PURSUIT OF ORGANIC GROWTH
Another option is for Income Insurance to grow from within itself or organically. This is a most obvious and viable choice as new strategies for market and product development can be actively pursued.
New ideas and talent will be needed for organic growth. It may strengthen its distribution strategy, such as through the financial advisory channels which it is already pursuing. The key challenge may be one of contradiction: Income must go mass market yet focus on the target worker market – a dual market strategy may be considered but this is difficult to manage.
Diversification into related financial products may be considered. But this risks diluting its insurance focus and distracting management attention.
New sources of capital will have to be sought. One suggestion has been to list on the stock exchange. But this has to be weighed carefully considering the compliance requirement and the shareholder pressure for financial returns.
Income Insurance probably cannot revert to its original co-operative model. There may be merits but the key question is where future funding may come from. Should the trade unions foot the bill thus draining resources from other areas of worker welfare? Will mass market customers support its social mission and buy into products that aren’t the most competitively priced?
The choice of strategic options to get to Income Insurance 2.0 is complex. It needs to retain its social character but must also be able to withstand the global market test.
This is a tall order. And if it fails, the broader question will be: What would Singapore lose in the insurance space especially on the social front and should public funds be allocated accordingly?
Lawrence Loh is Director, Centre for Governance and Sustainability of NUS Business School at the National University of Singapore, where he is also Professor in Practice of Strategy and Policy.
