SINGAPORE – Singapore is one of two places in Asia where the market share of large multinationals in life insurance shrank, a study by McKinsey has found.
The 2023 global insurance report released on Nov 6 found that multinational corporation (MNC) insurers dominated emerging markets, while developed markets were dominated by local insurers such as Japan Post Insurance in Japan and Samsung Life Insurance in South Korea.
It found that large MNCs posted market share gains of between 2 percentage points and 15 percentage points from 2016 to 2021 in seven of nine markets in the region.
The seven markets are China, Japan, India, Indonesia, Thailand, Malaysia and Hong Kong.
Singapore recorded a 9 percentage point fall during the period, while South Korea shrank by 2 percentage points.
On the reduced share in Singapore, McKinsey senior partner Bernhard Kotanko told The Straits Times that the Republic is home to strong domestic insurers, notably Income, Great Eastern and Singlife.
“In other markets, MNC insurers have taken a stronger position, while in Singapore, domestic champions are expanding and leveraging their unique distribution franchises and bank relationships,” Mr Kotanko said, referring to AIA, Prudential, Manulife, HSBC and Chubb as MNC insurers in Singapore.
Asia’s life insurance distribution channels are heavily dominated by tied agents and bancassurance.
Together, these two sales channels make up 80 per cent of total life insurance gross written premiums in the region.
Specifically, distribution via banks accounts for 48 per cent of global bancassurance premiums, said the report.
It added that more than 50 per cent of premiums come from bancassurance in markets like Hong Kong, India, Indonesia and Taiwan.
Mr Kotanko said Singapore’s life insurance distribution channels are more diverse, compared with the rest of Asia.
Here, financial advisers, agents and bancassurance represent around 30 per cent of new business in 2022.
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He added that there has been a growing trend towards financial advisers, and that many insurers have built their own financial adviser teams.
“Singaporean customers seek more professional, independent advice. This is why the financial adviser channel has been growing and is expected to gain more share,” he noted.
From 2012 to 2022, life insurance premiums in Asia grew at 4 per cent annually, to an estimated US$1.07 trillion (S$1.45 trillion).
This outpaced the 2.8 per cent annual growth in the Americas and 1.9 per cent in Europe, the Middle East and Africa.
But Asia’s growth has slowed the last six years, led mainly by stagnation in China, Hong Kong and Taiwan during the Covid-19 pandemic.
In its outlook, Mr Kotanko said the team expects Singapore’s life insurance industry’s compound annual growth rate over the next five years to be in the range of 6 per cent.
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