SINGAPORE (THE BUSINESS TIMES) - The pressure is on for incumbent insurers Aviva and AIA to battle, not only new contenders, but also each other for the multi-million-dollar group-employee benefits contract involving the Singapore Armed Forces (SAF) and the Ministry of Home Affairs (MHA).
Aviva has been the insurer for the SAF for a long time, and AIA is the insurer for MHA under the existing deal, but the stakes could be higher this time round if one winning bidder secures both accounts.
Industry observers estimate the total value of the two existing contracts to be easily in the region of S$40 million.
The group insurance tender, which closed on Tuesday, was jointly called by the Ministry of Defence (Mindef) and MHA on Dec 24.
A government briefing on the joint tender exercise was held last month, drawing interest from not only the major insurers but also reinsurance brokers, general insurers and other smaller players.
While details of the tender are unavailable, The Business Times understands that the top four insurers in the group-employee benefits space in terms of market share - Aviva, AIA, Great Eastern and Tokio Marine Life - have submitted their bids. NTUC Income is also in the running.
Based on past experience, industry players said the insurance coverage usually starts in July, and they believe that if this is the case here, the winning bidder or bidders may be unveiled in April or May.
In response to queries from BT, Mindef said: "The provision of group insurance is an initiative under the Committee to Strengthen National Service (CSNS). Under this initiative, Mindef provides life and personal-accident insurance for our servicemen to cover incidents during their full-time NS and the period of their operationally ready national service (ORNS) call-ups.
"The request for proposal for the provision of group insurance has closed and we are currently evaluating the proposals."
The existing coverage extends to SAF and Mindef personnel, full-time national servicemen (NSFs), NSmen, regulars, as well as everyone under MHA, sources said.
Such coverage is now largely voluntary, but the government is moving to make it partly mandatory to improve the benefits provided.
Some observers noted that this deal is crucial, particularly for Aviva, which last year ceased its partnership with DBS Bank, under which the lender distributed its life products.
The composite insurer was heavily reliant on bancassurance as a distribution channel but the loss of the partnership has been supported by its group-insurance business.
Aviva is the largest group-insurance player here, having bagged half the market share. It is also one of the biggest providers of employee benefits and healthcare here - it is a long-time insurer for the SAF, the appointed insurer for the Public Officers Group Insurance Scheme, as well as the ElderShield scheme, with half of all new business allocated to it.
Data from the Life Insurance Association Singapore (LIA Singapore) showed that the group life and health policies that were in force in the fourth quarter of 2015 grew 7.2 per cent year on year to S$974.9 million.