Singaporean insurers still confident amidst pandemic uncertainties
The annual rankings reveal that the city’s top insurers gained S$263b in terms of assets.
Whilst the impact of the COVID-19 pandemic may linger a little bit longer, the Singapore insurance industry is confident about its ability to service customers whilst balancing cybersecurity needs and sustainability, and is looking to remain buoyant as the border reopens and the economy flourishes again.
Singapore Business Review’s annual review of the Lion City’s insurance sector revealed that its top 49 insurers gained 21.1% to S$263b in terms of assets in 2019. Great Eastern Life Assurance still reigned supreme with S$61b in assets, a 19% jump from S$51b in 2018. AIA Singapore followed in second place, recording a 19% increase to $51b from S$43b in 2018. Prudential Singapore came in at third place with S$45b, NTUC income placed fourth with a 14.1% growth to S$40b, and Manulife Singapore rounded up the top five with S$19b.
Uncertainties in several factors may continue over a longer period, as shown in a PwC sector report, which ranges from regulatory measures to lower sales volumes to underwriting volatility. Insurers also have to be wary about deteriorating consumer risk profiles due to lapses in coverage. And with rapid digitisation and rise of remote working come increased data and cyber risks, as insurers need to ensure that their digital capabilities can support their operations without sacrificing network security.
Notwithstanding all these pain points, insurers are still determined to prioritise the needs of their customers. The General Insurance Association of Singapore (GIA) will continue to bolster resilience amongst general insurers over the next 12 months which will allow them to extend better support to clients now and in the long term, according to its president Craig Ellis.
Likewise, Aviva Singapore will not be complacent even if the economy is showing signs of recovery, its chief information officer Santosh Gon assured. “In the next twelve months, we will maintain our momentum of adapting to recovery, and focus on leveraging technology disruptions and driving digital customer innovations,” Gon said.
Regarding consumer demands, AXA Insurance is seeing customers who are more concerned about securing their futures amidst uncertainties, said its chief customer and operations officer Jeremy Ong. This is in line with PwC’s observation that customers will gravitate from investment-centered products towards protection-focused policies.
“In January, we launched Singapore’s first prenatal plan offering free health insurance coverage for newborns as a way to encourage parents to take a long-term view for their unborn child’s future insurance needs as early as possible,” Ong explained.
On the other hand, Aviva’s Gon noticed that clients are moving away from premiums that cover more than 10 years. “The demand for premiums with a shorter shelf life calls for new, simple and transparent products that can be bought at greater convenience.”
There is also an ongoing need for insurers to reassess the service that they deliver to clients, in which accelerated use of technology will be a key, added Gon. Nonetheless, clients will still turn to their financial advisors “because of the personal touch they bring,” he explained. This observation was echoed by Ellis, who cited a GIA joint survey with YouGov saying that even digital-savvy younger customers are still looking for a human touch.
“Our sector is making sure that general insurance protection remains accessible to all and that changing needs continue to be met in an ever-changing market environment. To do so, we are ensuring that our digital capabilities, while much more efficient, still effectively recreate the in-person and advice-based relationships customers are looking for today,” Ellis said.
To address evolving demands, PwC recommends that insurers must evaluate product design and pricing, especially where investment returns are priced in and tax advantages are expected. Moreover, insurers must gain a deeper understanding of future risk and varying risk profiles.
“Risk management guidelines provided to customers will need to be adapted to ensure they appropriately plan for pandemic-related risk that may emerge in the future, particularly for business interruption and liability products,” PwC said.
Insurers’ reliance on outsourced and third-party service providers to carry out key business activities has increased during the circuit-breaker period, PwC has observed. Working with third-party providers is important for Aviva to remain at par with latest technologies and focus on core competencies, explained Gon.
“More IT service providers are moving to the cloud—a form of third-party provider, which is highly reliable and offers shorter time to market. Contrastingly, relying solely on on-premise solutions is cost and time-consuming,” Gon added.
But the growing instances of supply chain attacks has led the Monetary Authority of Singapore (MAS) to bolster its rules for financial institutions’ (FIs) dependence on third-party providers. The revised guidelines have urged FIs to build a strong process for timely analysis and sharing of cyber threat intelligence within the ecosystem, and to conduct cyber exercises to stress test defences through simulating tactics and techniques used by real-world attackers. In addition, institutions must assess its risk exposure that may affect the confidentiality, integrity, and availability of its IT systems and data before entering into an agreement with a third party.
Perhaps most importantly in this context, “the FI should ensure the third party employs a high standard of care and diligence in protecting data confidentiality and integrity as well as ensuring system resilience,” MAS said.
The move was welcomed by the sector, with insurers saying that it provides a common framework for institutions and their suppliers whilst keeping pace with the evolving cyber landscape. GIA’s Craig does not think that the new guidelines will lead to a reduction in dependence on third-party providers; instead, he expects their presence will increase and the guidelines should cement the need for risk assessment and management of such providers.
“Aviva is keenly aware that reliance on third-party service providers should not result in any deterioration of controls and compromise of risk management. We are committed to only working with vendors who reflect our high standards of security, particularly in the areas of customer and payment data,” Gon assured.
Both Aviva and AXA are keen to work with MAS for the Singapore Financial Data Exchange (SGFinDex). Not only will it grant customers a comprehensive view of their financial information, it will also help advisers streamline the financial planning process, Ong said.
“Aviva is working closely with MAS and other financial institutions to identify challenges and implement solutions to ensure financial information can be safely exchanged to provide customers a comprehensive view of their portfolio,” Gon noted.
Both insurers also highlighted their own initiatives in ensuring a more sustainable future in their operations. Aviva has started cutting the frequency of its business travel even before the pandemic started, which yielded a 40% drop in its carbon emissions footprint, Gon said. It has also been pushing for lower paper consumption and zero-waste amongst its employees.
AXA has also been taking into account ESG considerations in its investments through investing in green assets and impact funds, Ong said.
The general insurance sector remains committed to the Singapore government’s efforts in advancing its national sustainable development agenda, Ellis said. GIA has been made a strategic partner of the Green Finance Industry Taskforce, which aims to champion a green outlook in the business community through a new environmental risk management handbook, amongst other key initiatives.
“We are also working towards the launch of the Global-Asia Insurance Partnership in partnership with the Monetary Authority of Singapore, creating a centre of excellence for insurance and risk management in Asia, for Asia, and by Asia. This is a tripartite partnership amongst regulators, academics, and the global insurance and financial service industry aiming to address the future development and needs of our sector with the support of global collaborators,” Ellis explained.