Singapore Life Insurance Growth 2020

Singapore's life insurance industry garnered $2.68 billion in weighted new business premiums for the first six months of this year, surpassing the same period in 2019 before the onset of the Covid-19 pandemic. New sales for the first half of this year surged 61 per cent from $1.66 billion in the year-ago period, which felt the impact of Singapore's circuit breaker measures. But new sales were also higher than the $1.91 billion recorded in the first half of 2019.

Singapore's economy, which shrank 5.4 per cent last year, is now expected to grow by 6 per cent to 7 per cent this year.

Weighted new business premiums measures premiums collected on new policies by taking into account 10 per cent of the value of single premium products, all of a year's premiums for annual premium products and adjusted value for products with premium payment durations of less than 10 years.

Single-premium products recorded a 106 per cent annual increase in sales, generating $1.28 billion in weighted premiums, LIA said yesterday in its report on the industry's first half performance.

Annual premium products also saw significant uptake, with sales rising 35 per cent from the same period last year. This amounted to $1.4 billion in weighted annual premiums.

LIA said that single-premium par and non-par products comprised 84 per cent of all single-premium purchases, while single-premium linked products made up the remaining 16 per cent.

Meanwhile, 8 per cent of the overall single-premium policy sales came from Central Provident Fund Investment Scheme-included products, with cash-funded products accounting for the remaining 92 per cent.

New policies bought online grew to 203,351 in the first half of this year, compared with just 32,952 in the same period a year before.

As at June 30, 43,000 more Singaporeans and permanent residents were covered by Integrated Shield Plans (IPs) and riders which provide coverage on top of MediShield Life. A total of 2.85 million lives - or about 70 per cent of Singapore residents - are now protected by IPs and riders.

Total new business premiums for individual health insurance for the first half of this year amounted to $176.8 million, with IPs and IP rider premiums accounting for 82 per cent and other medical plans and riders making up the remaining 18 per cent.

A total of 22,137 retirement policies were purchased in the first six months of the year, up 34 per cent from the first half of last year.

Employment in the life industry dipped slightly compared with the corresponding period last year, taking the Singapore life insurance industry's workforce to 8,589 employees as at June 30.

In the same period, 14,893 representatives held exclusive contracts with companies that operate a tied agency force.

Millennials Reshaping Insurance

There’s nothing more impactful than the loss of someone close to you to shine a light on the need for life insurance. And this past year, most of us have experienced some sense of loss, collectively if not personally, through the grief and suffering brought on by the global pandemic. Many of us who never before spent time thinking about or planning for our own death, or that of a loved one, likely found ourselves confronting this subject over the past year.

Millennials - The shift has been particularly significant among millennials, who now range from age 22 to 40, as they begin to plan for the next stage of their lives. Millennials are the most likely to be influenced by the pandemic to purchase life insurance. Forty-five percent of millennials said they are more likely to buy life insurance due to COVID-19, compared with 15% of baby boomers and 31% of Gen Xers.

And just as millennials have redefined everything from appropriate workplace attire to car-buying options, they’re reshaping the life insurance market as well. This digital-savvy group prefers online research and information that they supplement with financial advice from a human professional to make sure they’re on the right track.

Here are several ways the life insurance market has adapted in recent years and some navigating tips for millennials considering their options:

Fewer employers are offering life insurance as a benefit - About 56% of Americans who work for private companies have access to life insurance through their employer. The number of employers offering such benefits, largely through group plans, has been in steady decline in the last decade. The result? More than 50% of those who have life insurance purchased it individually.

our move, millennials: If your employer does offer life insurance, it’s worth reviewing the coverage options. You may find the value you need for your circumstances. You may also discover that you need to purchase additional coverage on your own. Many employer life insurance plans offer very basic coverage, and the policy may not be portable if you part ways with your employer. That’s an important factor for millennials, who tend to have higher rates of job changes.

The process continues to get faster and easier - Millennials are comfortable researching and buying nearly everything from groceries to cars online. Life insurers and agents were already making enhancements to digital tools to make it easier for consumers to research and purchase life insurance online, but the pandemic accelerated those improvements. It’s now easier than ever to gather quotes from multiple insurers, research potential providers, and even go through the application and delivery process entirely online.

In addition, physicals for many policies are optional (but you might still want one). A growing number of insurers have ditched the physical examination requirement in recent years, meaning you can purchase a life insurance policy without a medical exam or blood tests. Exam-free policies typically have faster underwriting times than traditional policies, and they offer the convenience of avoiding an additional appointment. But they’re not the right choice for everyone. Exam-free policies, for example, typically cost more than those that include a physical, and coverage may be capped at $500,000.

Millennial consumers love customization - With so much information readily available, there is quite a bit you can do on your own if you choose to. And when you are ready and have questions or want a more guided experience, there is a financial professional who will be able to help. Whether by phone, by video, online or the good old-fashioned face-to-face meeting, a financial professional is always a great stop on this journey to be sure you have considered your needs and options. There are nuances to the features and benefits of life insurance, and an experienced professional can help you sort it all out. Among millennials who purchased life insurance in the pandemic, more than half used a live adviser, and 30% used both a live adviser and online elements in their purchase.

