The life insurance industry posted a 3% growth in weighted new business premiums to S$4.2bn ($3.1bn) in 2018, compared with 2017.
While sales of annual premium products continue to show stable growth at 6% to S$2.78bn, there was a 3% decline in the uptake of single premium plans to S$1.42bn.
The Life Insurance Association Singapore (LIA) attributed the lacklustre sales of single premium plans to turbulent markets late last year, combined with the regulatory requirement to remove the sales charge for purchases of Central Provident Fund Investment Scheme (CPFIS) products, which include unit trusts and investment-linked insurance plans.
LIA president Patrick Teow, said, “Changes to the CPFIS significantly impacted the last quarter of 2018, which saw single premium CPFIS-included products recording S$29m in weighted premiums, a decline of 62% compared to the previous quarter.”
Since October last year, sales charges for purchases of CPFIS products have been halved from 3% to 1.5% and will be removed entirely from 1 October. These adjustments are to reduce the cost of investment for CPFIS members, as well as target the scheme at members with knowledge and time to invest, and are prepared to take investment risk.
By policy count, the industry recorded a significant increase of 48% in the uptake of retirement policies designed to provide regular pay-outs to policyholders during their retirement years.
Retirement policies accounted for about 8% (S$338m) of total weighted premiums for the year, up from 5% for 2017.
Calling it a positive sign, Mr Teow said, “People are living longer and are concerned whether they have enough funds for retirement. Insurers have been creative in their product offerings, such as providing cover to age 100.”
There was a 7% growth in total sum assured for new business to nearly S$140bn last year.
Integrated Shield Plans (IPs) and IP rider premiums accounted for 92% (S$388.3m) of total new business premiums for individual health insurance, which totalled $424m for 2018. The remaining 8% (S$35.7m) came from uptake of other medical plans and riders. A