Singapore general insurance market set for high growth

“Singapore’s general insurance penetration at 0.8% in 2021 is lower than other regional countries like South Korea (5.1%), Japan (1.8%), China (1.2%) and Hong Kong (1.6%), indicating high growth opportunity,” said Rokkam Eswara Jyothi, insurance analyst at GlobalData.

Motor insurance is the largest general insurance line in Singapore, with a 24.6% share of GWP in 2021. This segment is expected to grow moderately at 2.7% in 2022, amid decreased motor vehicle sales due to increased taxes. According to GlobalData, the tax increase led to a 34.4% year on year drop in car sales for August. The cost of certificates of entitlement (COE) increased by 15.2% in 2022, making vehicles costlier to own. The COE grants the privilege to own a vehicle for a 10-year period and is a significant portion of the cost of car ownership.

Property insurance is the second largest general insurance line in Singapore, with a 19.5% share of GWP in 2021. Property insurance is expected to grow by 9.9% in 2022, with demand driven by increased construction activity in Singapore. The Building and Construction Authority said that up to SG$32 billion in construction contracts are to be awarded in the sector in 2022, with high demand for new infrastructure expected to continue until 2028.

Singapore is working on several rail projects, such as phases two and three of the Cross Island Line, including the Punggol Extension, as well as the Downtown Line’s extension to Sungei Kadut. Other projects in the pipeline include the Toa Payoh Integrated Development plan, which is expected to cost SG$4.7 billion; the Marina Bay Sands expansion, with a total cost of SG$4.7 billion; and the East Coast Integrated Depot with a total cost of SG$3.4 billion.

“Singapore’s general insurance industry is projected to recover backed by higher per capita income, and growing household spending that will drive the demand for household and commercial property, automobiles, and private health insurance,” Jyothi said.