyholders of policies within non-participating funds are not entitled to profits the fund makes. Instead, a linked fund pools premiums paid under investment-linked portfolios and invests in assets. Policyholders can sell their units in such a fund to make a profit if the fund’s investments perform well.

The mix of investment-linked, participating and non-participating products in the first nine months of 2022 has remained stable from the year before, said LIA.

While the insurance industry saw a notable dip in weighted premiums for single premium products, there was an uptick in annual premium product purchases.

Sales of annual premium products rose by 7.2 per cent in the third quarter to $724.1 million, from $675.1 million in the same 2021 quarter . This narrowed the year-to-date gap in annual weighted premiums – it currently stands at $1.91 billion, compared with $2.1 billion in the first nine months of 2021.

Among the new business premiums acquired in the first nine months of 2022, individual health insurance products contributed $255.8 million, down 4.6 per cent from $268.2 million a year ago. 

Nonetheless, premiums for Integrated Shield Plans (IPs) and riders rose quarter on quarter by 13 per cent to $86 million from $76.1 million. This indicates that IPs remain a priority health insurance product, said LIA.

Online purchases of insurance policies have also been on a steady rise. LIA recorded 603,116 online purchases amounting to $106 million in the first nine months, compared with 370,528 a year ago. The cost amounts to 2.7 per cent of the weighted new business premiums.

Overall employment in the industry rose 4.8 per cent year to date, bringing Singapore’s life insurance workforce to 9,145 employees. As at Sept 30, a total of 14,353 representatives held exclusive contracts with companies that operate a tied-agency force.

Bank representatives ranked as the preferred channel for insurance policy purchases. They accounted for $1.4 billion – or 35.1 per cent – of weighted new business premiums in the first nine months.

LIA also reported that insurance providers have been paying out more claims year on year. Between January and September 2022, the industry paid out $8.7 billion to policyholders and beneficiaries, up 14.8 per cent from the claims paid out in the equivalent period in 2021.

Of this amount, $7.6 billion were for policies that matured, while the remainder went to claims for death, critical illness, and total and permanent disability.

LIA president Khor Hock Seng expects the business climate for the life insurance industry to remain challenging in the short to medium term. 

Despite highlighting concerns of continued market volatility and inflationary pressures, he remains confident of the resilience of Singapore’s life insurance industry. THE BUSINESS TIMES

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