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Business Times
6 days ago
- Business
- Business Times
Silver lining in insurance buyers' shift towards investment-linked plans
[SINGAPORE] Insurance participating funds, which provide investment returns for long-term whole life and endowment plans had a good year in 2024. The par funds managed by nine insurers delivered a positive return, based on my compilation for a column this week. That shouldn't be a surprise. Equity markets were in bull territory last year and continued to soar this year. Two things stood out in my research. First, insurers invest in private markets including private equity and debt for their par funds, and say they have been doing so for some time. This is interesting because of the intense interest in private assets lately. But the specific allocations, which are lumped together with equities, isn't publicly disclosed by almost all except HSBC Life. Without more disclosure it's hard to tell whether their private-asset exposure is sizeable enough to make a difference in terms of return enhancement or risk mitigation. In 2022, when stocks and bonds fell in tandem, par funds' losses ranged between 7 and 14 per cent. Second, Life Insurance Association data on new business indicates an apparently decisive shift from par products towards investment-linked plans (ILPs). Unlike par plans where premiums are pooled and invested collectively by the insurers, ILPs enable policyholders to make their own asset allocation and fund choices. Investors bear the risk of losses and do not depend on a 'smoothing' process for returns or dividends. Between 2022 and 2024, ILPs' share of new business rose from 25 to 39 per cent. The trend continues this year. In LIA's latest data for the six months to June, ILPs' share rose from 31 per cent in 2023 to 43 per cent in 2025. Traditionally, Singaporeans preferred par plans. Could the shift towards ILPs prove lasting? The puzzle, however, is this. Both vehicles may leave policyholders in limbo – still under-insured and with far lower net returns than illustrated. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Over the long term, returns from par products especially whole life plans were typically only slightly better than fixed deposits and may not keep up with inflation. As for ILPs, a substantial portion of returns may be eaten up by high annual costs – as high as 4 per cent a year based on my earlier research. As a result, the protection value and overall return may also fall short. Still, a trend towards ILPs suggests a greater awareness of the benefit of calibrating one's portfolio choices towards one's own risk appetite and objectives, and possibly a desire for greater transparency in returns. This is a good thing, especially at a time when choices for self-directed investors have burgeoned, even for the risk averse. Retail investors, for instance, have flocked towards Astrea's latest offering of private equity-linked bonds, which attracted applications worth more than S$3 billion. The popularity of platforms like Endowus, which onboards institutional funds with substantially lower fees than retail funds, is testament to rising awareness of the dilutive effect of high fees. Now what remains is for insurers to simplify their ILPs and lower the recurring costs. That would go a long way towards enhancing returns, which is paramount in helping policyholders to achieve their financial goals.
Business Times
6 days ago
- Business
- Business Times
Singapore life insurance new business premiums surge 7.7% to nearly S$3 billion in H1 2025 while claims payouts fall 42%
[SINGAPORE] The life insurance industry in the Republic recorded a total of S$2.99 billion in weighted new business premiums for the first half of 2025, representing a year-on-year growth of 7.7 per cent. This is considered the industry's highest performance since the Covid-19 pandemic. This growth was driven largely by annual premium policies, which saw a 22 per cent year-on-year increase in weighted new business premiums, said the Life Insurance Association (LIA) Singapore on Wednesday (Aug 13). However, single premium policies recorded a 21.3 per cent decline in weighted new business premiums over the same period. Weighted new business premiums measure the premiums collected on new policies. This includes considering 10 per cent of the value of single premium products, the full premiums for annual premium products, and an adjusted value for products with premium payment durations of less than 10 years. Other figures reported by LIA suggest that consumers may be purchasing fewer, but more comprehensive policies, potentially opting for coverage that offers greater protection or investment potential per policy. While the total sum assured rose by 1.7 per cent year on year, the total number of policies declined by 18.6 per cent, from 711,922 policies to 579,343 policies. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Claims payouts also fell significantly by 42.1 per cent between Jan 1 and Jun 30, 2025, with the life insurance industry paying out S$6.35 billion to policyholders and beneficiaries. Of this, S$5.32 billion was for matured policies, while the remaining S$1.03 billion was for death, critical illness, or disability claims covering more than 10,900 policies. In contrast, data from LIA for 2024 reflected a significant increase in payouts, with a total of S$18.12 billion disbursed to policyholders and beneficiaries. The life insurance sector recorded a total sum assured of S$71.4 billion during the first half of 2025. It saw significant contributions from financial adviser (FA) representatives who achieved a sum assured of S$30.4 billion, accounting for 42.6 per cent of the total. Tied representatives, meanwhile, secured an additional S$21.4 billion, representing 29.9 per cent. LIA Singapore president Wong Sze Keed believes the resilient Singapore economy provides a 'more encouraging backdrop' for consumers to review their financial plans and re-engage with their FA representatives to optimise their portfolios and address long-term protection needs, amid geopolitical concerns. 