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SG accident, health insurance to see highest growth of 6.7% annually

Personal accident and health insurance are poised to witness significant growth amidst a thriving general insurance landscape in Singapore.

Singapore's general insurance industry is projected to reach a staggering $5.5 billion within the next five years, with personal accident and health insurance on track to see the most pronounced growth of 6.7 percent compound annual growth rate (CAGR).

Swetansha Chauhan, an Insurance Analyst at GlobalData, said that personal accident and health insurance, which accounts to 20.5 percent of the general insurance rate in 2022, is forecasted to drive the insurance industry during 2023 to 2027.

“Post pandemic we have seen increasing awareness and demand for global insurance for the year due to high inflation, we have seen an increase in premium prices in the country, which will support growth of the health insurance sector,” she said.

“Comparing this with the global market, this global growth in personal accident and health category is broadly aligned with global trends. GlobalData estimates the global personal accident and health insurance market to grow at a CAGR of around 8.4% During 2023 to 2027, similar to 6.6% growth we expect in Singapore. 

Chauhan mentioned that Singapore will also see a surge in demand for travel insurance as the country further eases travel restrictions. The rise in geopolitical tension and the increase in cases of cyber attacks will also support the demand for cyber insurance.

“This trend is not only specific to Singapore, but it is a global trend. We are seeing that investment in cyber security has become an integral part of business strategy for most of the businesses around the globe,” she said.

Chauhan explained that the key contributors to the insurance growth encompass demand stemming from prominent infrastructure projects, the nation's demographic, and escalating health insurance premiums influenced by high inflation rates. 

Additionally, Chauhan cited the significance of recent regulatory shifts which supported insurance growth, highlighting the government's move to enhance health insurance coverage for foreign workers. 

"The mandatory coverage limits for foreign workers have risen substantially from 15,000 Singapore dollars to 60,000 Singapore dollars."

Moreover, strides in digitalization coupled with AI integration are anticipated to assist insurers in providing more tailored and cost-effective singular insurance products, further bolstering the industry's growth.

Chauhan cautioned that any slowdown in the country’s economic growth will lead to a decline in demand for insurance products.

“The biggest challenge right now is the current political uncertainties and changing economic conditions. This is leading to a rise of interest rate and high inflation pressure,” she said, “Rising interest rates and inflation is increasing the operational cost for its orders, which in turn are impacting their profitability.”

Chauhan said that the underwriting profitability margin of Singapore's general insurance industry is predicted to slide from 13 percent in 2023 to approximately 11 percent over the subsequent five to six years.

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