MAS Annual Report 00/01

Overview

Real value-added growth in the insurance sector in 2000 was 57.5%. Insurance premiums grew by 27.2% to $11.9 billion. (See Chart 27.) Sustained robust growth in the single premium life insurance business and recovery of the general insurance business fuelled this growth. Total assets grew by 16.9% to $45.4 billion as at end-2000.

Singapore remained an attractive location for international insurers involved in the areas of captive insurance, specialised lines of insurance and reinsurance. For the period April 2000 to 31 March 2001, three insurers were awarded the Approved Marine Hull and Liability Insurer incentive⁵ status. The same period also saw the establishment of two insurance companies specialising in the financial guarantee insurance business and another focusing on credit insurance business.

Life Insurance

The domestic life insurance industry experienced strong growth in new business sales in 2000. New single premium life insurance business grew by 87.0% to reach a record high of $3.3 billion. New single premiums for annuity business continued to expand strongly by 52.7% to $266.2 million, and new annual premiums for life insurance business increased by 27.7% to $705.6 million. Investment-linked insurance products continued to attract consumers seeking higher returns in a low-interest rate environment.

General Insurance

The domestic general insurance industry grew by 9.7% to $1.6 billion, in line with the growth in the Singapore economy. All classes of domestic business experienced growth ranging from 1.5% to 14.0%. Motor insurance business, as the largest class, expanded by 13.3% due to an increase in the motor vehicle population and a hardening of premium rates. Competition remained stiff for all classes. (See Chart 28.)

Offshore Insurance

Offshore general insurance business grew substantially by 29.4% to $1.6 billion. Business written by general direct insurers recorded an increase of 18.8%. Business written by general reinsurers also enjoyed a good 33.1% increase to $1.3 billion. The firming of premium rates, portfolio transfers from head offices, expansion in territorial scope of a few reinsurers and the adoption of the non-delay accounting method by some reinsurers boosted the volume of offshore business. Increased offshore business written by captive insurers, from the writing of new policies and firming of premium rates, saw growth in total gross premiums to $241.5 million,an increase of 18.1%. (See Chart 29.)

5 This tax incentive is open to all general direct insurance and reinsurance companies in Singapore. Recipients of the incentive are exempted from tax on underwriting profits, as well as offshore income derived from investing insurance and shareholders' funds related to offshore marine hull and liability business.