How one insurer is covering the Lion City’s ultra-rich amidst economic downturn

Sun Life Singapore and corporate officer Michael Wei also weighs in on Singapore's rivalry with Hong Kong as Asia's premier insurance hub

How one insurer is covering the Lion City’s ultra-rich amidst economic downturn

Insurance News

By Kenneth Araullo

It is no secret that over the course of the past few years, there has been a significant surge in wealth tilting towards the eastern side of the map. As China and its affluent neighbours – Singapore and Hong Kong – become international hubs across industries, it is also a certainty that insuring the high-net-worth (HNW) sector becomes paramount in the face of growing economic uncertainty.

In conversation with Insurance Business Asia, Sun Life Singapore and its chief partnership and marketing officer, Michael Wei (pictured above), spoke at length about the country’s HNW sector, their outlook on inflation and the cost-of-living crisis, and the Lion City’s advantages over its insurance rival, Hong Kong.

“One notable indicator of Singapore's growing stature as a financial hub is the establishment of 1,100 single-family offices in the country by the end of 2022 based on MAS figures,” Sun Life Singapore said. “Furthermore, a report by real estate consultancy Knight Frank indicates a remarkable growth in Singapore's Ultra-High Net Worth (UHNW) population, which saw a 6.9% increase from 4,206 individuals in 2021 to 4,498 individuals in 2022.”

The insurer noted that this positive trend contrasts with the global population of ultra-rich individuals that has declined by 3.8% in 2022. Conversely, Singapore will continue to be called home by the UHNW sector in the near future reaching around 5,300 individuals by 2027, a 17.7% increase.

“The overall outlook for the HNW landscape in Singapore remains promising, as the country continues to attract a robust inflow of wealth and sees a growing number of HNW and UHNW families prioritizing their wealth preservation and succession planning needs,” Wei said. “This trend has been accentuated since the pandemic struck, underlining Singapore's resilience and appeal as a wealth management hub in the world.”

Brushing off an impending crisis through better propositions

While Sun Life Singapore admitted that the impending cost-of-living crisis and inflation issues are concerns for the growth of the HNW sector, there are also several factors that suggest that the market will still be thriving in the years to come.

“The annual review by the Monetary Authority of Singapore (MAS) indicates that Singapore's near-term growth may remain weak due to dimmed prospects,” the insurer said. “However, it is noteworthy that inflation is expected to reduce by the end of the year. MAS now forecasts 2023 headline inflation to be at 4.5% to 5.5%, which is slower than the earlier projection of 5.5% to 6.5%. Additionally, core inflation is anticipated to be significantly lower, ranging from 2.5% to 3.0%. These forecasts suggest that inflationary pressures could ease in the medium term.”

With these considerations in mind, the insurer is confident of an upward trajectory for the segment. What it will all come down to is proper regulatory practice – policies aimed at attracting UHNW families to set up shop in Singapore.

“Wealth preservation and planning remains essential for HNW/UHNW individuals and families, and the need for insurance and investment solutions is expected to continue rising. Financial institutions and service providers will likely offer an array of sophisticated and tailored products to meet these demands,” the insurer said.

Sun Life Singapore is no different in this regard, as the insurer also recently announced its newest solution to cover the booming ultra-rich segment in the country. Called the SunBrilliance Indexed Universal Life plan, one of its major stand-outs is an indexed multiplier account with the highest multiplier rate in the country at 120%, giving clients the potential to earn higher returns based on the performance of the S&P 500 index.

“SunBrilliance Indexed Universal Life provides a high degree of flexibility compared to similar products in the market,” the insurer said. “Policyholders have the freedom to allocate their premiums among various investment options based on their preferences. Additionally, they can reallocate the balance among the different accounts to align with their changing investment perspectives over time.”

The plan also takes into account the philanthropic spirit that high-wealth clientele often consider. Sun Life Singapore partnered with Community Chest, a pioneering move and the first time a life insurer has incorporated upfront philanthropic giving to the community in a life insurance plan in the country.

“Clients can benefit from flexible investment options, Legacy Plus feature, and the opportunity to make a positive impact through the Philanthropic Pledge,” Wei said. “Sun Life’s commitment to meeting the needs of High Net Worth clients positions itself as a leading choice in the market for Affluent, High Net Worth individuals and families seeking innovative insurance solutions.”

Singapore or Hong Kong – which is the definitive international insurance hub?

It may seem like a simple enough question to answer, given that Sun Life Singapore is – as already mentioned in the name – based in Singapore. As the world’s most affluent individuals find themselves in the crossroads of both the Lion City and the Fragrant Harbour, the insurer listed some arguments for both.

“Singapore and Hong Kong are both prominent international insurance hubs in Asia, and each offers unique advantages for insurers and businesses,” the insurer said. “One of Singapore's key advantages is its reputation for political stability and a robust regulatory environment. The country is known for its transparent and efficient regulatory framework, which provides a sense of security for insurers and policyholders alike.”

The country’s location is also a prime reason for its success as an insurance hub. Often called the gateway to Asia, Singapore offers paths to the Southeast where most of the emerging sectors reside, and its favourable time zone makes business easy to conduct with multiple global markets efficiently. Finally, Sun Life Singapore cited the country’s diverse and multicultural society, as well as its premier status as a global financial centre that constantly attracts a diverse pool of talents from across the world.

All of that said, the insurer also maintained that the choice between Singapore and Hong Kong will ultimately depend on “specific needs and objectives.” It is also important to note that Sun Life operates in both countries.

“It’s essential to recognise that Hong Kong also has its strengths as an international insurance hub,” Sun Life Singapore said. “Hong Kong has historically been a significant financial centre in Asia, with well-established connections to Mainland China. Its proximity to the Mainland market and access to the Greater Bay Area present unique opportunities for insurers looking to tap into China's growing middle class and high-net-worth individuals.”

The future of the HNW sector

While there is no definitive answer for a clear winner in the Hong Kong-Singapore rivalry, Sun Life Singapore did have a clear goal of making itself the prime contender in this niche yet lucrative sector, and its success involves both countries.

“Sun Life is poised for significant developments in the high-net-worth (HNW) market, with a clear and ambitious strategy for the next five to ten years,” the insurer said. “By bringing together Sun Life Singapore, Sun Life Hong Kong, and Bermuda-based Sun Life International in 2020, the company has established a strategic platform dedicated to serving the HNW and ultra-high-net-worth (UHNW) client segments in Asia.”

Wei added that the insurer will capitalize on this very strategic platform, built on the expertise of its divisions in product innovation, underwriting, technology, and human capital. He also said that the firm recognises Asia as a key growth engine for its business in the years to come, and that the insurer will seize the many opportunities presented by the dynamic and fast-growing region.

“To further solidify its presence and success in the HNW sector, Sun Life Singapore is actively seeking additional partnerships that complement its strengths and enhance its offerings,” Wei said. “Sun Life's vision for the future in the HNW market is clear and focused. By harnessing the potential of its strategic platform and capitalizing on Asia's growth opportunities, the company is determined to establish itself as a prominent player in the HNW sector.”

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