singapore life insurance sales slow

By International Adviser, 17 Nov 11

Sales of insurance products in Singapore slowed to a year-on-year increase of 18% in the third quarter of 2011, after posting a 38% leap in the first half, the Life Insurance Association of Singapore has reported.

During the three months to the end of September, the industry registered a total of S$523m ($404.2m, £256.4m) in so-called “weighted” new business premiums, paced by sales of mostly savings-oriented products through the bancassurance channel.

The weighted figure is calculated by adding 10% of the Single Premium Index (SPI) to the Annual Premium Index (API), with adjustment for premium payment terms of less than 10 years.

Sales of weighted regular premium products hit S$345.7m, marking a 19% growth over the same quarter last year, while single premium business rose by 16% to S$177.3m. Of this amount, 16% of sales were through the Central Provident Fund, Singapore’s mandatory savings and retirement fund.

In a statement, Tan Hak Leh, president of the LIA, acknowledged that the industry “could potentially be impacted” during the rest of the year, and possibly beyond, by the uncertain global economy, but he exhorted Singapore consumers not to “shelve plans for life insurance, as it becomes particularly essential in times of uncertainty”.

In its latest economic review, the Monetary Authority of Singapore (MAS) predicted that the Singaporean economy would be sluggish through the first half of 2012, and was likely to improve only in the latter half of the year.

Distribution Channels

As for distribution channel trends in the third quarter, tied agents contributed to nearly half of the new business written by Singaporean insurers, bringing in 48% of weighted new business sales for the first three quarters of the year.

The uptrend of business sold through banks continued in the third quarter,
accounting for 35% of sales, up by 8 percentage points from the same period
the previous year, while financial advisers contributed 13 of sales. Other channels, including direct sales, made up the remaining 4%.

Singapore’s so-called defined market segment insurers, the category of companies comprised of Friends Provident International, Generali, Royal Skandia, Transamerica and Zurich International, contributed 5% of sales, while insurers holding “normal” licenses represented the other 95%. DMS insurers are registered with the MAS to conduct only non-CPF business, with restrictions on the minimum size of the policies they write.