Singapore Insurance Industry
Singapore is one of the most open insurance markets in the world. As at 17th March 2000, the market became fully open to foreign insurers and the 49% limit on foreign shareholdings was also removed. The Monetary Authority of Singapore which is overall responsible for the development, supervision and regulation of the insurance industry, is determined to develop the Republic into a world class insurance centre by the year 2003.
There are 153 insurers registered in Singapore. Of these, there are 12 active direct life insurers, 39 active direct general insurers, 40 active reinsurers and 51 captive insurers. About 75% of the life and non-life companies are foreign-owned.
Developments In The Industry
The insurance industry grew by 21% in 1999 to $9.4 billion fuelled by strong growth in single premium life business. In 1999, total gross premiums for the general insurance industry amounted to $2.8 billion, a moderate increase of 3.5% with domestic and offshore business turning in mixed performances. Domestic business contracted by 3.3% to $1.5 billion due to rate competition. The recovery of the Singapore economy in the second half arrested the decline somewhat. Except for the miscellaneous class which reported a sluggish growth of 1.2%, all the other classes recorded declines ranging from -11.5% to -0.5%. The offshore general business grew by 13% to $1.3 billion due largely to the business from new reinsurers.
The life business experienced a strong growth in 1999 from buoyant sales of single premium life business with single premium policies growing by 239% to $1.8 billion and single premium annuities by 68% to $174 million. New annual premiums comprising individual and group business amounted to $553 million, up 2.3% from 1998. As at end December 1999, annual premiums in force expanded by 4.7% to $4.7 billion. While the low interest rate environment had increased the attractiveness of single premium products, sales of investment-linked products were boosted by the recovery of the stock market.
The Singapore insurance industry has survived the financial crisis in Asia intact, and benefiting from the quick rebound in asset values in 1999. Despite this, 1999 has been a very tough year for the industry, with the investment market recovery masking a sharp deterioration in underwriting performance. The operating environment is getting more competitive and rates are depressed, and this will affect their underwriting results. Standard & Poor's, one of the leading rating agencies in the world, have praised the Republic's insurance sector for being a financially strong position but has warned that continued erosion of rates will affect the financial stability of the industry and the individual companies.
The outlook for the general insurance sector is said to be tough with little growth, fierce competition, and further rate cutting and underwriting deficits. The life sector looks rosier as it has managed to respond to the economic shock by lowering crediting bonus rates and expense levels. However, analysts say that unlike many neighbouring markets, the Singapore life sector is mature and offers little prospect for growth, providing slim pickings for new entrants. (article is from here)