SINGAPORE (THE BUSINESS TIMES) - The Covid-19 pandemic and the ongoing recession took a toll on insurance sales in Singapore in the first six months this year.
Singapore's life insurance industry saw new business, in terms of total weighted premiums, decline 13 per cent to $1.66 billion from January to June, compared to $1.91 billion in the year-ago period.
This comes as strict social-distancing measures were enforced during the circuit-breaker and Phase One periods, said the Life Insurance Association, Singapore (LIA) on Tuesday (Aug 11).
The weaker showing is in line with Singapore's dour economic performance, with the pandemic-induced recession resulting in demand and supply-side shocks, LIA said. In its worst quarter on record, Singapore's Q2 gross domestic product plunged 13.2 per cent, while the full-year outlook was cut again, policymakers announced on Tuesday morning.
Sales of annual-premium policies dropped 25 per cent from a year ago, amounting to $1.04 billion in total weighted annual premiums for the half-year period.
Nonetheless, sales of single-premium policies rose, with weighted single premiums rising 17 per cent year on year to $622.9 million. Some 16 per cent came from CPF Investment Scheme-included products, while cash-funded products accounted for 84 per cent.
More short-term single-premium products were sold in tranches during the half year, as these products are easy to understand and do not require medical underwriting, LIA said. As such, representatives were able to bring customers through the sales process electronically and close sales despite the challenging situation, it added.
Total sum assured for the industry rose 1 per cent year on year, amounting to $65.7 billion in H1 2020.
Said LIA president Khor Hock Seng: "Since the beginning of the Covid-19 outbreak in Singapore, the life insurance sector has and continues to work closely with the relevant authorities to ensure Singaporeans receive the protection they need during this challenging period." Some support measures he cited include allowing premium payments to be deferred up to six months, as well as complimentary access to telemedicine services.
Meanwhile, there was a 36 per cent year-on-year decrease in the uptake of retirement policies, which provide regular payouts during policyholders' retirement years. This reverses the upward trend in recent years, LIA said. A total of 16,582 retirement policies were purchased as at end-June, down from 25,757 policies last year.
For health insurance, Integrated Shield plans (IPs) remained a significant component. As at June 30, there were 51,000 more Singaporeans and permanent residents covered by IPs and riders which provide coverage on top of MediShield Life, compared to a year ago.
New business premiums for individual health insurance totalled $173 million for the first six months of the year. IPs and IP rider premiums made up 87 per cent of this amount, while the remaining 13 per cent comprised other medical plans and riders.
In addition, the life insurance industry continued to expand its workforce during the January-to-June period. Employment rose by 4 per cent year on year with 368 new hires, reaching a workforce of 8,650 employees as at end-June. Recruitment was focused on the expansion of distribution and sales teams, as well as project and product management roles, LIA said.
Separately, for the second quarter this year, new business in terms of total weighted premiums sank 33 per cent to $695.1 million. Sales of annual-premium policies halved to $365.6 million, while sales of single-premium policies rose 7 per cent to $329.5 million.
Looking ahead, Mr Khor said that life insurers need to accelerate their digitalisation efforts as these are crucial to maintain business continuity, optimise efficiency, and improve customer servicing standards, among other things.