'As our nation celebrates 60 years of independence, the life insurance industry is focused on what it can do to truly help people 'go' further in life – by enhancing financial literacy to bridge protection gaps, supporting families through legacy planning and simplifying claims processes, as well as strengthening trust through elevating industry culture and conduct,' she added. Focus on long-term security Industry growth continued to be driven by investment-linked policies (ILPs), which allow customers to select professionally managed investment-linked funds. In H1 2025, the weighted new business premiums for ILPs rose by 31.3 per cent year on year, from S$975 million in H1 2024 to S$1.28 billion. As a result, ILPs accounted for 43 per cent of total new business in the first half of 2025. 'The continued growth in annual premium policies and ILPs demonstrates Singaporeans' focus on long-term financial planning and security,' said Wong. She added that this trend is supported by renewed optimism, as Singapore's economy posted a robust 4.3 per cent year-on-year growth in Q2 2025, outpacing Q1 figures. 'The sustained demand for ILPs reflects a prudent yet ambitious mindset – one focused on safeguarding against global current unpredictability while capturing growth opportunities in an evolving financial landscape,' said Wong, who is also chief executive officer at AIA Singapore . In line with this, a spokesperson from Tokio Marine Life Insurance Singapore told The Business Times that there has been a growing preference for ILPs among those 'seeking a balance between wealth accumulation and security'. Similarly, a spokesperson from Manulife Singapore highlighted a growing demand for hybrid solutions that combine both protection and wealth accumulation alongside the rising focus on critical illness and long-term care coverage, as key trends in the life insurance sector. Reflecting this, recent data from LIA showed that integrated shield plans (IPs) remain a critical component of health insurance coverage as about 69,000 Singaporeans and permanent residents took up new IPs in H1 2025. In total, about three million lives, roughly 72 per cent of Singapore residents, are covered by IPs, which provide additional coverage on top of national health insurance scheme MediShield Life. Total new business premiums for individual health insurance in H1 2025 amounted to S$373.7 million, marking a significant 69.3 per cent increase compared with the same period last year. Of this, premiums for IPs and IP riders accounted for 89.9 per cent (S$336.1 million), while the remaining 10.1 per cent (S$37.6 million) were made up of other medical plans and riders.
Straits Times
29-06-2025
- Health
- Straits Times
Forum: Sustaining affordable healthcare is a shared responsibility
We refer to the Forum letter 'Insurers' restriction of patient choice undermines trust in system' (June 19) and wish to provide context on pre-authorisation and panel doctors. To ensure a sustainable healthcare ecosystem, all parties need to play a part in making quality healthcare affordable and accessible. Insurers and patients are payers of healthcare services. Healthcare providers who recommend treatments and charges must do so responsibly to manage healthcare inflation. The year-on-year increase in medical costs is untenable, and Integrated Shield Plan (IP) insurers will continue to be proactive in introducing measures to ensure patients continue to receive quality care while balancing the collective needs of policyholders to keep premiums affordable. Ultimately, policyholders bear the brunt when medical and claims costs escalate. This is why IP insurers regularly review claims data and update their practices, measures and controls to ensure a sustainable healthcare system. Pre-authorisation and panel doctors were among measures recommended by the multilateral Health Insurance Task Force in 2016 to address escalating healthcare costs. Pre-authorisation is a service – not a contractual clause – that gives policyholders assurance that their treatment will be covered when deemed fair and medically necessary. Not all IP insurers offer this service, and, where it is limited to selected hospitals, it is often due to cost or implementational considerations. The absence of pre-authorisation does not restrict a policyholder's choice of healthcare provider. Besides pre-authorisation, policyholders may apply for an electronic letter of guarantee as a waiver of deposit, reducing the need for upfront payment. Panel doctors provide quality treatment at pre-agreed rates, and policyholders may enjoy additional benefits such as lower co-payments. The introduction of panel doctors has reduced instances of over-treatment and over-charging, helping to ensure a more sustainable healthcare system for all. Despite rising premiums, the total IP portfolio continues to operate at single-digit gross margin and sometimes at a loss. The insurance industry is committed to policyholders' interests and to communicate any changes to benefits and coverage. We urge all parties – including doctors, hospitals, government agencies and patients – to work collaboratively in managing healthcare costs to ensure continued access to quality healthcare in Singapore. Chan Wai Kit Executive Director Life Insurance Association, Singapore More on this Topic Forum: What readers are saying Join ST's Telegram channel and get the latest breaking news delivered to you.
