Singapore insurance industry at an inflection point
Companies in Southeast Asia are reacting to growing need for flexible, sophisticated insurance products due to rising life expectancy and growing wealth
13 Jun 2019 | Tom King

HSBC Insurance in Singapore became the latest institution to respond to changing market requirements and demographics after it undertook an overhaul.

As societies across Southeast Asia grow wealthier at a quicker pace, products and services offered by insurers must also continue to transition up the value chain.

In the Lion City, HSBC’s business overhaul reflects the overall growth and evolving composition of the local insurance market.

Many in the industry believe there is a need to restructure because of the disconnect in the savings, investments and protection space.

Two examples of factors influencing the organic development in the sector are Singapore’s increasingly ageing and wealthy domestic population and the increase in international citizens seeking more sophisticated wealth and insurance solutions in Singapore.

The effect of digitization in the insurance business, insurtech, is also disrupting traditional distribution channels while empowering consumers with new and targeted insurance solutions.

Additionally, the adoption of artificial intelligence, blockchain, data analytics and connected devices is allowing insurance firms to infiltrate new coverage, while offering enhanced transparency to customers.    

The Asset spoke with business leaders in the Singapore and Southeast Asian insurance industry about their own recent moves as they finetune their products and services to match the changing market parameters.  

According to Sean Goh, managing director, Life, AXA Insurance, as customers in Singapore become increasingly sophisticated, the insurance sector has had to adapt to their evolving needs and expectations.

“Apart from our solutions, AXA fully recognizes that customers expect more value from us beyond our traditional role of an insurance provider and therefore provide complementary value-added services to better serve them,” says Goh.

“We are seeing that customers today are looking for insurance solutions that offer flexibility to meet their diverse needs,” he adds.

Goh’s firm have developed solutions to address this demand. In the area of wealth management and legacy planning, AXA offer variable universal life which is a jumbo life insurance alternative to traditional universal life policies with added benefits such as cost efficiency and flexible premium funding.

“We’ve also recently launched AXA Wealth Accelerate, a flexible wealth accumulation plan that helps to meet the financial goals of individuals across various life stages, allowing customers to choose how long they wish to invest and boost their investment from a range of minimum investment period options and multiple bonuses,” says Goh.

One of the single biggest issues facing the insurance industry globally is the ageing challenge. All over the world, people are living longer, which should be a good thing for us all.

Singapore and Southeast Asia are no different and this demographic challenge is making insurers act.

“In Singapore, people are living longer, with an average lifespan of 83 years which is inching towards 100. Rising longevity means people are going to need a much bigger nest egg for their retirement,” says John Elkovich, head, High Net Worth Solutions, Prudential Singapore.

According to Elkovich, it is important that solutions are designed to ensure clients are financially ready to live longer and have enough to leave a legacy for their future generations.

“We found that high net worth families in Singapore are not well prepared in the area of wealth transfer, with only one in five having a plan to ensure the smooth transfer of wealth across generations,” he adds.

Elkovich points out that their wealth is usually locked up in their homes or businesses, making it difficult to liquidate when the need arises.

With the liquidity that life insurance offers, high net worth families can avoid having to sell-off assets, and can manage costs such as estate taxes. His firm has addressed the issue by establishing a new suite of products.

“Branded Opus, our high net worth offering provides personalized solutions, dedicated service and advisory that goes beyond insurance,” says Elkovich.

“By investing in and setting up a high net worth insurance brand, Opus, we want to help high net worth families bridge their protection gap and stay adequately prepared to face life’s curveballs.”

Walter de Oude who led the HSBC insurance unit in Singapore for seven years, recognized these market challenges early on and took the step of creating Singapore Life, the first digital life insurer in the city state.

On the need for the industry to restructure, de Oude said, “Yes, absolutely. We recognize the need to reshape finance because there is a disconnect today in the savings, investments and protection space.”

From the outset, de Oude’s aim to bridge this gap in the industry was to leverage fintech solutions to empower customers to take control of their financial decisions.

His firm Singapore Life decided the digital offering was the way forward and since its inception in 2017 it has worked to reduce the complexities in the purchase journey.

The CEO claims his firm is fixing the way consumers look to wealth management and insurance, by offering better solutions that have consumers’ wealth needs in mind namely, convenience, transparency and simplicity. It is also using technology to become a distributor of wealth products.

“From the get-go, we have built nimble, agile solutions that empower customers to make their own decisions without the clutter,” says de Oude.

“Moving forward, we expect to make announcements as Singapore Life continues to roll out new and innovative solutions in the wealthtech space,” he says.

One of the new services is Canvas, a prepaid Visa card and mobile app that allows parents to send pocket money to their teens and manage spending.

In 2018, Singapore Life gained control of Zurich Life Singapore’s insurance portfolio, consisting of SG$6 billion (US$4.4 billion) of coverage in life, critical illness, and disability insurance policies.

Aegon Asia Chairman and CEO Andrew Byrne believes the insurance industry’s landscape has changed dramatically in recent years, and more choice means more benefits for customers.

“The broad context is that Asia is the fastest growing insurance region in the world and still has a long way to go from its current levels of participation. The digital revolution has brought more power to consumers and has given more access to a wide range of people,” Byrne says.

“We are working to deliver the best outcome for the customer, whether that’s a direct digital offering or a specialized offering that is best served by an agent,” he adds.

AIA has also recognized the growing importance of life insurance for financial planning by increasing the skills of its personnel. “AIA Singapore is the first insurance organisation in Singapore to benchmark training against the new Private Banking IBF Standards,” says Ho Lee Yen, chief customer and marketing officer, AIA Singapore. “AIA Singapore is working with the Wealth Management Institute (WMI) of Nanyang Technological University, Singapore (NTU Singapore), taking the lead position to strengthen our wealth management proposition and upskill Singapore’s financial workforce.”

“We also have the by-invitation-only AIA Altitude programme which entitles customers to a suite of bespoke lifestyle privileges, exclusive benefits, and invitations to private events,” adds Ho.

According to Byrne, who operates across China, Hong Kong, India and Singapore, people want choices and are now more connected and increasingly seeking quality products with convenience and simplicity.  

“Companies that deliver this will be winners,” says Byrne.