Singapore’s life insurers are designing schemes to assist
financially stressed policyholders, Darren Thomson, president of
the Life Insurance Association of Singapore (LIAS) stressed in a
statement accompanying release of data showing a dramatic reversal
in the life industry’s fortunes.
Thomson said an extended “premium holiday” for whole life and
endowment policyholders with small one-off fees, and low-cost
relief schemes offering coverage against death, critical illness
and permanent disability are among the solutions the life industry
is now offering.
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The industry’s move comes against the background of a slump in
premium income growth in the fourth quarter 2008 following what had
been a period of significant growth.
Single premium new business sales, the mainstay of the
industry’s new business, were hard hit in the fourth quarter,
falling 67.3 percent compared with the fourth quarter of 2007 to
S$811 million ($297 million). Regular premium new business sales
fell by 12 percent to S$220 million.
Overall the fourth quarter sales fall left total sales for 2008
at S$8.64 billion, 10.8 percent lower than new business sales of
S$9.68 billion in 2007. The overall annual result contrasts
radically with a 9.5 percent increase in new business sales in the
first three quarters of 2008, a 16 percent increase in the first
two quarters and a 52 percent increase in the first quarter.
A number of factors impacted on new business sales in the fourth
quarter of 2008, not least being a 16.4 percent annualised,
seasonally adjusted slump in Singapore’s GDP in the fourth quarter
of 2008.
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By GlobalDataCoupled with this has been a slump in the value of shares listed
on the Singapore Stock Exchange which has seen its benchmark index
fall by some 70 percent since late-2007. The resultant decline in
popularity of single premium, unit-linked products saw their share
of total new business fall from 69 percent of new sales in 2007 to
38 percent in 2008.
Also working against new business growth in 2008 was a major
change to the Central Provident Fund Investment Scheme, (CPFIS). In
essence, this is a compulsory social security savings scheme
comprising Ordinary Accounts which can be used for expenses such as
home purchases and education; Special Accounts for retirement
savings; and Medisave Accounts for hospital and medical insurance
expenses.
As from 1 April 2008 the first S$20,000 in ordinary and special
accounts was required to be held in an interest-bearing CPFIS
savings account whereas before all funds could be placed in life
insurance investment products. Notably, the SLIA reported that the
CPFIs sector accounted for S$1.72 billion or 63 percent of single
premium sales and 58 percent of total sales in the first quarter of
2008.
Against the odds Singapore’s largest life insurer Great Eastern
Life (GEL) marked 2008, its100th anniversary, with new life
business sales in the Singapore market of S$3.162 billion, up 34
percent compared with 2007. This growth was despite a 66 percent
fall in fourth quarter sales to S$285 million.
Overall, GEL recorded a 32 percent increase in new business
sales in 2008 to S$3.67 billion with Malaysia accounting for S$468
million (92 percent) of non-Singapore sales. Net profit fell 50
percent to S$272.4 million, primarily thanks to lower investment
returns.
Given the Singapore life market’s history of extreme new
business sales volatility, the city-state’s life insurers appear to
be in for a grim 2009.
