According to the Life Insurance Association, which represents the city-state’s life insurance product and reinsurance providers, single premium products were the key drivers for the 1% growth even as annual premium products registered a decline.
The LIA said the decline in new business for annual premium products was due to premium revisions in the integrated shield plans by insurance companies following enhancements to the Government’s Medishield programme which were implemented last year. MediShield is a low cost basic medical insurance scheme which was introduced in 1990.
For the first six months, the total weighted new business premiums of single premium products rose on-year by 20% to S$378.4m ($303.8m, £180m) while that of annual premium products declined by 5% to S$937.3m.
Ken Ng, deputy president of the industry association said the “strong” growth in single premium products was on the back of a number of companies launching such plans.
The second quarter reflected a similar pattern, with single premium products showing a 16% growth in new business premium and annual premium products suffering a 19% decline.
Elaborating further on this, Ng, who is also chief executive of NTUC Income Insurance Co-operative, said: "For the annual premium products, there was revision of premium in MediShield products for last year. Due to the higher base last year, we see a decline this year. Adjustment of the base is the main reason and (we) don’t see any significant shift in product.”
This is reflected in the health premiums under the integrated shield plans that totalled to S$170m during first six months of 2013, while this declined to S$127m during January-June.
The so-called defined market segment (DMS) of Singapore's insurance industry, accounted for 5% of sales, while companies with "normal" licenses generated the rest, which has been more or less the trend over the last year.
The defined market segment caters for a high net worth market that is defined by a minimum premium size, and its members are not permitted, under their licenses, to handle Central Provident Fund business.
In terms of distribution channels, tied agents continue to dominate with 41% share in weighted new business premiums, followed by banks with 39% while financial advisers accounted for 16%.
For the first quarter of the year, the industry had reported a 24% on-year growth in total weighted new business premium driven by annual premium products.
Other Initiatives
Apart from the direct commission-free life insurance sales channel, which was detailed recently, Khoo Kah Siang, president said the Life Insurance Association is working closely with regulators on other initiatives such as the web aggregator and the balanced scorecard remuneration framework.
“We are working to ensure, not just to comply, but to step into this new framework smoothly to make sure consumers are not affected by the changing regulatory regime,” said Khoo who is also the chief executive for Great Eastern.
He was referring to other regulatory frameworks as well such as Personal Data Protection Act, Risk-based Capital Framework 2, and FATCA.
On the first half performance, Khoo said: “Industry continued to grow on a very stable basis and industry is financially very sound.”
Summary of results:
Weighted new business sales by Singapore’s insurance industry:
All figures in S$m
| Jan-Jun 2014 | Jan-Jun 2013 | Change | |
| Single premium | 378.4 | 314.2 | 20% |
| Annual premium | 937.3 | 938.8 | – 5% |
| Total | 1315.7 | 1298.0 | 1% |
| Apr-Jun 2014 | Apr-Jun 2013 | Change | |
| Single premium | 210.2 | 181.4 | 16% |
| Annual premium | 450.1 | 554.8 | -19% |
| Total | 660.3 | 736.2 | -10% |
| Apr-Jun 2014 | Jan-Mar 2013 | Change | |
| Single premium | 210.2 | 168.2 | 25% |
| Annual premium | 450.1 | 487.2 | -8% |
| Total | 660.3 | 655.4 |
1% |
