As one of Singapore’s ‘core institutions’, Income Insurance should not be sold

THE proposed sale of a majority and controlling interest of Income Insurance to German firm Allianz has raised important issues. Some of the issues have been widely discussed and need to be recognised by the government, as this is not just the sale of any privately owned insurance company. It goes to the very heart of the current government’s social compact with Singaporeans.

The proposed sale cannot but give me a sense of deja vu. In 2001, DBS Bank sold its insurance business, the Insurance Corporation of Singapore (ICS), to the UK’s CGU Insurance, as it was then known. ICS was later renamed Aviva Singapore.

I was one of the early buyers of ICS’ catastrophic medical insurance policy, for my entire family. When introduced, it was touted as covering the widest range of illnesses.

Barely a year after the acquisition of ICS, Aviva Singapore informed me that due to unexpectedly high claims by policyholders – not including my family, as we never made any claims – premiums had to be raised significantly.

It was indeed significant: Our premium was raised by about 40 per cent. We paid up, reluctantly. The following year, our premium was raised again, by more than 30 per cent.

We could not accept what we considered a bad faith move, as surely Aviva would have had an idea of the claim rate when doing its due diligence. We gave up our policy, after about a decade of payments.

Since we left Aviva Singapore, Income Insurance has been our health insurer.

Income Insurance is one of the core institutions which form the social compact between the current government and Singaporeans. This is by far the most important reason it should not be sold.

Besides, NTUC Enterprise’s justifications for the proposed sale are highly questionable. Do we really need Allianz to manage it better?

The promise to protect existing policyholders must also be taken with more than a pinch of salt. The fine print of most insurance policies is riddled with loopholes; this, to my dismay, I have learnt the hard way over the years.

When all else fails, insurers may fall back on the argument of their financial sustainability, irrespective of the real reason for their poor performance – even if, perhaps, it has to do with poor management.

Like many other Singaporeans, I expect the government will do the right thing and stop the sale of Income Insurance to Allianz.

Ho Swee Huat