Transfer Of Wealth To Next Generation

Asia is undergoing a historic transfer of wealth to the next generation. Within Greater China, most high net worth individuals use insurance to facilitate this process. More than half (57 percent) of high net worth individuals (HNWI) in Greater China said they leverage insurance to facilitate a smoother transfer of wealth to future generation.

In terms of the most important outcome they hoped to achieve, 64 percent prioritized the distribution of their assets in their desired manner to prevent inheritance disputes. 67 percent acknowledged that designating beneficiaries through insurance can help mitigate such conflicts.

Insurance has evolved from a risk management product to a legacy planning tool highly preferred by our HNWI clients. It mimics some key features of will, family trust, and limited power of attorney, making insurance one of the most accessible legacy planning components.

By the types of coverage, life insurance was the leader with close to 78 percent of respondents owning a life insurance policy. This was followed by medical insurance (76 percent) and savings insurance (60 percent). 70 percent also said they have integrated insurance into their asset portfolios with 30 percent allocating 11 percent or more of their assets.

In today’s evolving financial environment, HNWIs are turning to insurance as a key strategic means of achieving financial stability, effectively managing risks, and preserving their legacies.

Singapore Life Insurance Robust Growth

Singapore's life insurance industry recorded robust growth in 2024, with total weighted new business premiums reaching S$5.87 billion. This marks a 19.7% increase from the previous year, the Life Insurance Association Singapore (LIA) reported.

Investment-linked plans (ILPs) emerged as a key growth driver, surging 41% year-on-year to S$2.25 billion, as consumers sought wealth accumulation opportunities amid economic uncertainty.

Non-participating products also showed strong performance, growing 19.2% to S$2.19 billion, while participating products saw a slight 2.7% decline.

The industry reported significant growth in health insurance coverage, with approximately 40,000 more Singaporeans and permanent residents covered by Integrated Shield Plans (IPs) compared to 2023.

Currently, 2.97 million lives – about 71% of Singapore residents – are protected by IPs providing coverage beyond MediShield Life.

Claims payouts increased substantially in 2024, with the industry paying out S$18.12 billion to policyholders and beneficiaries, up 33.4% from 2023. Of this amount, S$16.18 billion was for matured policies, while S$1.94 billion covered death, disability, and critical illness claims.

Curbing Medical Insurance Premium - Malaysia

The continuous rise in medical inflation has led to an increase in the claims rate for medical and health insurance and takaful (MHIT), Second Finance Minister Datuk Seri Amir Hamzah Azizan said. He said Bank Negara Malaysia (BNM) had taken several interim measures to curb the impact of rising MHIT premiums on policyholders, which took effect on Jan 15.

The interim measures include the distribution of premium adjustments due to medical claims inflation over a period of at least three years until the end of 2026, and a one-year delay in premium adjustments due to medical claims inflation for policyholders aged 60 and above who are covered under the minimum plan for the MHIT products purchased.

Additionally, policyholders whose policies have expired in 2024 due to the premium reset can contact their respective life insurers and family takaful operators (ITOs) to request their policies be reactivated based on the adjusted premiums.

Amir Hamzah was responding to a question from Lim Guan Eng (Pakatan Harapan-Bagan) regarding the profits of life insurance companies since 2018 and the resolution of the controversy over premium increases for medical insurance, which had surged by as much as 70%, as well as steps to prevent arbitrary hikes in private healthcare costs.

Amir Hamzah said that through the interim measures, 80% of policyholders are expected to face annual premium adjustments of less than 10% due to medical claims inflation. Meanwhile, he said the average annual profit of the insurance and takaful industry between 2018 and 2023 was RM4.4 billion from life insurers and ITOs.

At the same time, he said the government, through the Ministry of Health, will prioritise comprehensive health reforms to address the issue of medical inflation and charges at private hospitals. These efforts include implementing the Diagnostic Related Group (DRG) payment model, enhancing transparency in drug costs, and comparing common medical costs.

Other measures that can be taken by private hospitals to curb medical inflation are also being discussed as long-term solutions.

Ghost Insurance

Reports of "ghost broking", scammers selling fake car insurance, have risen by 30% over the last five years. Ghost brokers sell false policies to drivers, manipulate information given to genuine insurance companies, or take out insurance and cancel it straight away. This leaves people without valid car insurance, which is illegal.

A victim lost over £500 to a ghost broker. He was looking for cheap car insurance and saw an advertisement on social media for a deal which was half the price of other companies. He bought the policy, and it was only when he tried to make a claim after a crash that he discovered the truth: He called up Aviva and they told me there wasn't a policy taken out in my name and that the number we had given them was not a number they would use.

Aviva was not at fault. Victims are lured in by genuine-looking websites and are sent professional-looking invoices. Victim received insurance documents that looked so real, they even fooled the police officer at the accident.

