Singapore: A Growing Regional Hub for Insurers

Singapore’s insurance market remains robust notwithstanding ongoing geopolitical issues.

Across most lines of business, stable growth is projected for the next 12 months. On the client side, an increasing number of organizations are setting up in the country, due to ease of doing business, political neutrality, and stable currency, among other factors. On the insurer side, Singapore is welcoming new entrants and growing as a regional underwriting hub.

Market Dynamics: Pricing

Employee Benefits: The cost of medical insurance continues to rise yearly due to medical inflation and the exit of certain insurers. Rate increases are within the range of 9-12%.

Property & Casualty: Certain lines such as directors and officers liability (D&O) and cyber face an uncertain market despite increased capacity in those lines. Risks such as war, terrorism and looming recession are causing concerns, as they may create exposures for D&O and cyber. Nonetheless, rates in these segments have either dropped or remain the same. On other lines, pricing is stable.

Market Dynamics: Underwriting

Employee Benefits: With rising healthcare costs and more people seeking treatment that was put off during the pandemic, insurers are seeing an increase in claims. As a result, underwriting stringency remains a concern.

Property & Casualty: For most lines (e.g., property, workers compensation, public liability), underwriting remains stable. However, for lines with more international exposure, such as D&O, cyber and marine, insurers are engaging in more fact finding and due diligence, primarily due to sanctions and war risks.

Market Dynamics: Deductibles

Employee Benefits: Organizations are increasingly including co-insurance when high-cost providers are used. This is to encourage employees to tap into more public hospitals, since healthcare remains at a high standard at all hospitals in Singapore. This helps keep overall loss ratios down and helps employers better manage their premiums.

Property & Casualty: Apart from cyber, deductibles in most lines of business remain stable. However, because claims against P&C policies remain low-frequency, some clients seek higher deductibles.

Notable Offerings and Consumer Demand

Employee Benefits: There is rising demand for flexible benefits, well-being programs and mental healthcare. The prevalence of wellness benefits has seen the most substantial increase. Additionally, there is notable growth in the availability of maternity, dental and vision care benefits. With an increasingly affluent workforce demanding more benefits, the ability to cater to clients’ demands, along with tightening budgets, remains a common discussion.

Property & Casualty: With most P&C lines seeing a softening market or stable rate trajectory, insurers are, apart from just pricing, offering more enhanced coverages in the form of extensions. For example, under workers compensation, they are offering higher limits than those mandated by regulation. For D&O policies, some insurers are considering offering higher sublimits and even benefits such as unlimited reinstatement of limits.

Regulatory Update

Mandatory Coverage: For foreign workers employed in Singapore under a work permit or S-Pass, the Ministry of Manpower (MOM) has mandated higher limits of $60,000 on inpatient medical coverage (up from $15,000).

Taxes: Singapore raised its goods and service tax (GST) to 8% from 7% in 2023. As of Jan. 1, 2024, the GST is once again going to be increased, to 9%. This will impact all services, including insurance premiums, which are subject to GST.

Artificial Intelligence Framework: In a landmark achievement, Singapore and the United States have successfully made their AI governance frameworks interoperable, marking a significant step toward global standardization in the field of artificial intelligence. The announcement was made at the inaugural United States-Singapore Dialogue on Critical and Emerging Technologies (CET Dialogue), a platform designed to foster collaboration and align approaches in the field of artificial intelligence. The successful crosswalk of the AI governance frameworks between the two countries, achieved through joint mapping exercise, is anticipated to streamline international AI regulations and promote responsible AI innovation globally.

Notable Differences from U.S.

Employee Benefits: From an employee benefits perspective, there are significant differences between Singapore and the United States. For example, in Singapore, not all plans per any group size provide coverage for pre-existing conditions from the first day of coverage. Pacific Prime has established facility plans with insurers for small to midsize enterprises that allow for better underwriting, premium and benefits even for smaller group clients. Flex benefits are also evolving in Asia Pacific, with Singapore being one of the more developed countries in this regard. There are similarities in these types of programs in Singapore, though they do require more support and servicing on the broker end than what is likely expected in the United States.

Property & Casualty: Many of these lines and common practices are dictated by global coverages and the U.S./U.K. markets. The main difference is in the regulations applied in Singapore, for example some of the workers compensation laws and updates being implemented and noted above.

3 Tips for Doing Business in Singapore

Pension: Singapore has a compulsory pension scheme for Singaporeans and permanent residents, known as the Central Provident Fund (CPF). A portion of every employee’s salary is credited to this scheme, which can be used only for retirement, healthcare, housing and education, until one attains retirement age. CPF is managed by the government directly.

Mandatory Insurance: Certain industries such as architects, lawyers, doctors and investment managers are mandated to have certain insurance policies in place. Though workers compensation insurance remains compulsory only for employees performing manual works and for employees earning below $2,600 per month, employers are liable for compensating all employees for work injuries.

Talent and Manpower: The manpower shortage in Singapore remains a major concern for many businesses, with the government imposing certain caveats on when and how a business can employ foreign employees. This in turn adds to the high cost of doing business in Singapore. Furthermore, in view of this talent shortage, providing good employee benefits remains essential in the competitive hiring landscape.

For more information on Singapore, email Jonathan Hsieh at jonathan.hsieh@pacificprime.com.