The first six months of 2016 saw sales drop across the unit-linked life market in Asia but Singapore continued to outpace Hong Kong with total sales of S$206m ($147.7m, £121.7m) in annual premium equivalent (APE) terms compared to HK$450m ($58m, £47.8m) in Hong Kong.
Singapore first overtook Hong Kong for unit-linked sales in 2015.
Hong Kong’s woes continue
Individual Life and Annuity (unit-linked) new business in Hong Kong continued its severe decline in the first half of 2016, falling by 70% fall compared with the first half of 2015, according to statistics produced by the Office of the Commissioner of Insurance.
This poor performance was driven by a dramatic drop of 69% in regular premium savings new business to HK$270m APE ($34.8m) and 73% for single premium new business which fell to HK$180m ($23.2m)APE.
The regular premium sales performance compounds the 44% reduction suffered in the first six months of 2015 when new business fell following the introduction of the GN15 rules on sales of ILAS (investment-linked assurance products).
These dramatic decreases in Hong Kong ILAS business were suffered across both the broker channel and the agency (excluding banks) channel.
Regular premium business was down 75% to HK$160m ($20.6m) in the broker channel and down 52% to HK$100m ($12.9m) in the agency channel. The broker channel experienced a 74% fall in new single premium business to HK$120m ($15.5m) APE, with the agency channel down by 68% to HK$60m ($7.7m) APE.
Singapore sales also dip
In the first six months of 2016 unit-linked new business in Singapore fell by 25% compared to the same period in 2015, reaching a total of S$206m ($147.7m) APE for Singapore Insurance Fund business, according to statistics produced by the Monetary Authority of Singapore.
Single premiums decreased by 22% to S$98m ($70.3m) APE while regular premiums fell by 28% to S$108m ($77.5m).
Highlighting the contrasting growth in non-linked business, figures from the Life Insurance Association of Singapore (LIAS) show that total new business premiums for linked and non-linked life products in the first half of 2016 increased by 13% compared with H1 2015 to reach a total of S$1,523m ($1.1bn) APE.
Investment-linked products accounted for only 14% of this total new business APE, confirming the market’s preference for non-linked premium products over unit-linked products against the backdrop of global market uncertainty.
The ‘defined market segment’ of Singapore’s insurance industry, which is made up of just six companies including Friends Provident International, Generali International and OMI/Royal Skandia, accounted for only 3% of sales.
The LIAS figures show that tied agents accounted for 36% of new business APE in Q1 2016, with banks accounting for 41% and financial advisers for 19%.
Trend to continue?
The Hong Kong and Singapore new business figures for Q3 should be published in the next few weeks.
The combined forces of regulators, advisers and clients forcing increased disclosure, transparency and value for money suggest that the downward trend will continue.
Modern day platforms are also parking their tanks on traditional unit-linked products’ lawns across the offshore market, exerting more pressure on life company sales targets.
