Data suggests that the Singapore property insurance sector will remain profitable this year due to disciplined underwriting, adequate reinsurance coverage, and growing premiums from compulsory fire insurance.
According to analytics firm GlobalData, the sector is projected to grow at a compound annual growth rate (CAGR) of 8.7% from SGD1 billion (US$700 million) in 2022 to SGD1.5 billion (US$1.1 billion) in 2027. The primary growth driver is mandatory fire insurance, which has become a requirement when purchasing homes from the Housing and Development Board (HDB) as well as taking out home loans. According to the HDB, more than three quarters of Singapore residents live in flats sold by the board.
GlobalData’s database indicates that the underwriting profit of Singapore property insurers was at 28.5% in 2021, and it is expected to remain above 25% in both 2022 and 2023. GlobalData senior insurance analyst Swarup Kumar Sahoo said that despite the rise in inflation that ultimately leads to higher claims payouts, the sector is set to remain profitable thanks to sufficient reinsurance that helped insurers maintain low levels of loss ratio and reduce their risk in higher claims.
“Property insurers in Singapore ceded 72.6% share of their business to reinsurers in 2021, an increase from 65.8% share in 2017. This trend is expected to continue over the next few years as insurers look to maintain their underwriting profitability,” Sahoo said.
Sahoo also said that well-diversified portfolios supported the insurers’ growth in Singapore. The top 10 property insurers in the country accounted for 67% of the market in 2021, generating an average of 41% of their business from property insurance, 19% from liability insurance, 14% from motor, and 14% from non-life PA&H insurance.
“Such diversification helps in managing risk arising due to loss in any single line of business,” Sahoo said. “While property insurers in Singapore have continued to maintain profitability, high inflation, and growing global economic uncertainty can have an adverse impact on their profitability over the forecast period.”
Another market outlook report from GlobalData revealed that the Malaysian life insurance sector is set for steady growth, rising to US$15.9 billion in gross written premiums by 2027.
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