Insurance firms' underwriting profits plunged 58.53% to $107m in 2017
For the first time since 2010, the motor insurance segment generated an underwriting loss, losing $27.2m in 2017.
The total gross premiums for Singapore’s general insurance industry rose by 0.8% to $3.68b in 2017, close to the 0.6% growth recorded in 2016, the General Insurance Association of Singapore (GIA) revealed. Due to competitive market conditions in the general insurance sector, underwriting profit for the overall industry plunged by 58.53% from $258m in 2016 to $107m in 2017.
The performance was varied across the general insurance classes of business. Fire, Personal Accident, Marine Cargo and Hull were amongst the classes that registered increases in gross premiums in 2017. In contrast, the Motor, Health and Work Injury Compensation classes recorded declines.
GIA president A K Cher noted that the general insurance industry experienced another year of minimal growth in 2017, reflective of the general business landscape and competitive insurance market conditions in Singapore. “With these headwinds, the industry delivered a lacklustre performance. GIA and its members continue to make strides in its digital journey with the launch of the Fraud Management System last year. We recognise that it is vital for the industry to continue embracing and investing in innovative solutions and emerging technologies to remain relevant and progressive.”
Motor insurance remains the largest segment in 2017 at over 30%. Gross premiums fell 3.3% to $1.1b. Incurred claims rose by 12%, an increase of $60m over the previous year.
GIA noted that for the first time since 2010, the motor insurance segment generated an underwriting loss, losing $27.2m in 2017. “Looking forward, individual insurers can be expected to conduct a review of the commercial viability of their motor insurance business. The average motor premium eased by 3.9% to $1,155, resulting from increased competition in the largely saturated motor insurance market. GIA looks to continue working closely with key partners and stakeholders like the Singapore Road Safety Council and Traffic Police towards improving education and awareness for road users in Singapore,” it added.
With close to 14% market share, health insurance was the second largest class of business with premiums totalling $500m in 2017, a marginal decline of 0.7%. The health segment posted a loss of $28m, continuing the downtrend trend seen in 2016.
“In the wake of medical inflation, rising healthcare costs is expected to remain a key factor influencing this segment,” GIA said.
The work injury compensation class contracted in 2017, with gross premiums falling by 4.1% to $337.9m due to weaker construction sector demand and competitive insurance market conditions. Meanwhile, underwriting performance moved up by 24.1% to $30.7m, indicating improved workplace injury and fatality rates in 2017.
GIA noted that fire amongst the major general insurance classes, gross premiums for the fire insurance segment delivered a healthy growth of 4.5% to $458.5m in 2017. “This growth is in line with the growing number of buildings being completed and rising asset valuations. The fire insurance segment achieved an underwriting profit of $41.2m, a strong growth compared with $19.8m in 2016, largely driven by the decrease in fire incidents in residential and commercial premises.”
Personal Accident Total gross premiums for the personal accident segment rose by 3.2% to $363.1m last year. Underwriting profit witnessed a drop to $11.7m as claims paid increased by 29.5%.
“The travel insurance sub-class continues to gain traction on the back of growing consumer awareness as Singaporeans travel more,” the group said.
Lastly, both the marine cargo and hull classes recorded a drop in total premiums. The marine cargo sub-segment dipped by 0.6% to $268.6m in 2017, down from $270.3m in 2016. Gross premiums for the hull sub-segment also recorded a drop, at 11.4% to $507.1m, a significant decline from $572.1m seen in 2016.
Looking ahead into 2018, GIA said the general insurance industry continues to remain focused on the core areas of improving automation and embracing digital solutions to forge a stronger and more competitive sector. “The industry is expected to continue navigating challenges and headwinds in 2018 as market conditions persist. Against this landscape, the sector looks to develop new and ongoing initiatives to raise standards and practices, and improve overall operational efficiency for the general insurance industry,” it concluded.
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