Trending Korea Micro-insurance

An increasing number of insurance companies have launched small-sum, short-term products that boast high accessibility through digital enrollment and affordable premiums, in a bid to attract the MZ Generation. The MZ Generation includes Millennials and Generation Z, born between the early 1980s and early 2010s. 

Insurers are increasingly developing microinsurance products with lower premiums and simpler coverage to align with MZ lifestyles. Insurance companies will continue investing in coverage tailored to the needs of the MZ Generation and enhancing their digital competitiveness to overcome the insurance market’s decline, driven by various factors such as COVID-19, low interest rates and slow economic growth.

Digital Platform - The insurance subscription rate of the MZ Generation in 2019 was about 10 to 15 percentage points lower than those of all age groups for both life and non-life insurance. However, around 50 percent of MZ respondents reported having purchased or attempted to purchase insurance via computers or mobile devices, the highest among all age groups. This suggests significant potential for digital platform-based insurance sales. 

Lotte Insurance - recently launched a ski insurance plan that covers injuries sustained while skiing or snowboarding, for a premium of just 1,800 won ($1.23). The product, available to customers aged 19 to 59, comes in two plans. One covers only injury-related risks such as fracture diagnosis, surgery and cast treatment costs. Another provides comprehensive coverage from the moment the customer leaves home for a ski trip until they return, including protection against traffic accidents and other risks. The premium for this one is 3,200 won.

Tongyang Life Insurance - for its part, introduced a mini flu insurance plan priced between 2,000 won and 3,000 won last month. This product provides coverage by paying out benefits if the insured is diagnosed with influenza and prescribed antiviral medication for treatment.

Kyobo Life Insurance - introduced a product that covers various conditions that may arise while reading. The plan provides coverage for eye, muscle and joint disorders as well as spine-related conditions. For a 40-year-old male customer with a coverage amount of 10 million won, the one-time premium is only 1,290 won.

Prudential Financial Reported Losses

Prudential Financial shares fell in post-market trading on Tuesday, after the insurer posted a surprise loss for the fourth quarter.

Guaranteed Universal Life Insurance - The life insurer reported losses of US$57 million (RM252.55 million), while analysts anticipated a profit of US$1.1 billion. At its individual life unit, Prudential sustained a one-time hit from transaction costs related to the reinsurance of guaranteed universal life policies, it said in a statement on Tuesday. That unit posted adjusted operating losses of US$57 million.

For the quarter, the firm said it sustained US$1.5 billion of pre-tax net realised investment losses and related charges and adjustments. As at 5.07pm, Prudential shares had fallen 2.9% to US$114.50 in extended trading in New York.

The firm issued several targets for the 2025-2027 period, including its goal to grow its core adjusted operating earnings per share by 5% to 8% over the period. It also aims to keep its adjusted operating expense ratio at 8.5% to 10.5%.

Newark, New Jersey-based Prudential is mapping out its next phase of growth, as chief executive officer Charlie Lowrey is expected to step down next month and be replaced by Andy Sullivan.

AMMB MetLife Great Eastern Life Deal Called Off

AMMB Holdings Bhd and MetLife International Holdings LLC have mutually agreed to terminate the proposed disposal of their jointly owned insurance and takaful businesses to Great Eastern Holdings Ltd, a deal initially valued at about RM1.12 billion.

AMMB said the implementation agreement dated Oct 2, 2023 has been terminated and that the parties involved (AMMB, MetLife, and Great Eastern) have collectively decided not to proceed with the sale of AmMetLife Insurance Bhd and AmMetLife Takaful Bhd to Great Eastern Life Assurance (Malaysia) Bhd and Great Eastern Takaful Bhd.

AMMB’s wholly owned AMAB Holdings Sdn Bhd holds 50% minus one share in AmMetLife Insurance and 50% plus one share in AmMetLife Takaful. MetLife owns the remaining stakes in both entities.

The original plan stipulated that Great Eastern Life Assurance and Great Eastern Takaful would acquire 100% of the share capital in both AmMetLife entities. Following the acquisition, the two insurance and takaful businesses were intended to be merged and integrated with Great Eastern’s existing life assurance and takaful operations.

The merger also included exclusive 20-year bancassurance and bancatakaful agreements, ensuring the distribution of life insurance and family takaful products through AMMB’s network of banking subsidiaries across Malaysia.

The strategic partnership between US-headquartered MetLife and AMMB dates back to April 2014, when MetLife acquired a 50% stake in AmLife Insurance and AmFamily Takaful Bhd (later renamed AmMetLife Takaful) for RM812 million or US$249 million.

Trading of Great Eastern shares has been suspended since July 15 last year, after its parent Oversea-Chinese Banking Corporation (OCBC) acquired close to 94% of its shares following a S$1.4 billion (RM4.6 billion) bid it made in May for the remaining 11.56% it did not own in the insurance company — one of the largest in Malaysia and Singapore — to take it private. But the shareholding is not sufficient to have Great Eastern delisted from the Singapore Exchange or for OCBC to compulsorily acquire the rest of the shares it doesn't own.