Singapore’s life insurance industry is set to end 2026 with premium growth of 13% to 17%, before growth slows to 7% to 9% in 2027, said ratings agency S&P in a report published Monday (12 October).

Changing demographics and an ageing population, rising health awareness and household wealth accumulation are set to be growth drivers for the life insurance sector, the agency said, alongside inflows of overseas funds and family offices to the city-state.

Total weighted new business premiums rose 21.4% year on year to S$3.63bn (US$2.83bn) in the first half of 2026, according to the Life Insurance Association Singapore (LIA). Investment-linked products accounted for 44% of the total, at S$1.59bn. New business premiums for integrated shield plans and riders rose 66.5% to S$100.3m.

Profitability for life insurers should remain sensitive to movements in interest rates and capital markets, as well as medical inflation, S&P said.

The agency expects rising private healthcare claims to keep compressing margins on health lines, which it attributed to years of overly generous coverage. Mandatory deductibles and premium reductions will take time to moderate consumer behaviour, it added.

Strong equity markets, competition and policyholder expectations could push insurers with large participating funds to raise discretionary benefits — and to boost returns, insurers may raise equity allocations or expand into private credit, real estate and infrastructure, which S&P said could increase market risk and add liquidity risk.

Competition is also expected to intensify in the high- and ultra-high-net-worth segment, favouring insurers with stronger capital, cross-border networks and global investment access, S&P said.

Demand for ILPs grows

As Singapore’s household wealth grows, demand for “protection-plus-investment” solutions will continue to increase, with investment-linked products becoming the dominant engine for premium growth, S&P said.

Insureds are increasingly looking to combine life insurance with market-linked returns, the agency added, with investment-linked products (ILPs) extending their lead in Singapore’s life insurance market in the first half of 2026 and accounting for 44% of weighted new business premiums, at S$1.59bn, according to LIA data.

The share of premiums from ILPs has risen steadily. Premiums from ILPs rose 24.2% year on year in H1 2026, according to a (Re)in Asia analysis in August, and ILPs have climbed from 20% of weighted new business in 2020 to 39% in 2024, reaching 43% in 2025.

S&P expects the trend to continue as long as global equity markets perform. The shift towards ILPs has allowed insurers to conserve capital as investment risks are passed down to consumers, the agency said, but rapid rises in investment markets could increase surrender risk, as policyholders liquidate policies to chase higher yields elsewhere. Weaker fund performance would also lower the fees insurers earn, S&P noted.

An increase in private healthcare claims will compress the margins of health insurance lines, S&P said, attributing the surge to “buffet syndrome”, a pattern of overconsumption and over-servicing linked to years of overly generous coverage.

The ratings agency said that it expects mandatory deductibles and premium reductions to take time to change behaviour. The LIA told (Re)in Asia in June 2025 that it is prioritising curbing overconsumption and overtreatment, which can drive up claims costs and premiums, with insurers possibly having to vary coverage to counter the effects of overconsumption and overtreatment.

Competition for HNWs heats up

Singapore’s status as an international wealth hub is expected to strengthen, and the life insurance industry should expect competition intensifying in the high- and ultra-high-net-worth (HNW) segments, favouring insurers with stronger capital, cross-border networks and global investment expertise, S&P said.

Demand for life insurance payouts is set to rise over the next few years, as affluent baby boomers near or enter retirement, said S&P. Payouts can serve as liquidity engines for families to settle estate taxes or fund complex trust structures, allowing HNW individuals and families to retain core assets.

The Monetary Authority of Singapore announced a series of measures in August 2026 to bolster competitiveness in this area, including a planned tax exemption for profit-related returns from fund management services to qualifying funds, a new hedge fund investment programme and a specialised investment management work visa.

The central bank said it was considering adding insurance policies to a designated investment list for single-family offices, which would expand the tax-efficient investment options available to family offices operating from Singapore.

Insurers and distributors have been opening dedicated wealth facilities in Singapore. Prudential Singapore opened a Wealth Suite for high-net-worth clients in March last year, including access to external experts in tax, legal and estate planning services. Ascend Asia opened a Singapore wealth centre in August, following a distribution partnership with FWD Singapore announced in July. Insurers have also set up HNW-focused vehicles elsewhere, including Sun Life’s Bermuda subsidiary in September 2026 and Allianz Malaysia’s Labuan unit in October 2026.