THE life insurance industry racked up robust growth last year amid a slowing economy, as more Singaporeans signed up for policies.
Weighted new business premiums – a measure of premiums collected on new policies – was $2.18 billion in 2012, up 8 per cent from a year earlier, said the Life Insurance Association (LIA) yesterday.
Insurers use the weighted premium measure to track their performance.
The method takes into account just 10 per cent of the value of single-premium products sold and all of a year’s premiums for annual plans.
The overall performance last year was driven by growth in the sale of regular-premium products, which climbed 18 per cent year-on-year to $1.59 billion.
But weighted new sales of single-premium products fell 11 per cent from 2011 to $586.2 million last year.
“The bulk of single-premium product sales over the last few years was short-term endowment policies designed as savings instruments, which are highly sensitive to the interest rate environment,” said LIA president Tan Hak Leh. Sales of these products will improve if interest rates rise. If rates stay low, sales of single-premium products will likely remain in the doldrums, he added.
A total of 2.61 million lives were covered by health insurance as at Dec31, with paid-up premiums amounting to $1 billion.
About 278,000 Singaporeans signed up for health insurance plans in the fourth quarter, compared with the 282,000 or so in the same period in 2011.
But the total premiums of plans bought in the fourth quarter were $186 million, 12.7 per cent higher than in the previous year. Mr Tan said this could be due to the fact that more people are buying policies with richer benefits.
LIA deputy president Chris Gill said the numbers could also signal that more older Singaporeans are becoming aware of the need for health insurance, and are signing up for new plans.
Forfeiture rates were at 1.35 per cent and surrender rates also remained low, at 1.83 per cent. During the global economic crisis a few years ago, surrender rates went above 2 per cent.
Agents tied to specific insurance firms continued to be the main channel of distribution for new business, accounting for 46 per cent of new weighted premiums.
Bancassurance, meanwhile, continued to grow as a distribution channel, accounting for 35 per cent of total weighted premiums sold last year, up 1 percentage point from 2011.
Mr Tan said the LIA’s outlook for the industry is one of “tempered optimism”, given that the Singapore economy is likely to grow at a slower pace.
Nonetheless, he said the organisation expects continued demand for health insurance, protection and long-term savings plans.
“In the last five years, our industry narrowed the gap between the amount of coverage needed for the average working adult and the amount of protection they actually have,” he said.
“There is still a way to go and the industry is resolute in helping Singaporeans close their protection gap.”