In addition to helping provide financial security for your loved ones in case you pass away, many life insurance policies now also offer optional riders (sometimes at additional cost) that can help address other concerns, like chronic illness or longevity risk.

As millennials become more likely to purchase life insurance, insurers have evolved their offerings to create new products and innovations to meet their needs. That’s great news for first-time applicants who may find a much more painless process than expected.

China Crack Down After Online Insurance

China's banking and insurance watchdog is stepping up scrutiny of the nation's insurance technology platforms, widening a regulatory dragnet that has roiled global investors. The regulator ordered companies and local agencies to curb improper marketing and pricing practices, and step up user privacy protection. It encouraged companies to address these issues voluntarily and said those that failed to comply would face "severe punishment".

The sweeping order goes beyond the targeted action that has hit a few listed companies including Waterdrop Inc and operations backed by Ping An Insurance Group Co in the months since China began a broad crackdown on its fintech sector this year. It has since moved to rein in some of its biggest technology companies, as well as edtech, ride-hailing, and short video platforms.

The online insurance industry had been expected to grow to 2.5 trillion yuan (US$385 billion) in a decade. The China Banking and Insurance Regulatory Commission (CBIRC) did not immediately respond to a request seeking comment.

Just a year ago, the insurance industry seemed ripe for disruption as start-ups vowed to transform traditional practices with technology. Regulators have since moved to shutter operations including crowd-sourcing healthcare platforms operated by Waterdrop and Ant Group Co.

Investors and companies have poured an estimated 45 billion yuan into insurance technology. By the end of 2020, more than 140 insurance companies in China had started online insurance businesses, with total premiums of 298 billion yuan for the year, or 6% of the industry total.

Garuda Sukuk Default

The June 2021 default by Indonesian airline, PT Garuda Indonesia, on its USD500 million sukuk could provide clarity on sukuk restructuring, resolution and enforceability in the country. Legal precedent for effective enforcement in many jurisdictions where sukuk issuance is prevalent is lacking, including in Indonesia. It therefore remains uncertain whether certificate holders will be able to enforce their contractual rights in relevant courts.

Sharia requirements - could make sukuk default resolution more complex than bond default resolution. Complexity is also added by Garuda’s capital structure, which consists of several types of debt instruments, including sukuk, asset-backed securitizations, bank loans, factoring and aircraft leases. These involve various off- and on-shore parties. The sovereign owns over 60% of Garuda’s shares and the airline’s sukuk offering does not contain government or financial institution guarantees.

Garuda - announced that it will continue to defer the periodic distribution payment. The ongoing coronavirus pandemic remains the major risk to Garuda’s recovery and to that of other Indonesian-based sukuk issuers, with defaults of on-shore corporate sukuk peaking at 4.2% in 2020 (2019: 0.6%).

The country’s bankruptcy regime is difficult to navigate and its legal system lacks precedent of sukuk default treatment. Similar countries under this group are those where the law is not supportive of creditor rights or where significant volatility in the application of law and legal enforceability of any claim limits the practical chances of recovery or greatly increases the volatility of recovery prospects.

Court supervised debt moratorium and bankruptcy proceedings for sukuk are rare - given the intricacies of making such applications in the domestic religious court, as opposed to the commercial court. Indonesian law states that religious courts have authority in resolving Islamic financial disputes. However, in practice, these can be settled in commercial courts should both parties agree. Religious courts are frequently used to settle simpler retail transactions, while commercial courts typically adjudicate on complex commercial disputes, as litigants consider the officials to be more competent in ruling on such matters.

Sukuk default - by PT Berlian Laju Tanker Tbk in 2012 was resolved through the commercial court and resulted in a restructuring plan. Islamic financing defaults among financial institutions have been treated similarly to conventional loan defaults from what we have observed so far. Out-of-court restructuring of on-shore public sukuk generally follows similar treatment to bonds and includes maturity extensions and the deferral of periodic distributions.

Most international sukuk issued - so far create an economic effect similar to conventional bonds, with most sukuk instruments resembling debt obligations; for instance, ijara and murabaha structured sukuk. However, a number of local corporate sukuk that missed payments in 2019 and 2020 were based on mudharaba contracts, which have equity-like or profit-and-loss sharing features. These distinctions could complicate creditor or sukuk-holder treatment and affect their recourse, debt ranking and recoveries upon issuer default. The issuers that missed sukuk periodic payments included state-owned enterprise, PT Indah Karya (Persero), and real-estate developer, PT Prima Jaringan.

English law - Sukuk issued on the international capital markets are typically governed by English law and are subject to the jurisdiction of the courts of England or other courts that are recognized by international law and jurisdiction. However, part of the documentation and any judgement would also be governed and reviewed by the courts where the originator is domiciled and enforceability would be restricted by local laws.

