While many sectors suffered a huge setback due to the Covid-19 pandemic, the insurance sector gained a lot of popularity. Recently, the Life Insurance Association, Singapore (LIA Singapore) announced that the sector has seen an increase of 3 percent during the fourth quarter of 2020, when compared to the same period in 2019. A total of SG$4.38 billion was accounted for business premiums for the fourth quarter of 2020.
According to LIA Singapore, the sector witnessed a rebound in the second half after the initial fallout when the Covid-19 virus started spreading. Since most of the movement was restricted during the height of the pandemic, the number of new insurance policies that people bought online rose to 206,679 in 2020 compared to 9,971 in 2019. Most of these policies were single premium products such as short-term non-par endowment plans, par whole life plans, and universal life plans. The sale of the same was recorded at a 47 percent increase, amounting to SG$1.84 billion for the fourth quarter of 2020. This amount helped a lot to match with the low numbers of annual premium policies, which recorded a 15 percent decrease for the quarter.
Additionally, employment in the life insurance sector rose by 4 percent compared to 2019 with 320 new hires, which brought Singapore’s life insurance industry’s workforce to 8,768 employees on December 31, 2020. A large number of these new hires took place because the insurers expanded their IT and operations team so that they can provide support and have a smooth transition to the digital-focused business. It can be expected that the demands for digital specialists will continue to rise, reported LIA.
Compared to this, Singapore’s life insurance market recorded a total earning of SG$4.3 billion in new business premium in 2019 and showed a 0.4 percent increase compared to 2018. Additionally, the total sum assured by new businesses continued to increase, and a 7 growth year-on-year.
Singapore’s insurance market and the impact of Covid-19
Recently, a report by London-based insurer Aon noted that there has been an increase in shorter-term and micro-insurance products in the market, as a response current environment. Aon, in its Q4 2020 Global Market Insights Report mentioned that reopening the businesses and the current ongoing vaccination programme in Singapore has boosted a lot of investor’s confidence. Apart from the price hike, the Singapore insurance market is not as severely challenged, as compared to the global market. Aon expects this upward trend to continue at least till the first half of 2021.
The pandemonium caused by the pandemic has also turned credit insurance more difficult to obtain. Additionally, it has also been observed that there has been a decrease in driving and road accidents during the first half of 2020 because of lockdown, and auto insurers took this opportunity as the performance of a favorable claim. The research report also mentioned there can be a modest increase in the market price because the return of a normal traffic pattern is expected. Real estate and the property was another sector that was badly affected by the pandemic.
The report mentioned, “Deductibles are increasing, particularly for a business interruption for Singapore risk locations. Insurers continue to reduce capacity as they focus on diversification of risk, and a further reduction in capacity is expected as reinsurance rates continue to increase.”
The Work Injury Compensation act of 2019 has also contributed to increasing the premium rates for employer’s liability and workers’ compensation. Following this, the insurers have become responsible for assessing permanent incapacities. Seeing this, certain insurers have already appointed third-party providers that will help them make correct assessments, thereby increasing costs for this class of insurance.
The market research also suggested that insurers have begun leveraging technical pricing approaches and rationalising capacity at the portfolio level, which, in turn, is leading to increased premium and decreased capacity. Additionally, insurers are also taking a much conservative approach to scrutinise financial positions, operations controls, and governance. The companies that have been severely affected due to Covid-19 will likely see narrowing coverage with a very low chance of negotiation.
Brent Clawson, chief broking officer, commercial risk solutions, Asia Aon said that the claims related to the pandemic for businesses and insurers have not yet been fully determined. The fluidity of any business depends on regulation, litigation, and the macro-economic environment, which will continue to bring forward complexities even in 2021. He also claimed that Covid-19 has also resulted in claims activity in other coverage lines and the number is only likely to increase.
As stated above, the insurance industry has generally responded well where they enabled remote work and addressed immediate capital questions. Presently, Singapore’s insurers current focus is now turning to what the competitive landscape will look like in the immediate future, what it means for their business, and how to emerge stronger. The insurers have been resilient and have managed to effectively navigate the industry challenges over the years along with adopting new regulatory requirements. Additionally, it has also been observed the industry players reaching out to help the community through extended health coverage for those who have contracted Covid-19. This is a chance for the insurers to make the branding of the industry better and show common people how they can help the community overcome some of the challenges they are experiencing.
Cross-sector alliance to drive sector growth
In order to make the Singaporean insurance market and the healthcare industry of the nation more streamlined for the citizens, a cross-sector alliance is now reported to have been accepting proposals so that an end-to-end claims platform can be developed for those seeking the health insurance process. The alliance happened between General Insurance Association Singapore (GIA Singapore), the Life Insurance Association, Singapore (LIA Singapore), and the Integrated Health Information Systems (IHiS), with the support of the Ministry of Health and the Monetary Authority of Singapore (MAS).
Ravi Menon, director of MAS revealed his ambitious plans to create such an innovative platform in his speech at the Singapore Fintech Festival last December. The call for the proposal period was open between March 15 and April 26 and interested people were required to express their interest through email by March 29 latest. According to a statement released by the alliance, the proposed platform aims to improve patient experience along with enhancing operational efficiency.
The vision of the platform is aligned with Singapore’s goal to transform itself into a more digital and innovation-driven economy that would bring a lot of wide benefits to its citizens. Another thing that the platform aims to do is to make it convenient to access patient’s insurance policy details, faster claims processing, seamless authorisation of data release, and timelier exchange of data.