Can Singapore’s Insurers Adapt to the Ageing Well Challenge?

Can Singapore’s Insurers Adapt to the Ageing Well Challenge?

by November 6, 2023

Singapore, often called the “Lion City,” is well-known for its thriving economy. Yet, beneath this successful exterior lies a significant demographic shift that brings challenges and opportunities.

The country is witnessing a rapid rise in its ageing population, with a projected 27 percent of residents aged 65 and above by 2030. This demographic transformation is reshaping the city-state’s landscape.

In this context, the Capgemini Life Insurance Industry Report 2023 gains significance, offers insights into Singapore’s ageing population’s distinct challenges and opportunities and underscores the growing preference for digital tools, including AI-driven wealth management advice and platforms.

The Singaporean context

Statista Singapore's Ageing Population

Residents aged 65 years and older as share of the resident population in Singapore from 1970 to 2022

Singapore’s demographic profile is evolving at an accelerated pace. The city-state’s residents are living longer, healthier lives thanks to advancements in healthcare, improved living conditions, and greater access to medical treatments.

In 2022, residents aged 65 years and above made-up 16.6 percent of the total resident population in Singapore. Singapore is currently one of the most rapidly ageing societies in Asia, along with Japan.

This shift in demographic composition presents critical challenges, chief among them being the increasing pressure on social support systems designed to support an ageing population.

Social security spending in Singapore nearly doubled from S$17 billion to S$31 billion in the last decade and now takes up close to half of the annual Budget. The need for public resources to support older individuals is growing, and this trend is projected to continue. In addition, the dependency ratio in Singapore is expected to increase significantly.

Currently, Singapore’s dependency ratio stands at a manageable level, but projections suggest that it will rise as the population ages. This means the working-age population will support a larger elderly population, potentially putting pressure on the country’s social safety nets and resources.

The role of digital tools in wealth management

Singapore's Ageing Population

Amid these demographic shifts, Singapore’s insurance industry is presented with a unique opportunity and responsibility. Insurers must manage the assets of an ageing policyholder base and ensure a seamless intergenerational wealth transfer.

Policyholders aged 65 and above control a significant portion of insurers’ assets under management (AUM).

This is where digital transformation and AI-driven wealth management advice come into play.

Singapore’s strong preference for digital channels for insurance needs, with 88 percent of consumers favouring these tools, positions the city-state as a prime candidate for embracing innovative solutions.

Singapore’s favourable environment
Singapore Ageing Population

The government’s supportive regulatory environment and robust innovation ecosystem strengthen this advantage. Initiatives such as the Digital Acceleration Grant and the Financial Sector Technology and Innovation (FSTI 3.0) scheme demonstrate Singapore’s commitment to fostering digital transformation.

Furthermore, numerous local and foreign players in the wealthtech sector, such as Endowus, Syfe and Bambu, underscore the vibrancy and potential of the wealth management industry in Singapore.

AI-driven wealth management advice and platforms offer a promising avenue for insurers. By harnessing artificial intelligence, insurers can provide tailored and comprehensive solutions that address Singapore’s ageing population’s evolving financial, health, and lifestyle needs.

These digital tools can offer personalised investment strategies, retirement planning advice, and health management recommendations, all while ensuring a seamless customer experience.

Singapore’s readiness for digital solutions also opens up opportunities for insurers to engage in ecosystem partnerships. These collaborations can encompass various services, including healthcare, wellness, travel, leisure, education, and social impact.

By offering a holistic suite of services, insurers can enhance customer loyalty, drive retention rates, and seize cross-selling opportunities.

Navigating Singapore’s ageing population

Singapore’s ageing population presents both challenges and opportunities for its insurance industry. The Capgemini Life Insurance Industry Report 2023 highlights the importance of adapting to changing demographics and embracing digital transformation.

With Singapore’s strong preference for digital tools and solutions, the city-state is well-positioned to address the evolving needs of its older population.

As Singapore navigates the complex terrain of an ageing population, embracing digital tools and fostering trust will be the keys to success.

By providing AI-driven wealth management advice, engaging in ecosystem partnerships, and facilitating seamless wealth transfer, insurers can ensure that the years of Singapore’s elderly residents are truly golden.