AFTER two consecutive quarters of dismal sales, the life insurance industry sprang to life during the three months to the end of June.

Total new premiums in the second quarter topped $1.13 billion, 39 per cent ahead of the first quarter's $818 million, according to statistics released by the Life Insurance Association (LIA) yesterday.

The positive performance was seen both in the sales of single-premium and annual premium products. The former rose 39 per cent to $897 million, while annual premiums saw an increase of 37 per cent to $238 million, said the LIA.

During the second quarter, sales of investment-linked products jumped 60 per cent to $284 million from the preceding quarter.

LIA president Darren Thomson believes the latest sales figures signal the start of a sustained recovery for the industry.

'We're very optimistic that the positive trend will continue. The industry is hiring more people, companies are launching new products - ranging from regular to single premiums - and there is a big emphasis on meeting the protection and health needs of consumers,' he said.

But despite the resurgent sales, the second-quarter figures are a far cry from the same period last year.

Single-premium sales during the three months ended June are down 60 per cent and annual pre-mium sales down 9 per cent, when compared to the second quarter of last year.

And the $1.95 billion of total premiums collected during the first half of this year are a shadow of the $5.48 billion generated in the same period last year.

The LIA said the sharp fall in sales is partly explained by the fact that during the first half of last year, sales were fuelled by pending Central Provident Fund Investment Scheme restrictions - with new rules cutting the available sum for private investments.

It resulted in many consumers buying policies ahead of the rules that took effect in April last year.

This contrasted with the steep downward spiral in global financial markets that occurred from last September onwards.

The LIA said it was not surprising that sales of single-premium insurance products plummeted quarter-on-quarter last year, particularly because such products - including endowment and investment-linked plans - are very sensitive to market and consumer sentiment.

Although the economy has been in recession, policyholders have held on to their policies over the last six to nine months. The LIA's findings point to no dramatic increase in the number of consumers allowing their policies to lapse.

To raise consumer awareness, the LIA has embarked on a six-week radio programme aired on Live 93.8 and 95.8 focusing on protection, health and financial planning.

It is set to publish a consumer guide next month clarifying changes to the way beneficiaries of insurance policies are nominated.

HEALTHY OUTLOOK

'We're very optimistic that the positive trend will continue. The industry is hiring more people, companies are launching new products...and there is a big emphasis on meeting the protection and health needs of consumers.'

LIA president Darren Thomson