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Everything About NTUC Income’s Impending Conversion into a Company Simplified for You

2022-01-07 , 10:23 am

Last Updated on 2022-01-14 , 3:52 pm

Singapore’s second-largest health insurer, NTUC Income, will be converting itself from a co-operative to a company.

Before that, if you’re one of their policyholders, fret not.

No Changes nor Action is Required for Current Policyholders

Income has almost 700,000 IncomeShield policyholders, and serve more than two million policyholders in total. They are also fourth place in the health insurance business for new business premiums.

Current policyholders do not need to take any action. They will continue to enjoy the same coverage, benefits and terms after the conversion of their legal structure.

The main purpose of Income has not changed either: to provide insurance for workers. They will continue to cater to underserved customer segments like migrant and gig workers, the elderly and people with special needs.

In fact, they pledged $100 million over the next 10 years to support various causes. Those that champion underprivileged youths and children’s education, the elderly, and the environment will all benefit from the funds.

Instead of deviating from their original path, Income will be adding on to it by adapting to changing consumer needs. Look out for more insurance solutions by Income that resonate with consumers’ modern, digital lifestyles, like Snack by Income!

What’s the Difference Between Co-operatives and Companies?

NTUC Income was established in 1970 and is the only insurance co-operative in Singapore.

Co-ops are membership-based enterprises that function on the values of self-help and mutual assistance. Members are also owners of the co-op.

Only trade unions and other co-ops can invest in Income as institutional members.

Meanwhile, a company is governed under the Companies Act. Shareholders will not be limited to just trade unions and co-ops, but even to people like you and me. There will also no longer be a statutory cap on dividends and share values.

It means that Income will have more options like mergers, acquisitions, joint ventures and initial public offerings—anything that a company can do.

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How will the Corporatisation Work?

If all members approve, Income will transfer its existing insurance business and assets to the new company, Income Insurance Limited. They will then liquidate the co-op.

Existing members who hold co-op shares will get the equivalent number of Income Insurance Limited shares, and all co-op shares will be cancelled. All shareholders of the new company will also have one vote per share.

Income’s more than 500,000 ordinary members will also get a personal accident policy with an assured sum of $52,000 for three years.

This process will not change Income’s organisational structure, and NTUC Enterprise will continue to be the main shareholder of the company. The new company will also continue to be part of NTUC Enterprise’s network of organisations.

Employee roles, benefits, and contracts will remain the same, and unionised employees will still be represented by the Singapore Insurance Employees Union.

Subject to regulatory approvals and other closing conditions, this corporatisation exercise is expected to be done in the second half of this year.

Why Corporatise Now?

Changing regulations and expectations, a more mature domestic market, and competitors catering to the digital generation’s demand for more diverse and targeted products—these are just a few of the shifts that prompted Income’s corporatisation.

It will also allow it to raise funds for its expansion here and in the region.

Income has also recently partnered with other insurers in Indonesia, Malaysia and Vietnam to provide personalized and simplified insurance products. These partnerships, which brands insurance as a service, also account for when and how the customers need them.