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The Driving Forces Behind the Booming Growth of Singapore’s Insurance Industry

Singapore’s general insurance sector is poised for a substantial upswing, with forecasts projecting a 6.9% growth in 2023 and 5.6% in 2024. This surge is fueled by robust investments in infrastructure projects and a heightened demand for health insurance in the post-pandemic era.

A comprehensive analysis predicts the sector’s growth at a 5.8% compound annual growth rate (CAGR), with gross written premiums (GWP) expected to rise from SG$5.54 billion in 2023 to SG$7.35 billion by 2028. Insights from GlobalData shed light on the dynamic landscape of Singapore’s insurance industry.

Swetansha Chauhan, a respected insurance analyst at GlobalData, notes, “Following remarkable growth in recent years, the Singaporean insurance sector may experience a moderated pace from 2023 onwards.” Factors such as evolving economic conditions, inflationary pressures, and geopolitical uncertainties are poised to impact various general insurance lines, potentially decelerating overall industry growth in the coming year.

In a significant shift, personal accident and health (PA&H) insurance has emerged as the frontrunner in Singapore’s insurance market, set to account for a 23.9% share of the GWP in 2023, surpassing motor insurance, which led in the past decade. A significant 32.6% growth in PA&H insurance in 2022 is primarily attributed to increased health awareness post-pandemic, rising medical costs, and relaxed global travel restrictions.

Regulatory changes have played a pivotal role, with the Ministry of Manpower mandating health insurance for all foreign workers earlier this year. This includes migrant domestic staff and those on short-term employment passes (S Pass). Government subsidy schemes supporting employers in acquiring medical insurance for foreign workers further strengthen this segment, projected to grow at a CAGR of 6.6% from 2023 to 2028.

Property and motor insurance are also pivotal contributors to the sector’s performance. Property insurance, driven by mandatory fire insurance for Housing and Development Board (HDB) home purchases and home loans, is projected to account for an estimated 19.1% of the GWP in 2023. The growth in the construction sector, buoyed by investments in major infrastructure projects, is set to enhance property insurance.

Motor insurance, despite a 7.9% decline in 2022 due to reduced vehicle sales and supply chain disruptions, holds the third-largest position in the market. Factors like increased certificate of entitlement (COE) premiums and additional registration fees on high-end vehicles have impacted the market.

Other insurance lines, including liability, financial lines, marine, aviation, and transit (MAT), and miscellaneous insurance, comprised the remaining 38.6% of the GWP in 2023.

“The insurance penetration in Singapore, at 0.8% in 2022, is lower compared to other Asia-Pacific countries, signaling vast growth potential for Singaporean insurers,” Chauhan adds. The expected rise in demand for health insurance, mandatory fire insurance, and inflation-driven premium increases will play crucial roles in propelling the country’s insurance industry over the next five years.

Furthermore, the Monetary Authority of Singapore (MAS), in collaboration with various financial regulators, has introduced a basic financial planning guide. This initiative aims to empower Singaporeans in enhancing their financial well-being, further enriching the landscape of the insurance and financial sector in Singapore.

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