CNA
20-06-2025
- Health
- CNA
How does genetic testing affect your insurance coverage? Here's what you should know
SINGAPORE: Singapore will launch a national health programme on Jun 30 targeting a hereditary cholesterol condition. Health Minister Ong Ye Kung has described the programme as the country's first preventive care programme based on genetic testing. As Singapore expands its use of genetic testing in preventive healthcare, the question of insurance fairness looms large. Here's what you need to know about the moratorium that protects your data and your coverage. What is a genetic testing moratorium and why does Singapore have one? A genetic testing moratorium is an agreement that restricts how life insurers can use genetic test results when evaluating applications for insurance. It aims to prevent genetic discrimination, ensuring that individuals are not penalised for potential health risks identified through genetic screening. Countries that have such guidelines include Singapore, the United Kingdom and Canada. In Singapore, insurers cannot use predictive genetic test results - used to predict future risk of diseases - in assessing or deciding the outcome of insurance applications, unless certain criteria are satisfied. Genetic tests analyse one's DNA, RNA, chromosomes or specific genes to identify changes that may be linked to inherited conditions, disease risk and the likelihood of passing on conditions to one's children. In Singapore's case, a moratorium on genetic testing and insurance was introduced by the Health Ministry (MOH) and the Life Insurance Association Singapore (LIA) in October 2021. In June 2025, the moratorium was expanded to include all predictive and diagnostic test results from the national familial hypercholesterolaemia (FH) genetic testing programme Under the agreement, life insurers in Singapore are also not allowed to use genetic test results from biomedical research or direct-to-consumer genetic test results. This means individuals do not need to worry that participating in MOH's genetic testing initiative will affect their ability to get life insurance, critical illness coverage. or similar products. The framework applies to all LIA members, including life insurers and reinsurers that are licensed to operate in Singapore. What does the moratorium mean for you? In your insurance applications, insurers may ask that you confirm you have read and understood the moratorium. Under the moratorium, insurers cannot require or pressure you to take a genetic test for insurance underwriting. This applies to all such tests, including predictive, diagnostic, pharmacogenetic or prenatal and newborn screening genetic tests. Insurance underwriting is the process that insurers take to evaluate the risk of insuring a person and decide how much he or she should pay for coverage. In addition, if you have done genetic testing under the new national FH genetic testing programme, insurers are not allowed to ask for or use your test results, both predictive and diagnostic, in insurance underwriting. A predictive test reveals the risk of developing a condition in the future while a diagnostic test confirms a current illness. Are there exceptions to the moratorium on the use of genetic test results? If you have previously taken other genetic tests, insurers cannot ask for or use your results in insurance underwriting. However, there are two exceptions. First, if the test was a diagnostic genetic test that confirmed diagnosis of a disease, insurers can request this as part of your medical history. Second, if you are applying for life, total permanent disability, long-term care, critical illness or disability income insurance, insurers may request your predictive genetic test results only if both of the following conditions are met: The sum assured or payout you are applying for is higher than the approved financial limit (see table below) set out in the moratorium The predictive genetic test you took is one of the approved ones set out in the moratorium - the HTT test for Huntington's Disease and the BRCA1/2 test for breast cancer The moratorium also does not affect insurers' ability to request or use diagnosis or family history, as per current industry practice. In addition, the moratorium only applies to insurance policies that were already in effect before its rollout. For instance, only policies signed on or after Jun 30 will be subject to the updated moratorium. What if you happen to reveal predictive genetic test results to your insurer? The rules of the moratorium still hold as it applies to accidental disclosure as well. This means insurers cannot consider the predictive genetic test result unless the two conditions, stated above under the exceptions, are met. If the predictive genetic test result is favourable, insurers may use it in deciding the underwriting outcome. Does the moratorium cover prenatal or newborn genetic screening? No, the moratorium does not apply to genetic tests done as part of prenatal or newborn screening, for example, tests for metabolic or inherited disorders in babies. These results are treated like other clinical diagnostic tests, and whether they are used in insurance decisions is up to individual insurers. If such tests are done as part of medical care, insurers may consider the results during underwriting, just like with other medical diagnoses. What can you do if you suspect non-compliance with the moratorium? If you are concerned with how an insurer has handled your genetic test information, you may work directly with them to resolve your complaint or feedback. If both parties fail to reach a resolution, you may file a complaint with the Financial Industry Disputes Resolution Centre, or approach the Singapore Mediation Centre for mediation.
CNA
09-05-2025
- Business
- CNA
CNA938 Rewind - Mind Your Money - The importance of Legacy Planning with a greying population
CNA938 Rewind With a fast-growing ageing population, why does legacy planning become even more relevant? For those without financial training, Hui Wong speaks with Wong Sze Keed, newly-elected President of the Life Insurance Association, Singapore from 2025-2026, to highlight the urgency of Legacy Planning.
