As the Asian region enjoys economic expansion, investment in life insurance products has enjoyed double digit growth. There are more signs that the Asian economy is gathering pace, with the latest figures from life insurance sectors in Singapore and India demonstrating substantial growth in 2011.
In Singapore premiums in the life insurance market increased by 16 percent year-on-year during 2010, according to the Life Insurance Association (LIA). Over the 12 month period January to December 2011 the Singaporean life insurance market generated US$1.3 billion in new sales – up from US$1.1 billion in 2010.
Singapore experienced robust economic growth, coupled with a rise in the population on the South-east Asian Island taking out life insurance cover in 2010; the sector benefited from a rising immigration population helping to boost sales last year. The Life Insurance Association (LIA), the Singaporean life insurance trade body, reported annual premium sales increased by 20 percent over 2011 to generate US$85 billion, while single premium sales in Singapore grew 9 percent to total US$438.4 million.
Singapore’s health insurance sector also achieved a substantial growth rate of 7 percent to reach US$121 million, with 2.35 million people on the island being covered by private health insurance. The growth in new health insurance coverage is driven by the recognition of increasing medical costs spurring consumers to obtain Singaporean health insurance.
Demand for insurance products in 2012 is expected to remain strong – although possibly not as buoyant as in 2011 – as the population in Singapore seeks protection through life products and health insurance. As the economy in Singapore strengthens, there is an appetite for investment in saving products in order to secure long term benefits for clients.
As in Singapore, the life insurance market in India increased in 2010, in this case by 13 percent to total US$4.1 billion in 2010; this is up from US$3.6 billion in 2010, according to the Life Insurance Council in India.
The Indian life insurance market saw a 28 percent increase in new premium sales, totaling US$1.9 billion up from US$1.4 billion in 2010.
India recently introduced regulatory changes in ULIPs (unit- linked insurance products) which provided an incentive for growth in the Indian life insurance sector in 2010. Sales were up across the sector despite a reduction in the number of private life insurers competing in the Indian insurance market.
Part of the growth in life insurer’s activity in India reflects the implementation of cost efficiency measures in order to stimulate demand and simultaneously improve bottom-line results. The Indian insurance body – the Insurance Regulatory and Development Authority (IRDA) – introduced reforms in the life insurance sector to benefit consumers, which has driven Indian life insurers to focus on the provision of value for money products.
While the new ULIP regulations took effect in September 2011, providing a platform for expansion of sales in life insurance, analysis shows that sales growth in India was already buoyant in 2011 ahead of the reforms being implemented.
As communities in Asian countries continue to enjoy the benefits from economic expansion triggering growth in personal wealth, the Asian life insurance sector is forecast to experience steady expansion in new written premiums. Markets such as those in Singapore, Japan and Hong Kong have well developed life insurance businesses which have been developed overtime, while the life insurance market in India is linked to the more recent rise in the wealth of the population as industrial output increases. The opportunities for life insurers to grow their business in these countries, together with the powerhouse economy in China – now the second largest economy in the world – and emerging markets in nations such as Indonesia, Thailand and Malaysia are enormous.
Life insurance is designed to provide a specified sum of money to a designated beneficiary at death or at a specified period of time. There are a range of life insurance products available, tailored to suit the requirements of an individual. These include provision for a lump sum to be paid out upon a person’s death or to meet the costs of a funeral. Life insurance policies can be used to cover children, spouses, business partners, debtors and other family members, with designation of person to be the subject of the final benefit. As individual wealth improves, clients look for long term investments – such as life insurance – to provide desired benefits.
The life insurance industry in Singapore and India reaped the benefit from these considerations in 2011, with the prospect for continued growth in 2012.
Life insurers operating in India include: SBI Life, ICICI Prudential, Reliance Life, Bajaj Allianz, HBFC Standard and Aviva. While in Singapore, life insurers include: AIA Singapore, Allianz, Manulife and Great Eastern.