Latest market snapshot from GlobalData. Interestingly, the FT reported recently that the wealthy in China who are finding life difficult under constant Covid related lockdowns are relocating to Singapore. This could open the door for HNW brokers. Here’s the word from GlobalData;
The general insurance industry in Singapore is set to grow at a compound annual growth rate (CAGR) of 7.2% from SGD4.7 billion ($3.5 billion) in 2021 to SGD6.6 billion ($5.1 billion) in 2026, in terms of gross written premium (GWP), forecasts GlobalData, a leading data and analytics company.
According to GlobalData, the growth in the general insurance segment in the country is expected to remain high over the next five years, led by private health insurance and increased demand for property insurance from large infrastructure projects. The industry is projected to grow by 7.9% in 2022 and 6.7% in 2023, driven by strong uptake of property insurance, which registered the highest growth of 14.1% in 2021.
Rokkam Eswara Jyothi, Insurance Analyst at GlobalData, comments: “Singapore’s general insurance penetration at 0.8% in 2021 is lower than other regional countries like South Korea (5.1%), Japan (1.8%), China (1.2%) and Hong Kong (1.6%), indicating high growth opportunity.”
Motor insurance is the largest general insurance line in Singapore, accounting for a 24.6% share of GWP in 2021. The motor insurance segment is expected to register a moderate growth of 2.7% in 2022, due to a decline in motor vehicle sales following a tax increase by up to 5.9% this year. The tax increase led to a drop in car sales by 34.4% in August 2022 compared to August 2021.
An increase in the cost of certificates of entitlement (COE) by 15.2% in 2022, which will make vehicles costlier, also contributed to the decline in vehicle sales. COE represents the right to vehicle ownership for a period of 10 years and contributes a significant portion to ownership cost of a new car.
Property insurance is the second largest general insurance line in Singapore, accounting for a 19.5% share of GWP in 2021. Property Insurance is expected to grow by 9.9% in 2022, mainly supported by increased construction activity in the country. According to the Building and Construction Authority (BCA), contracts worth up to SGD32 billion ($23 billion) are likely to be awarded in the sector in 2022. Projected demand of new infrastructure also indicates a positive picture which is expected to continue until 2028.
Some of the major construction projects in the pipeline include the Cross Island Line (Phases 2 & 3) and its Punggol Extension and the Downtown Line Extension to Sungei Kadut, the Toa Payoh Integrated Development with a total cost of SGD 4.7 billion ($3.3 billion), Marina Bay Sands Expansion with a total cost of SGD 4.7 billion ($3.3 billion) and East Coast Integrated Depot with a total cost of SGD3.4 billion ($2.4 billion).
Personal accident and health (PA&H) insurance was the third largest general insurance line in Singapore, accounting for an 18.6% share in terms of GWP in 2021. PA&H insurance is expected to grow at a CAGR of 7.5% over 2021-26, driven by increased awareness for financial planning and protection.
Jyothi added: “Healthcare inflation, which has been on the rise during the last few years, has resulted in a high cost of claims for insurers. To maintain profitability, insurers will be prompted to increase their premiums for health and accident insurance policies.”
Liability, Financial lines, Marine, aviation, and transit (MAT), and Miscellaneous insurance accounted for the remaining 37.3% share in 2021.
Jyothi concludes: “Singapore’s general insurance industry is projected to recover backed by higher per capita income, and growing household spending that will drive the demand for household and commercial property, automobiles, and private health insurance.”
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