The life insurance industry had a mixed year in 2018 with growth in some areas but contraction in others. The sector posted a 3 per cent expansion in weighted new business premiums to $4.2 billion for the 12 months compared with 2017.
While sales of annual premium products had stable growth of 6 per cent to $2.78 billion, there was a 3 per cent dip in the uptake of single-premium plans to $1.42 billion.
The Life Insurance Association Singapore (LIA) attributed the lacklustre sales of single-premium plans to turbulent markets late last year, combined with the regulatory requirement to remove the sales charge from Central Provident Fund Investment Scheme (CPFIS) products. These include unit trusts and investment-linked insurance plans.
LIA president Patrick Teow said yesterday: "Changes to the CPFIS significantly impacted the last quarter of 2018, which saw single-premium CPFIS-included products recording $29 million in weighted premiums, a decline of 62 per cent compared with the three months ended Sept 30, 2018."
Sales charges for CPFIS products were halved to 1.5 per cent last October and will be removed entirely from Oct 1 this year. The aim is to reduce the cost of investment for CPFIS members while targeting the scheme at those with the knowledge and risk appetite to invest.
The industry also noted yesterday that it recorded an increase of 48 per cent in the uptake of policies designed to provide regular payouts to customers in retirement.
The LIA said 38,120 policies were bought last year, up 12,345 on 2017. Retirement policies accounted for about 8 per cent or $338 million of total weight premiums for the year, compared with 5 per cent for 2017.
Mr Teow said: "People are living longer and are concerned whether they have enough funds for retirement. Insurers have been creative in their product offerings such as providing cover to age 100."
There was a 7 per cent growth in total sum assured for new business to nearly $140 billion last year.
Integrated Shield Plans (IPs) and IP rider premiums accounted for 92 per cent or $388.3 million of total new business premiums for individual health insurance, which totalled $424 million for last year. The remaining 8 per cent came from the uptake of other medical plans and riders.
An additional 64,000 Singaporeans and permanent residents were covered by IPs as of Dec 31 last year. Approximately 68 per cent of Singapore residents have IP coverage to complement MediShield Life.
Most IP insurers are bearing underwriting losses in their portfolio, which has led to rising premiums of IPs and IP riders in recent years.
Mr Teow warned that this premium trend may continue for another two to three years before initiatives, such as a pre-authorisation medical panel and schedule of medical fees, can take effect.
Insurers must launch new IP riders by April where the co-payment benefit is 5 per cent, compared with 10 per cent now. There will be a co-payment cap of $3,000 per policy year.