Dai-ichi Bought Westpac Insurance

Life Holdings is acquiring an insurance arm of Australia's financial services company Westpac Group for about 900 million Australian dollars ($664.8 million). The Japanese insurer will acquire Australia's sixth biggest insurance company through its Australian subsidiary TAL. The deal is expected to be complete as early as the end of 2022.

Westpac, one of the four major Australian banks, has a customer base of more than 14 million and 5 million online users. Insurance premiums and other revenues amount to AU$1.1 billion.

Dai-ichi hopes to benefit from Australia's growing market, where the population is increasing, unlike in Japan. The acquisition is expected to bring in several billion yen per year in profit to the Dai-ichi Life group. TAL is increasing its share in insurance products that cover death and other unlikely events. After the deal, the Dai-ichi unit, already the largest life insurer in Australia, will control one-third of the market.

Dai-ichi started operating in Vietnam in 2007, and has expanded across the rest of the Asia Pacific region. The company invested in TAL in 2008, and made it a full subsidiary in 2011. Overseas business accounts for about 20% of Dai-ichi's profit, and the company hopes to increase the overseas ratio.

Japanese insurance companies have been bullish in Australia. Nippon Life Insurance acquired MLC, a former life insurance division of National Australia Bank, for about 180 billion yen ($1.6 billion) in 2016. MS & AD Insurance Group Holdings has invested in Australian life insurance company Challenger.

Buying Life Insurance Online

Amid the pandemic, several businesses adopted the online model including the life insurance sector that built its digital outreach to remain relevant to their customers. Through the online medium, purchasing a policy becomes easy, quick, safe and stress-free. However, customers have to be equally discerning when selecting the right policy. How? Here are few tips to keep in mind before you sign the virtual dotted line: 

1. Comprehensive research is a must: Whether this is your first time buying a life insurance policy online or not, research is important. This should be a mix of both online and offline, as it will bridge gaps in cost-effective options and help you select the best cover. Choosing a life insurance policy with an adequate sum assured is vital. A higher sum insured as per financial need is important as it increases the amount you have in case of emergency, which truly adds value in safeguarding the financial future of your loved ones. This is where an online calculator comes in handy, as a tool to help you calculate the coverage amount as per your lifestyle, future goals, and other financial requirements.

2. Comparison is key: The online world offers a wide variety of options for policy buyers, and, therefore, it is pertinent to compare offerings when purchasing a policy. As a potential policyholder, your research should entail a comparison between premiums, policy coverage, benefits, terms and conditions, and other specifications that help you make the right decision. Customers should base the results of the comparison based on their personal objectives and goals that they seek from the product be it pure life cover, investment or a mix of both. 

3. Important to check to claim paid ratio of insurers: While a premium amount helps you assess the affordability of a life insurance policy, a claim settlement ratio or claims paid ratio is an important and reliable metric to determine if the insurance policy you are buying is an apt choice or not. This ratio helps assess the insurer’s commitment to delivering insurance claims settlement. A higher ratio helps understand the claims paid efficiency of the insurer and gives comfort to the family of greater chances, of the claim being settled by the company after the insured person’s unfortunate demise.

4. Be transparent and choose wisely: When buying a life insurance policy online or offline, it is important to disclose all information including medical history, lifestyle habits as this will go a long way to ensure speedy claims settlement. This will also ensure your family does not face any issues when filing claims if required. 

A life insurance policy offers a shield that can protect you and your family’s financial interests. By following these steps, one can make a sound and prudent financial decision when it comes to purchasing a life insurance policy.

Suicide & Life Insurance Claim

The widow of a 49-year-old architect who unexpectedly took his own life has appealed to an insurance company to treat her family “fairly and with compassion” after it used its small print to decline her £338,000 life insurance claim. Had his death happened eight days later, the company would almost certainly have paid the claim.

Billie Lee-Smith, who has two daughters aged 10 and 16, now faces having to sell what she thought was her and her husband Tony’s dream home. They had taken out the policy with the insurer Aegon, which was designed to pay off their mortgage should anything happen to either of them.

Aegon has declined to pay the life-changing claim on the basis of its suicide clause. Its life policies, along with those of most other insurers, have a term that states they will not pay out where the insured person takes their own life within the first 12 months of cover. Lee-Smith’s husband died eight days short of the clause’s expiry.

Insurers impose such terms to prevent people taking out life cover with a premeditated plan to solve their financial difficulties by taking their own lives. A year is generally considered more than enough time to prevent such claims from arising.

The couple only became Aegon customers when they bought a new home in Truro in October 2019, and were advised to upgrade their life cover for their newly increased mortgage. Had they stayed with their previous life cover provider of many years, that policy would have paid out.

Lee-Smith says her husband had no history of mental health problems or depression, and was a successful architect and company director. They had good incomes and at the time had no financial worries. His death came completely out of nowhere, and even to this day she says she has no idea what caused it.