- Platform Workers found to have bigger protection gaps compared to the general Economically Active population
- Life Insurance Industry commits to spearheading efforts to narrow the protection gap in Singapore
SINGAPORE - Media OutReach - 8 September 2023 - The Life Insurance Association, Singapore (LIA Singapore) today
unveiled findings of the Protection Gap Study (PGS) 2022 which found that economically active
1 (EA)
Singaporeans and Permanent Residents in Singapore – including Platform Workers (PWs) - had a
S$373 billion mortality protection gap
2 and a S$579 billion critical illness (CI) protection gap
3. This
equates to a 21% mortality protection
gap
and
a
74%
CI
protection
gap
in
Singapore
in
2022.
The
study
comprises two components: analysis of policy data from life insurers, as well as a supplementary
market survey
of 775
EAs.
PGS
2022
provides
insights
for
the
industry,
life
insurers
and
reinsurers,
as
well
as
other
stakeholders
- including employers
and
relevant
government
agencies
-
to
implement
actionable
strategies
that
will
support
individuals
to
meet
their
protection
and
financial
planning
needs.
This
is
especially
important
given
the
extended
life
expectancy
4 as
well
as
an
unpredictable
socio-economic
landscape
5 facing
the
community today.
LIA
Singapore
also
included
the
additional
analysis
of
protection
needs
and
gaps
of
PWs
6 in
PGS
2022,
in recognition of this being a growing segment within the community. The average PW individual has
bigger
mortality and
CI
protection
gaps than
the
average EA
individual in
Singapore.
Mr. Dennis Tan, President, LIA Singapore said, "The Protection Gap Study 2022 shows that while
mortality and critical illness protection gaps persist, there has been progress recorded since our last
study
in
2017.
There
is
greater
awareness
and
appreciation
of
the
value
of
insurance
in
Singapore,
and
more individuals
are
taking
actions to
better
meet
their protection
needs.
1 Individuals employed and contributing to the production and distribution of goods and services. Platform workers fall within this category and are a subset of the economically active group. 2 The mortality protection gap represents the financial gap to cover needs of dependents over a defined period in the event of death. It is the amount of money required by dependents to cover expenses, clear outstanding debt, and maintain a reasonable lifestyle, less existing savings and insurance coverage for mortality, following the death of a member of the household. 3 The CI protection gap represents the financial gap to cover family needs during the assumed CI recovery period of 5 years, until the insured is able to return to work. It is the amount of money required to cover expenses and outstanding debt payments during the insured's CI recovery period, less existing insurance coverage for CI. It is to be noted that identified needs of dependents beyond the CI recovery period have been considered on the hypothesis that the insured may not be able to meet those needs when they do return to work (due to the assumed reduction in the insured's earning capacity). 4 'Life Expectancy Improved Over the Last Decade but Saw Declines Over Recent Years Due to the COVID-19 Pandemic' (May 22, 2023) SingStat Singapore. Available at https://www.singstat.gov.sg/-/media/files/news/press22052023.ashx 5 'MTI Narrows Singapore's GDP Growth Forecast for 2023 to "0.5 to 1.5 Per Cent"' (August 11, 2023) Ministry of Trade and Industry Singapore. Available at: https://www.mti.gov.sg/Newsroom/Press-Releases/2023/08/MTI-Narrows-Singapore-GDP-Growth-Forecast-for- 2023-to-0_5-to-1_5-Per-Cent 6 'Platform Workers' in this study refer to a group of individuals consisting of 'Private-hire Workers', 'Taxi Drivers' and 'Delivery Workers'. While this progress is encouraging, we know more can and must be done to support different
members of our community, such as our Platform Workers. The life insurance industry will continue
leading the charge on these efforts, leveraging insights from the study to inform initiatives for the
Association, our member companies, and other relevant stakeholders to pursue and to get more
individuals better insured."
Some
areas
the
industry
will
explore
developing
initiatives
for
include:
- Enhancing the understanding and reach of insurance policies through product innovations and further simplification of policy-related materials
- Adopting a customer profile and needs-based understanding approach to develop tailored customer segment-led propositions, product solutions and distribution approaches aimed at supporting specific groups with medium to high protection gaps (e.g. underserved segments such as those that are less educated, and/or those of lower income)
- Boosting consumer awareness and understanding about protection through public education initiatives
- Making it easier for underserved members of the public (e.g. Platform Workers) to reach accessible touchpoints to better understand and address their protection and financial planning needs
Mortality protection gap remained relatively unchanged for EA individuals despite an increase in mortality protection needs
EA individuals in Singapore have approximately 79% of their mortality protection needs met. Though
the mortality protection needs increased between 2017 and 2022 – primarily due to an overall
increase in costs of living and number of EA individuals – the mortality protection gap remained
relatively
unchanged
from
2017,
with
a
slight
2% decrease
from
23%
to
21%.
