MOST working adults in Singapore are hugely underinsured - a lamentable state of affairs that creates opportunities for insurers, according to global consultancy McKinsey & Company.
McKinsey director Stephan Binder said that Singaporeans are covered on average for only 2.8 times their average annual income, well under the suggested level of 10 to 12 times.
So if you earn say $50,000 a year, your life insurance cover should extend to at least $500,000.
Dr Binder also said that while life insurance penetration for the mass affluent and upper mass segments is 91 per cent and 82 per cent respectively, it is only 61 per cent for those in the lower mass segment.
And it is this segment - roughly 45 per cent of the population - that represents a huge growth opportunity.
'Singapore's positive life insurance story remains intact, and growth over the next five years should average between 4 per cent and 6 per cent annually,' said the China-based Binder, who was here visiting.
His belief that the life insurance industry will grow to around $22 billion by 2013 will bring some comfort to the battered sector.
The financial market uncertainty has taken its toll on the industry, with people buying less life insurance and many consumers giving up policies.
The industry reported a 73 per cent drop in total premiums for the first quarter of this year to $2.99 billion compared with the same period a year ago.
Mr Nigel Andrade, a McKinsey partner, agreed that the market is far from saturated.
'It's not a population growth issue,' he said. 'Singapore's population may not be surging the way some other markets are, but the population is growing older and that increases the demand for insurance products.'
Mr Andrade said that while the long-term prospects remain bright, Singapore insurers may need to invest to emerge from the crisis in a position to capture those opportunities.
'Investment now can position a company better than its peers to weather the crisis and emerge in a strong position to capture longer term opportunities,' he said.
