Download Singapore Insurance Market PDF

TitleSingapore Insurance Market
TagsInsurance Malaysia Banks Life Insurance Singapore
File Size712.7 KB
Total Pages36
Document Text Contents
Page 19


Mr Sivam Subramaniam believes that the Life and Non Life insurance sectors
have divided themselves itself in a way that the person on the street may find
it difficult to understand. Some consumers may not understand why their Life
agent may not sell them home insurance. He believes that agents should offer
both Life and Non-Life insurance products, noting that the more successful life
agents realise that to service their clients, they need to offer non-life products.

Mr Subramaniam points out that in countries like Malaysia and Vietnam, Life
agents outnumber Non-life agents. The issue pertains to the remuneration
structure. The commission payable on non-life personal lines products is
generally low. Mr Subramaniam says that ―Intermediaries are not pushing it
(personal lines) hard because the economies of scale are not there.‖

Mr Subramaniam believes that the Life agents in Singapore are well trained
and professional and should be able to offer non-life products to their clients.

Mr Derek Teo believes one way to address low penetration is to provide
accessibility. He cites travel insurance as an example where access is good
and penetration levels have increased in recent years. Consumers in
Singapore may purchase their travel policy via their travel agent, insurance
agent or online.

Access to good advice will continue to improve as the industry continues to
develop the professionalism of its workforce and intermediaries and as
insurers in Singapore continue to develop their distribution platforms for both
consumers and their intermediaries.

Affordability of Insurance in Singapore

Singapore has one of the highest incomes per capita in the region and in
terms of GDP per capita, is one of the highest in the world. Affordability is
arguably less of a factor leading to underinsurance and the current levels of
insurance penetration in Singapore than attitude or access.

Mr Derek Teo believes that affordability is not an issue for Singaporeans. He
also notes that instalment billing is common, especially with personal lines
products, which makes it easier for consumers to spread their payments over
the year.

The question therefore arises, whether affordability is a factor affecting
underinsurance or the purchase decision at all in Singapore? It can be argued
that wage earners from the lower income groups spend a larger proportion of
their income on necessities and have less disposable income for non-
essentials or luxuries. Insurance products may be seen by these consumers
as luxuries and we may find a proportion of the population citing cost or
affordability as a reason for under-insuring to save premium or not buying
insurance at all.

Page 35


both easier and cheaper for consumers and businesses to access products
and advice.
Insurers should also leverage technology to improve efficiency and ease of
transacting business for consumers and intermediaries. In Malaysia and
Singapore, insurers are already providing agency portals for transactions and
information dissemination. It will not be long before many
insurers utilise technology to enhance the service provided to consumers and
agents and allow them to transact online, from quote to fulfilment.

Takaful has the tremendous potential to increase insurance penetration,
especially in Malaysia, where the takaful industry has grown at a higher rate
than the general insurance industry (albeit from a smaller base).
Nevertheless, the takaful industry will need to address many of the issues that
also afflict the traditional insurance industry, including issues pertaining to
awareness and
distribution, if it is to continue to see significant premium growth in the future.

Awareness plays a critical role in improving the perception of value and
therefore in reducing the penchant for under-insuring one‘s assets. There is
anecdotal evidence and a belief by some of the insurance leaders and
professionals interviewed for this report that where there has been
customer awareness and education, the penetration of insurance products
have increased. This has occurred with travel and health insurance as well as
commercial insurance products purchased by SMEs.
Insurance and basic financial planning should be taught at secondary schools
to improve awareness and to allow the younger generation to gain a better
understanding of financial products including insurance, prior to starting their
working life. This would be an improvement over the often random process
that is undertaken now by consumers along their journey to financial literacy.
The insurance industry also needs to attract and retain talent. Many insurance
practitioners in Malaysia, Singapore and Vietnam have come into the industry
by accident. Most of the industry leaders interviewed for this paper have
stated that the attraction and development of talent is critical for the ongoing
success of the industry in the future.

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