This is largely due to income levels going
up,
increase
in
Central
Provident
Fund
(CPF)
and
other
savings
by 47%,
as
well as
an
11%
uplift in
life
insurance
coverage.
The average mortality coverage per policyholder increased by approximately S$41,100 to S$331,200
in 2022 which is approximately 3.6 times of average annual income. Policyholders in Singapore have
an
average
of three
policies
for
mortality
protection.
CI protection gap for EA individuals narrowed primarily due to an increase in CI coverage
The CI protection gap amongst EA individuals has narrowed by a notable 7% - down to 74% in 2022
from 81% in 2017. The average CI coverage per policyholder increased by approximately S$64,400 to
S$193,300 in
2022.
This is approximately 2.1
times
of average
annual
income.
This reduction in CI protection gap from 2017 was mainly driven by an approximate 63% increase in
CI
coverage
since
then.
On average, a CI policyholder owns less than one standalone policy.
Their
CI
coverage
is
generally
from
Whole-of-Life policies
or riders
with
CI
to
supplement
their
main
life
insurance policies.
Bigger mortality and CI protection gap amongst Platform Workers because of lower savings and insurance coverage PGS
2022
found
that
there
is
a
59%
mortality
protection
gap
and
a
91%
CI
protection
gap
among
PWs.
This is primarily attributed to them having lower CPF and deposit savings, as well as lower insurance
coverage
as compared to
EA individuals.
Takeaways
from
the
supplementary
market
survey
include:
- Many PW respondents indicating they are not covered under Group insurance offered by platform providers, with a further portion being unaware if they are receiving any Group Insurance coverage.
- PW respondents expressed interest for the life insurance industry to establish accessible touchpoints that they may visit to seek guidance and support for their financial planning journey and insurance protection needs. The industry recognises that these touchpoints could include roadshows at the offices of platform providers.
Comparison between 2017 PGS and 2022 PGS
Resources available include the aggregate of available savings (i.e. CPF savings, other savings such as cash and deposits) and existing insurance coverage Note to editor: The full report is available at www.lia.org.sg Hashtag: #LIASingapore
The issuer is solely responsible for the content of this announcement.
About the Protection Gap Study 2022
The Protection Gap Study (PGS) 2022 commissioned by LIA Singapore was conducted independently by Ernst & Young Advisory Pte Ltd. The study drew upon insurance data available until 31 December 2021 from insurers, coupled with public data analysis of economically active individuals in Singapore between the ages of 20 to 69 who have at least one dependent.
Key changes from the previous study are the inclusion of an inaugural protection gap study for the PW population, along with a supplementary market survey to gain deeper insights into the protection gap, thereby enabling a comprehensive reassessment of the assumptions that underpin the study.
Please be advised of key limitations arising from the assumptions and data sources used in the calculation of the mortality and CI protection gaps as these results reflect the average across Singapore, whereas each individual's circumstances will be different and specific to the individual. As such, individual protection needs should be analysed separately.
Another limitation of the study is that a significant portion of PWs sampled falls within the older age group. Nonetheless, the higher mortality protection gap and CI protection gap in comparison to EAs offer a valuable additional insight. This emphasises the importance of addressing the protection gaps among seniors, especially in light of Singapore's growing aging population.
Life Insurance Association, Singapore (LIA Singapore)
Established in 1962, the Life Insurance Association, Singapore (LIA Singapore) is the not-for-profit
trade body of life insurance product providers and life reinsurance providers based in Singapore and
licensed
by
the
Monetary
Authority
of
Singapore
(MAS).
Vision and Mission
The
vision
of
member
companies
is
to provide individuals with peace of mind and to promote a society where every person is prepared for life's changing cycles and for those situations unforeseen.
They are
committed to being a progressive life insurance industry by collectively enhancing consumer understanding, promoting industry best practices, and through the association fostering a spirit of collaboration and mutual respect with government and business leaders.
Values underpinning the association and its members
Unified in
our
resolve
to
deliver
innovative
solutions
where
every
individual's
needs
are
best
met.
Professional in
the way
we
conduct
ourselves
and
in
the counsel
we give.
Ethical in
ensuring
our
policyholders'
interests
are
managed
with
utmost
integrity.
Fair in
how
we
strive
to
provide
favourable
outcomes
to
both
our
policyholders
and
shareholders.
Open & honest in
all
that
we do
to build
an
environment
of
trust
and
transparency.
Proactive in
the
steps
we
take
to
give
our
people
the
skills
and
knowledge
to
provide
sound
solutions
at
all times.
https://www.media-outreach.com/news/singapore/2023/09/08/244491/