NTUC Income's digital investment gathers steam

Singapore

AFTER more than a year, NTUC Income's move to develop an integrated digital platform to modernise Singapore's financial advisory (FA) sector is picking up steam with more firms projected to come on board.

Andrew Yeo, chief of Income's life and health business, expects that this year four more FA firms will join the initial three, including Phillip Capital and Elpis Financial, to be fully integrated with Income for electronic submissions on the platform named Integrated Financial Advisory (IFAM).

If this happens, it will leave only four of the 11 FA firms currently on IFAM still not fully integrated with Income. Apart from Phillip Capital and Elpis Financial, two other firms identified to be among the 11 are IPP Financial Advisers and SingCapital.

Developed by Wen Consulting, IFAM is an open platform aimed at closing loopholes in the entire sales process and to ease FA firms' compliance with regulations such as the mandatory pre-transaction step called Know-Your-Client (KYC).

As it is, up to 90 per cent of Income's business is done through electronic submissions. "Potentially, our hope is that it (IFAM), at least, helps reduce 20-30 per cent of our backend work load because for the partnership distribution, it's all paper-based," Mr Yeo told The Business Times. "So it all depends on how many FAs and insurers come onboard and then it will be the kind of efficiency we can then gain."

Income is on the platform and talks with other insurers are ongoing.

Wen Consulting told BT that IFAM paves the way for FA firms and insurers to offer seamless services to clients, in addition to reducing business costs. "IFAM minimises errors and omissions, lowers manpower needs and raises productivity and speed. There is also negligible storage cost compared with that of storing paper documents for all."

Income's move to invest S$500,000 in IFAM was announced in December 2015 as the insurer sought to stay competitive in a crowded market. Since then, it has beefed up its distribution channels in order to generate new sales.

Today, in terms of weighted premiums for Income's new life and health insurance business, about 55 per cent come from regular premium products, 35 per cent from single premium plans and the remaining 10 per cent come from health insurance. (see clarification note)

"As a business, we're growing ahead of the industry," Mr Yeo said. "Even in Q3, when the industry was growing at 18 per cent, we were growing at 28 per cent on a weighted premium basis. We are well on track to finish on that trend."

The insurer has almost 1,000 agents and 150 direct sales staff. Together, they contribute 75 per cent of new sales while the FA channel accounts for 15 per cent and banks the remaining 10 per cent.

Given the rapidly ageing population in Singapore, the battle for younger sales staff has already started. One in four Income agents and 90 per cent of the insurer's retail staff are under the age of 30 - a sign of rejuvenation in the group.

Still, the strength of Income's agency force lies in the existing cohort of staff, noted Mr Yeo.

"They may be slightly older, (but they are a loyal and productive group because of the years that they have done good service to their customers. Their customers are actually very loyal to them, very sticky, so our repeat sales rate is 80 per cent."

Mr Yeo said the key ahead is to improve the process for agents and advisers so they can better advise customers.

"For the last 10, 15 years, financial planning has come of age but I guess a lot of it focuses on the technical aspects of financial planning. I think the shift they need to make now is how does an adviser work with the customer to understand the intent of the plan, to work towards the lifestyle choices they need to make as they prepare for their golden ages."

Asked if Income will set up its own FA arm, Mr Yeo said the insurer is keeping its options open.

He also expects Income's health insurance business "to be strained still", adding that Income will work more closely with policyholders so they stay fit and healthy, in turn reducing claims costs.

Based on mandatory financial filings, BT reported in September that the five Integrated Shield Plan insurers - AIA, Aviva, Great Eastern, Income and Prudential - last year recorded underwriting losses ranging between S$7.3 million and S$29.2 million.

Clarification note: The article has been updated to reflect ​Income's latest life and health insurance weighted premiums in percentages.