Singapore Life Insurance Segment to Register 5.9% CAGR through 2016, Says Timetric

28 Aug 2012 • by Natalie Aster

The life insurance segment was the largest segment in the overall Singaporean insurance industry during the review period in terms of gross written premium, accounting for 73.4% of the total written premiums in 2011. The life insurance segment registered a CAGR of 2.7% during the review period. This was mainly generated from the increasing demand for group life insurance products in the domestic market, which was recorded despite weak growth registered for single-premium, unit-linked and pension products due to the global financial crisis, which encouraged individual buyers to adopt a conservative approach to investment in these products due to their high exposure to the equity market. This was further supported by low interest rates on saving products, robust economic development following the recession, an increase in wealthy consumers, and solid offshore business.

However, growth was partially affected by recent natural disasters such as the floods in Australia and Thailand, and the earthquakes in New Zealand and Japan, which had a negative influence on the profitability of insurers with catastrophe or offshore business exposure. However, insurance industry growth recovered in Singapore due to the improved macroeconomic fundamentals in the country and its neighbors. As a result, the Singaporean life insurance segment is projected to register positive growth at a CAGR of 5.9% over the forecast period.

According to the report “Life Insurance in Singapore, Key Trends and Opportunities to 2016” by Timetric, in Singapore, life insurance companies have adopted several strategies to access the uninsured population, and have also designed multipurpose products to serve high net worth individuals (HNWIs) in the country. For instance, Manulife Singapore, the country’s fifth-largest life insurer, launched a new product, named Heritage, for HNWI customers. Heritage provides a life insurance contract which consolidates HNWI’s wealth by securing the real value of their assets in of the event of a downturn.

Singapore is among the wealthiest countries in the world. According to Swiss bank Julius Baer’s Lifestyle Index, the number of HNWIs is expected to reach 129,000, and their combined wealth will be approximately US$616 billion by 2015. HNWIs tend to buy insurance products which can provide life cover with an investment option, and therefore have a tendency to buy unit-linked products, which provide a modest return on investment with a life coverage option.

Singapore’s population is aging rapidly, and the older age group accounted for 9.9% of the country’s total population in 2011. This is expected to grow at a rapid rate of 5.8% annually from 2012 to 2020. However, this could be encouraging for life insurers in the country, as a growing aging population is likely to buy income-generated insurance products, including unit-linked and pension products. A number of life insurance companies, including Manulife, have launched investment-linked products to meet the retirement needs of this group of the population, aiming to provide a monthly income and decent investment growth for the aging population.

More Studies on Singapore Life Insurance Markets Include:

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