growthTHE life insurance industry in Singapore recorded modest sales growth for the first quarter this year, but there may be bumps on the road ahead.
A total of $517 million in weighted new business premiums have been collected, up 12 per cent from $460 million achieved in the same quarter last year, according to figures from the Life Insurance Association (LIA).
But its president Tan Hak Leh warned that global economic uncertainties and the low interest rate environment may weigh on growth this year.
“We are bracing ourselves for slower growth in 2012,” he said.
The distribution of insurance products via banks – known as bancassurance – accounted for 41 per cent of the new business sales, up four percentage points from 37 per cent last year.
Given that interest rates are “close to historical low”, bancassurance sales – which consist mostly of endowment or savings-like products – could give customers a higher return than they might have in traditional deposits, LIA said.
Tied representatives – agents employed by insurance companies – still brought in the bulk of new business in the first quarter by contributing 42 per cent of new sales, though this is down from 48 per cent in the same period last year.
Single premium products registered a 5 per cent fall in sales to $157 million for the period.
Mr Tan said that single premium investment-linked products are sensitive to market conditions and sentiment as consumers tend to adopt a wait-and-see stance or prefer non-linked products in uncertain times.
If it were not for the growth in high net-worth insurance sales, he added that the sales of single premium products would have declined further.
Up to end March, the life insurance industry has paid out about $1.33 billion to policyholders and beneficiaries – $1.22 billion for maturing policies and $105 million in respect of death, critical illness or disability claims.
New health insurance sales increased 3 per cent to $36 million in the first quarter. Integrated shield plans and riders made up 89 per cent of new health insurance sales.
About 2.51 million people were covered by health insurance as of March 31, with paid-up premiums amounting to $903 million.
There is also a growing number of customers opting for a partial or full fact-find process.
This involves an insurer’s representative asking customers various questions about their financial health to determine the best plan.
During the first quarter of this year, 86 per cent of new life insurance applications were completed with a full or partial fact-find, up 9 per cent over the corresponding quarter last year.
The life insurance industry managed assets of about $118.6 billion as at the end of last year, up one per cent on a year ago.
Assets of non-linked business accounted for $96.5 billion, while the remaining $22.1 billion were assets held for investment-linked policies.