A stronger Income is more relevant to society: Lim Boon Heng

The stronger Income Insurance is, the more competitive it can be, with the ability to offer better prices to consumers, said NTUC Enterprise (NE) chairman Lim Boon Heng.

- Claire Huang

In an exclusive interview with The Straits Times on July 29, he said that if the local insurer is weak, it will be less relevant to society.

In addition, NE is expected to get about $1 billion if a deal between German insurer Allianz and Income goes through, and this will be put into “possible ventures in education and health, particularly in services for the elderly”.

Mr Lim, who was labour chief from 1993 to 2006, noted that some in Singapore may feel very emotionally attached to the concept of Income as a cooperative, which does not place profit maximisation as a goal.

However, he asked: Can Income continue to discharge its obligations to policyholders in the long term if it is not a growing and thriving insurance enterprise?

Customers usually buy insurance when they are young and look forward to payouts when they are old, which means insurers have “a very long tail responsibility”, he said.

Having been associated with the labour movement and cooperatives under NTUC for a long time, he has strong feelings for businesses set up as cooperatives.

“But it’s not just my heart. I also have to exercise my head in deciding what is right and what is good for the people that we serve,” said Mr Lim.

Income operates in a very highly competitive market where foreign firms dominate.

Data from the Life Insurance Association showed that Income’s annual market share of the life insurance segment in Singapore has been less than 10 per cent by revenue for the last 10 years and is declining, Mr Lim said.

His comments come in the wake of an offer by Allianz on July 17 to buy a 51 per cent stake in Income at a premium.

The offer has triggered questions and concerns. Among the issues raised are whether Income will go back on its pledge to fulfil social obligations that support the low-income and vulnerable, and whether the deal is meant for minority shareholders and NE to cash out.