Aviva secures Mindef-MHA group insurance tender

Singapore

IN what would be somewhat of a relief to Aviva Singapore, the composite insurer has not only retained its group-employee benefits account with the Ministry of Defence (Mindef) but also managed to secure the right to provide such coverage to the Ministry of Home Affairs (MHA).

From July 1, the British insurer will provide group term life and personal accident coverage to Mindef and MHA servicemen in a three-year contract that could be renewed for another three years, said Nishit Majmudar, chief executive of Aviva Ltd.

The core scheme, named "Mindef & MHA Group Insurance", is an added benefit over and above existing welfare and compensation frameworks, the two ministries said in a joint statement released on Tuesday evening.

This means all servicemen from the Singapore Armed Forces (SAF), Singapore Police Force and Singapore Civil Defence Force will receive a S$150,000 group term life and S$150,000 group personal accident insurance coverage from July 1 under the core scheme, during their full-time national service or reservist duties. The premiums will be paid for by Mindef and MHA. This coverage is not subject to underwriting and covers pre-existing medical conditions.

The core scheme will cease upon a serviceman's completion of full-time national service, operationally ready national service, volunteer service or upon termination of employment with Mindef or MHA.

A voluntary scheme where coverage is up to S$1 million for group term life insurance and as high as S$600,000 for group personal accident insurance will also be offered to all personnel covered under the core scheme, public officers working in Mindef/SAF, all civilian staff working in MHA, as well as Defence Science and Technology Agency employees. They can opt for higher coverage for themselves and their dependants.

The voluntary scheme will be available from July 1 and from Oct 1, for MHA and Mindef personnel respectively.

Servicemen who are already policyholders under the existing insurance scheme will have their current coverage ported over to the voluntary scheme, the ministries said.

The development follows the government's call for a multi-million dollar tender last Christmas Eve under the Committee to Strengthen National Service initiative, as part of efforts to improve benefits provided.

In response to queries from The Business Times, Aviva's Mr Majmudar welcomed the appointment, adding that Aviva has been providing insurance coverage for the SAF's servicemen since 1983. "We are a leading group insurer in Singapore and insure about 750,000 group insurance policyholders in Singapore, including existing policyholders from the Mindef. Last year, group business contributed about 15 per cent of our overall business in gross written premiums."

Aviva has been the long-time insurer for Mindef and SAF, while the MHA account previously came under the care of rival insurer AIA Singapore.

When contacted, Patrick Teow, AIA's chief executive, said: "It has been our pleasure serving MHA over the last five years, and we wish them the very best with their new provider. We will work closely with the team to ensure a smooth transition."

BT had reported in February that the top three insurers in the group-employee benefits space in terms of market share - AIA, Aviva and Great Eastern - as well as Income, had participated in the bidding exercise, which closed in mid-February.

Observers had said that the contract was especially vital for Aviva, whose bancassurance partnership with local lender DBS Bank ended last year. The insurer was heavily reliant on the bank for the distribution of its life products, which accounted for the bulk of annual new business sales.

However, the loss of the tie-up was cushioned somewhat by Aviva's group-insurance business, industry sources had said.

But in a BT report on June 10, market sources shared that the bidding was one where parties were exceptionally aggressive on price and the profit margin from the deal was either slim, or non-existent. They also noted that clinching the joint tender would help Aviva remain the largest employee benefits insurer here in terms of life coverage.

In the overall group insurance space that includes both life and medical coverage, AIA still reigns with the largest market share, followed by Aviva and Great Eastern.