Singapore's life insurance premiums to grow 5% in 2020

It will benefit from sustained demand for annual premium products.

Singapore life insurance premiums are expected to grow by around 5% in 2020 as sustained growth in annual premium products, moderate demand for single premium policies and benefits from improved pricing sufficiency of integrated health plans continue to boost the sector's growth prospects, according to a report from S&P.

Life insurance premiums averaged about 5.6% of GDP over the past five years as the iindustry has thrived thanks to an established regulatory landscape implementing a regular review process that has been in place since 2004.

"We view the life insurance sector's asset-liability mismatch (ALM) risk as moderate. That's because participation products dominate the industry's liability profile (averaging about 64% for the past five years) and insurers have the flexibility to adjust bonuses based on their profitability and solvency," S&P said.

The sector will also continue to remain profitable with return on equity of around 15% although low rates and market volatility could weigh on earnings. "We estimate that the sector's average return on assets was about 1.4% over 2013-2017. This reflects disciplined underwriting strategies amid investment market volatilities," added S&P.

Singapore insurance industry distribution mix was dominated by traditional agents in 2018 although financial advisors are slowly gaining market share amidst a gradual shift in bank channels.

The number of employees at Singapore's life insurance industry hit 8,309 in March from 7,594 in 2018, according to a report from the Life Insurance Association Singapore. The number of tied representatives also rose to 15,384 in March from 14,817 in 2018.