Incumbent insurer Aviva Singapore is tipped to be the frontrunner in the race to secure a multi-million-dollar group-employee benefits contract to provide coverage for the Singapore Armed Forces (SAF) and the Ministry of Home Affairs (MHA).
It is understood that the parties are in the midst of finalising the deal, market sources told The Business Times. They added that if Aviva fails to fulfil any required terms and conditions during this period, the tender can be awarded to another bidder.
When contacted, the Ministry of Defence (Mindef) said: "Mindef and MHA are in the process of finalising the award of the tender for the provision of group term insurance. We will announce the appointed insurer soon."
Aviva, a composite insurer, said in response to BT queries: "It is premature to comment before any official announcement."
The British insurer is a long-time insurer of the SAF, while the existing MHA account comes under the care of AIA Singapore.
Industry observers had said that the stakes could be higher this time if one insurer secures both accounts.
The group insurance tender was jointly called by Mindef and MHA on Dec 24 and had closed in mid-February.
BT was told that the government briefing on the joint tender exercise was held in January and drew interest from not only the major insurers but also reinsurance brokers, general insurers and other smaller players.
The top three insurers in the group-employee benefits space in terms of market share - AIA, Aviva and Great Eastern - had submitted their bids, while Income, previously known as NTUC Income, also joined the bidding exercise.
While the specifics of this deal are unavailable, market sources said that the bidding was one where parties were exceptionally price aggressive and the profit margin is either slim, or non-existent.
In a BT article in 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 had been heavily reliant on the bank for the distribution of its life products, which accounted for the bulk of annual new business sales.
Still, the loss of the tie-up was cushioned somewhat by Aviva's group-insurance business, industry players had noted at the time.
Observers say 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 which includes both life and medical coverage, AIA still reigns with the largest market share, followed by Aviva and Great Eastern.
The move to call for a tender follows the government's decision to provide group term insurance under the Committee to Strengthen National Service (CSNS) initiative, where Mindef and MHA will provide life and personal accident insurance for their national servicemen to cover incidents during their full-time NS and the period of their operationally ready national service (ORNS) activities.
Currently, the coverage extends to SAF and Mindef personnel, full-time national servicemen (NSFs), NSmen, regulars, as well as everyone under MHA, sources have said.
Such coverage is now largely voluntary, but the government is moving to make it partly mandatory to improve the benefits provided.
This article was first published on June 10, 2016.
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