Singapore insurance industry due for further consolidation – report

Singapore insurance industry due for further consolidation – report | Insurance Business Asia

Singapore insurance industry due for further consolidation – report

Despite the Singapore life insurance industry being highly concentrated, with the top 10 insurers combining for a 95% market share in 2020, further consolidation is expected in the industry for this year, according to a report by GlobalData.

The consolidation will be driven by a heightened demand for life insurance products and mergers and acquisitions in the industry, the report said.

“The top 10 insurers have increased their combined market share from 88% in 2017 to 95% in 2020,” said Swarup Kumar Sahoo, senior insurance analyst at GlobalData. “The merger of Singapore Life with Aviva in November 2020 and the announced acquisition of AXA Singapore by HSBC will result in additional stability of the market in 2021. This will leave 11 insurers competing for the remaining market share.”

The resulting entity from the Singapore Life-Aviva merger will have a market share of 9%, Sahoo said. Once HSBC acquires AXA Singapore, it will have a market share of 3.6% and will improve its ranking from 11th-largest life insurer to seventh-largest.

Since 2016, the ranking of top five life insurers in Singapore has remained unchanged, according to GlobalData. Great Eastern Life continued to hold the top spot with a 25.5% market share in 2020, followed by Prudential Assurance with 16.9%.

Great Eastern was the only insurer among the top five to register growth in market share – from 21.2% in 2019 to 25.5% in 2020. Its GWP grew by 42% in 2020, after declines of 7% and 9% in 2018 and 2019, respectively.

Prudential’s market share shrank from 18.6% in 2019 to 16.9% in 2020. However, in terms of GWP, the company registered a higher growth of 8% in 2020, compared to 7% the previous year. 

“Large customer base, diversity in products and economies of scale will help the leading insurers retain their market share in 2021,” Sahoo said. “Decreasing profitability due to market consolidation may prompt the smaller insurers to increase premium rate in the short term.”