Two distinct trends: the rising number of high net worth individuals (HNWIs) in Singapore, and the country’s ageing population, provide an opportunity for life insurers to develop customised products and capitalise on the growth forecast for the Singaporean life insurance market. These are the key points highlighted in a new Timetric report, Life Insurance in Singapore, Key Trends and Opportunities to 2016, which is available at the Insurance Intelligence Center.
Life insurance companies in Singapore have designed multipurpose products to serve high net worth individuals (HNWIs) in the country. For instance, Manulife Singapore, launched a new product, named Heritage, for HNWI customers. Heritage provides a life insurance contract which consolidates a HNWI’s wealth by securing the real value of their assets in the event of a downturn.
SwissLife, one of the leading life insurance companies in Singapore, has also launched a new product to serve wealthy and HNWI customers in the country.
Low penetration level
Singapore’s potential GDP growth, combined with low life insurance penetration levels, provide opportunities for both new and existing life insurance companies. Penetration as a percentage of GDP in the Singaporean life insurance segment declined during the period 2007-2011, despite considerable growth recorded in the segment.
This was primarily due to the global economic recession in 2009, which brought down the country’s GDP. The country’s life insurance penetration, defined as gross written premiums as a percentage of GDP, decreased from 6.1% in 2007 to 5.6% in 2011 and is expected to be around 5.64% by 2016.
This figure is considered comparatively low in a country which has a low population and large number of wealthy consumers, although the low penetration level does provide the segment with strong growth potential.
Bancassurance is expected to play a significant role in the growth Singapore’s life insurance industry, and the number of policies sold through bancassurance grew from 189,100 in 2007 to 389,600 in 2011, at a CAGR of 19.8% during the review period.
The number of policies sold is expected to increase at a CAGR of 9.8% over the forecast period. Insurance brokers accounted for the third largest share, 13.3%, of the total new written premium in 2011.
The evolution of e-commerce is also expected to play a significant role for sales of life insurance products over the forecast period due to its cost advantages and convenience.