Singapore’s non-life insurers see growth as offshore business expands

However, competition from global carriers continues to squeeze margins.

Singapore’s non-life insurance sector continued to post steady growth over the past year as stronger demand in motor, health and property lines offset pressure from intense competition and rising claims costs, according to AM Best’s APAC Insurance Market Report.

Offshore business written in Singapore continues to expand, with brokers increasingly placing regional risks in the market due to its depth of underwriting capacity. 

Overall, the market remains supported by a stable regulatory environment, solid capitalisation and Singapore’s position as a regional hub for reinsurance and specialty business, AM Best said.

Most regional risks can be placed locally, except for some aviation fleet programmes.

However, competition from global carriers continues to squeeze margins, particularly in motor insurance. 

Claims costs in the motor segment remain under strain, driven partly by higher repair expenses and the growing number of electric vehicles. 

Domestic insurers also face earnings volatility from their offshore catastrophe exposures. 

Upcoming refinements to capital and disclosure rules may raise short-term compliance costs even though they are expected to strengthen the framework in the long run.

According to the General Insurance Association of Singapore, gross written premiums in the domestic non-life segment rose 8.3% year on year to S$5.62b ($4.33b) in 2024. Motor insurance retained its position as the largest line with GWP of about S$1.21b and a market share of 21.6%. 

Singapore’s life insurance industry also expanded, with weighted new business premiums increasing 19.7% in 2024 to S$5.87b. 

On the regulatory front, the updated MAS Framework for Impact and Risk Assessment of Financial Institutions took effect on 1 January 2024. 

The framework sets out enhanced oversight for domestic systemically important insurers, including a 25% capital surcharge. Income Insurance is the only non-life insurer on the current D-SII list.

Whilst Singapore has limited exposure to natural catastrophes, authorities expect climate change to increase risks such as coastal flooding, heavy rainfall and drought. 

The government is targeting net-zero emissions by 2050, although foreign investment priorities may slow progress in the medium term. Low-impact flooding, drought and transboundary haze remain periodic risks for the market.