Life insurance sales in Singapore down 13.6% in Q1 as economy slows

SINGAPORE – Singapore’s life insurance industry recorded $1.05 billion in weighted new business premiums in the first quarter of 2023, a drop of 13.6 per cent from the same period last year, amid rising interest rates and a weakening economy.

Of the total new business, single-premium or one-time premium products saw a 46 per cent year-on-year plunge in weighted premiums to $355.7 million, the Life Insurance Association, Singapore (LIA) said in its quarterly business update on Thursday.

LIA said the downturn came amid muted economic growth in the first quarter of the year, “with concerns that a potential technical recession may further impact Singapore in 2023”. It also attributed the fall in demand for single-premium products to a volatile macroeconomic environment and rising interest rates in an increasingly competitive marketplace. 

Bucking the trend, however, sales of annual premium products rose 24.7 per cent year on year to $692 million in new weighted premiums. The rise was driven mainly by sales of policies through insurance agents and financial advisers, said LIA.

The association’s president, Mr Dennis Tan, said that despite uncertainties in the macroeconomic environment, Singapore’s life insurance industry will “remain focused on supporting Singapore’s community” in addressing its protection and financial needs. “To this end, LIA will be launching findings of our nationwide protection study, looking at the mortality and critical illness protection gaps that exist. We remain committed to driving efforts to get the community better protected,” he said.

Its report showed that about 40,000 more Singaporeans and permanent residents were covered by Integrated Shield Plans (IPs) compared with the same quarter a year ago. This brings the total number protected by IPs, which provide coverage on top of MediShield Life, to 2.89 million, or 71 per cent of Singapore residents, as at end-March.

Among the new business premiums for the quarter, individual health insurance products contributed $93.6 million, an increase of 12.9 per cent compared with the same period last year.

The life insurance industry paid out $2.57 billion to policyholders and beneficiaries in the first quarter of 2023, up by 12.5 per cent compared with the same period last year. Of this, some $2.18 billion was for policies that matured and the remaining $398.6 million was for death, critical illness or disability claims.

Overall employment in the industry rose 8.1 per cent compared with the corresponding period in 2022. This brings the Singapore life insurance industry’s workforce to 9,588 employees as at March 31.

Insurance agents led the charge in getting $12.3 billion in sum assured in the first quarter of 2023, accounting for 40.3 per cent of the total $30.5 billion. Financial advisers secured $10.4 billion in sum assured, accounting for a 34.1 per cent share, beating out bank representatives (15.4 per cent) and online channels (5.2 per cent). About 4.9 per cent of sum assured was sold without intermediaries.

Mr Tan said: “With headwinds expected to impact us in the coming months, the life insurance industry will need to be nimble and adapt to changing consumer demands. The industry will continue to invest in digitalisation and talent to enhance efficiencies and customer experiences.”