The Life Insurance Association of Singapore (LIA Singapore) has released its industry results for the full year ending December 2023 (FY23), showcasing a notable 14.4% increase in weighted new business premiums for the fourth quarter (Q4) of 2023 compared to the same period in the previous year.
The year-to-date figures for Q4 2023 revealed a total of S$4.9 billion in weighted new business premiums, marking a 4% rise in non-par funds to S$1.84 billion from S$1.77 billion in 2022. Despite a 3.9% decrease in total weighted new business premiums for 2023 compared to the previous year, attributed mainly to a decline in single premium business, there was a surge in demand for regular premium non-par products, including term and health insurance plans.
The Singapore life insurance sector has persevered through a challenging macroeconomic environment, contributing to narrowing the nation's protection gap. This is evidenced by a 1.9% year-on-year increase in total sum assured for the period, with significant contributions from financial adviser (FA) representatives and tied representatives.
Additionally, the sector saw a 1.9% increase in the number of lives covered by health insurance, with around 60,000 more Singaporeans and permanent residents insured by integrated shield plans (IPs) by the end of 2023, covering approximately 70% of Singapore residents.
LIA Singapore president Dennis Tan commented on the resilience of the life insurance industry amidst global headwinds, including slowing economic growth, geopolitical tensions, rising interest rates, and inflationary pressures.
“Global headwinds, slowing economic growth coupled with geopolitical tensions, rising interest rates, and elevated inflationary pressures had impacted overall demand for life insurance products especially in earlier 2023. Despite these challenges, as the year progresses, the life insurance industry continues to recover and demonstrate resilience as we help more individuals get more adequately protected,” he said.
The final quarter of 2023 witnessed a significant uptake in both annual and single premium products. Annual premium products saw a 15.5% increase in total weighted new business premiums for Q4 2023 compared to the same period in 2022, while single premium products experienced a 12.2% increase in weighted premiums for the fourth quarter. This growth reflects the industry's response to evolving consumer needs amidst rising interest rates and a volatile economic landscape.
Demand for IPs remained robust, with total weighted new business premiums for individual health insurance reaching S$441.1 million for the period, a 14.9% increase from the previous year. IPs and IP rider premiums dominated, accounting for 85% of this figure.
The industry also reported a 16.2% increase in claims payouts in 2023, totalling S$13.58 billion to policyholders and beneficiaries. This included payouts for matured policies, death, total and permanent disability, and critical illness claims.
Other key highlights for the period included the distribution of product classifications, with par products accounting for 30% of total weighted new business premiums, non-par products 37%, and investment-linked products the remaining 33%.
Insurers with “normal” licenses contributed 98% of the total weighted new business premiums, while “defined market segments” (DMS) insurers made up the rest. Employment in the life insurance industry grew by 3.5%, indicating ongoing digital transformation initiatives.
Looking ahead, Tan emphasised the industry's commitment to addressing the cost-of-living concerns in Singapore through innovative product design and efficient business processes.
“Cost of living is a key concern amongst many in Singapore, and the life insurance industry is committed to finding ways to support members of the community [to] address their protection and financial needs. We will do this through innovations in product design and more effective business processes, amongst others,” he said. “We will also continue to take a long-term view and pursue initiatives to ensure the wellbeing of Singapore's population and to support the nation's net-zero transition goals.
“Just as we seek to protect the life and health of people, we are equally serious about protecting the earth and our collective future.”
