Singapore’s general insurance sector expanded in 2024, but underwriting profits declined by 16.7%, according to Sumit Narayanan, EY ASEAN Financial Services Leader. He attributed the drop to two main factors:
Inflation in Motor Insurance
A Large One-Off Loss in Marine Insurance
Narayanan emphasized that neither factor will have a long-term impact on overall profitability in the sector.
Broader Claims Environment Weighs on Earnings
While the sector grew, rising claims in property, travel, and health insurance continued to pressure earnings. Narayanan noted that inflation, changing consumer behavior, and higher healthcare costs are affecting profitability across all lines. These pressures have led to higher loss ratios, which insurers must manage carefully.
Premium Growth and Improved Claims Management
Despite the profit squeeze, general insurance premiums in Singapore “have continued to grow at a fairly healthy pace,” Narayanan said. Insurers are responding by refining their claims management practices and investing in operational efficiency through technology. He added that focusing on customer segmentation can help insurers grow profitably, even as claims rise.
Climate-Related Risks Become Critical
Climate-related risks emerged as another major concern. Narayanan explained that extreme weather events affect insurers well beyond traditional catastrophe claims. They also cause business interruptions and can lead to counterparty credit rating declines, which further impact loss ratios.
To address these risks, EY is partnering with insurers to create forward-looking strategies. These include setting net zero targets, reducing carbon emissions in underwriting and investments, and incorporating climate-related risk scenarios and stress testing into their planning.
Industry Outlook and Next Steps
Looking ahead, insurers in Singapore must balance growth with profitability and manage evolving risks. Rising claims and global uncertainty will test their ability to control costs and maintain capital strength. However, proactive measures—such as enhanced claims management and climate risk planning—offer a path toward sustainable growth in the general insurance market.
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