Singapore's general insurance sector is predicted to expand by 6.9% in 2023 and 5.6% in 2024, underpinned by investments in infrastructure projects and a surge in demand for health insurance following the pandemic.
The segment is anticipated to grow at a compound annual growth rate (CAGR) of 5.8%, projecting an increase from SG$5.54 billion ($4.02 billion) in 2023 to SG$7.35 billion ($5.5 billion) in 2028 in terms of gross written premiums (GWP), according to forecasts from GlobalData.
“After witnessing high growth in 2021 and 2022, Singaporean general insurance industry growth is expected to slow down from 2023 onwards,” GlobalData insurance analyst Swetansha Chauhan said. “Changing economic conditions, rising inflation, and geopolitical uncertainties have led to sluggish growth in all general insurance lines of business, which is expected to slow down the overall industry growth in 2023.”
Personal accident and health (PA&H) insurance takes the lead among Singapore’s general insurance lines of business, estimated to account for a 23.9% share of the general insurance GWP in 2023. This overtakes motor insurance, which held the leading position in the last decade, and is attributed to a 32.6% growth in PA&H insurance in 2022. This surge is primarily driven by heightened demand for health insurance due to increased awareness following the pandemic, rising medical costs due to inflation, and the easing of travel restrictions worldwide.
There have also been recent regulatory changes that have bolstered the growth of PA&H insurance. Earlier this year, the Ministry of Manpower made health insurance mandatory for all new and existing foreign workers, encompassing migrant domestic workers and those on short-term employment passes (S Pass).
The government is also offering various subsidies to assist employers in procuring medical insurance for their foreign workers. PA&H insurance is projected to grow at a CAGR of 6.6% during 2023-2028.
Property insurance follows as the second largest line of business, accounting for an estimated 19.1% share of general insurance GWP in 2023. In Singapore, property insurance is driven by fire insurance, a mandatory component when purchasing homes from the Housing and Development Board (HDB) and when obtaining home loans.
Additionally, the growth in the construction sector and investments in major infrastructure projects will further boost property insurance. The Building and Construction Authority (BCA) anticipates contracts worth up to SG$32 billion ($23 billion) being awarded in the construction sector in 2023. This will support property insurance, projected to grow at a CAGR of 6.2% over 2023-28.
Motor insurance holds the third largest position, expected to represent an 18.4% share of the general insurance GWP in 2023. The motor insurance market in Singapore witnessed a decline of 7.9% in 2022, largely due to a significant drop in vehicle sales, according to the Land Transport Authority. The additional registration fee imposed on high-end car purchases increased in March 2022, impacting vehicle prices and subsequently, sales.
Adding to this predicament are global disruptions in supply chains and an unprecedented surge in certificate of entitlement (COE) premiums contributed to elevated vehicle prices, resulting in reduced vehicle sales. COE constitutes the right to vehicle ownership for a 10-year period and substantially influences the ownership cost of a new vehicle.
Liability, financial lines, marine, aviation, and transit (MAT), and miscellaneous insurance made up the remaining 38.6% of the general insurance GWP in 2023.
“The general insurance penetration in Singapore stood at 0.8% in 2022, which is lower as compared to other countries in the Asia-Pacific (APAC) region such as South Korea (1.5%), Japan (1.8%), China (1.2%), and Hong Kong (1.7%), indicating a huge growth potential for Singaporean general insurers. Higher demand for health insurance, mandatory fire insurance, and increasing premium prices in most general insurance lines due to inflation will support the growth of the country’s general insurance industry over the next five years,” Chauhan said.
Elsewhere in the country, the Monetary Authority of Singapore (MAS), in partnership with several financial regulators, unveiled a basic financial planning guide aimed at empowering Singaporeans to bolster their financial wellbeing.
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