Implication of Allianz Insurance's Proposed Acquisition of Income Insurance on Affordable Insurance for Singaporeans and Government's Support of Co-operatives

7 Mr Liang Eng Hwa asked the Minister for Culture, Community and Youth (a) whether NTUC Enterprise's sale of its 51% stake in Income Insurance Ltd to a foreign insurance company will impact affordability and availability of essential insurance products to the broad mass consumers and small enterprise segment in the long term; and (b) whether there is social value for NTUC Enterprise to retain its controlling stake in Income Insurance Ltd so that the provision of insurance services remains inclusive and accessible.

8 Mr Leong Mun Wai asked the Minister for Culture, Community and Youth with the proposed majority stake acquisition of Income Insurance Ltd by Allianz Insurance, how will the Government continue to support the co-operative movement in providing Singaporeans with affordable essential goods and services in the future.

9 Mr Don Wee asked the Minister for Culture, Community and Youth regarding the potential acquisition of a majority stake in Income Insurance Ltd by Allianz Insurance, whether the Government will work with the National Trades Union Congress to assess the potential impact on (i) insurance coverage for lower-income groups and workers and (ii) Income Insurance Ltd's original social mission if it is acquired by a foreign-listed profit-driven commercial entity.

10 Mr Saktiandi Supaat asked the Minister for Culture, Community and Youth (a) whether MAS can provide an update on the sale of Income Insurance Ltd to Allianz Insurance, a foreign for-profit insurer; (b) what steps can MAS take to ensure that Income Insurance Ltd continues to provide accessible insurance products to Singapore citizens; and (c) whether companies set up with a social purpose and has performed a critical role in keeping prices affordable for Singaporeans should be designated by legislation as critical entities which require approval from the Government for ownership or control changes.

The Minister of State for Culture, Community and Youth (Mr Alvin Tan) (for the Minister for Culture, Community and Youth): Mdm Deputy Speaker, Madam, may I have your permission to take Question Nos 7 to 10 in today's Order Paper as well as a Parliamentary Question (PQ) by Mr Christopher de Souza¹ scheduled for a later Sitting, together please?

Mdm Deputy Speaker: Please proceed.

Mr Alvin Tan: Mdm Deputy Speaker, the Ministry of Culture, Community and Youth (MCCY) and the Monetary Authority of Singapore (MAS) have received several PQs on the National Trades Union Congress (NTUC) Enterprise's social mission and the Income-Allianz deal. Singaporeans have long recognised NTUC Income as a pillar of social support. It is, therefore, understandable that many Singaporeans are concerned about Allianz's plan to buy a majority stake in Income Insurance. I thank Members of this House for giving voice to these concerns through your many questions.

Allow me to, first, address the PQs relating to the social mission and the support given to co-operative societies, or co-ops, in Singapore, in my MCCY capacity. Minister Chee Hong Tat will, then, address questions relating to the regulatory aspects of the Income-Allianz deal in his MAS capacity. So, reserve your questions on the social mission for me, and then, later on, for the regulatory aspects for Minister Chee in his subsequent reply.

Mdm Deputy Speaker, co-ops remain an important pillar of our society and their work helps to strengthen our nation's social fabric. Co-ops are member-owned business entities that operate on the principles of self-help and mutual assistance. They address the common economic or social needs of their members or of the wider community. Some co-ops seek to provide goods and services at affordable prices for the benefit of their members and the community, while others seek to care for and serve the vulnerable within our community.

Mdm Deputy Speaker, the Government appreciates and values the role of co-ops and social enterprises in Singapore. We will continue to support the co-operative movement to ensure that Singaporeans' economic and social needs are met and that these goods and services remain affordable and of good quality. We have done so in a few ways.

First, MCCY has amended the Co-operative Societies Act twice within the last seven years, as part of our efforts to update our regulatory requirements to better support co-ops' formation, operations and development. In fact, I took Parliament through the latest amendment in April 2024, where one of the key amendments was to provide co-ops the flexibility to tap their reserves to pay dividends to their members. MCCY will continue to review our policies to ensure that they remain relevant and effective for our co-op sector.

Second, MCCY works closely with the industry body, the Singapore National Co-operative Federation (SNCF), to provide resources and training opportunities for our co-ops. MCCY and SNCF will continue to review the relevance of these training programmes and provide additional ones to our co-op sector to address current and emerging needs, where needed.

Third, the Central Co-operative Fund (CCF) has provided various grants to assist co-ops in their development. CCF disbursed about $2.7 million in grants to our co-ops over the last five years, including startup funding for new co-ops and grants that co-ops can use to address their emerging threats, risks and needs. These grants are reviewed from time to time to ensure that they remain relevant and useful to co-ops.

Mdm Deputy Speaker, the Government values the role played by NTUC and its enterprises. NTUC Income was established in 1970 with the founding premise of providing Singaporeans, especially underserved workers, with essential, affordable insurance. At the time, most of our workers, particularly from our Pioneer Generation, were uninsured. Through NTUC's affiliated unions, Income provided these workers with much-needed insurance protection at an affordable rate.

But social enterprises must, themselves, be sustainable. If a social enterprise cannot sustain itself financially and Government subsidy is needed to prop up the entity, then we will have to consider whether such a service ought to be provided by the Government. Taxpayers must also be prepared to pay their share of taxes to fund the service.

There are areas like preschool and skills training where the Government has a framework to provide funding to selected operators to deliver affordable services. Where such a framework exists, then the Government has appointed social enterprises, like the NTUC First Campus and NTUC Learning Hub, given them funding support and worked through them to provide the services.

But insurance is different. The insurance market is very different now, compared to when Income was first established in 1970. It is, now, a very competitive market, with many options available to Singaporeans. The Government has also significantly strengthened our social support system. Public healthcare is heavily subsidised. We have MediSave for Singaporeans, MediShield Life offering universal protection against large hospital bills and MediFund as a medical safety net for those with financial difficulties. We also have a universal retirement annuity scheme with CPF LIFE.

So, Income has to operate in this new environment. In fact, the premiums for several of Income's schemes are not the cheapest in the market. Besides competitive pressures, there are also regulators, like MAS and the Ministry of Health (MOH), who ensure that policyholders' interests are protected. Minister Chee will cover this in his reply.

The point is that Singaporeans, including lower-income workers, are well-served by our national insurance programmes and our competitive and well-regulated insurance industry. All these provide Singaporeans with wider choices and better value in insurance services and products.

NTUC has explained the reasons for the deal with Allianz. Let me briefly reiterate the points that NTUC has made. The current situation for Income cannot be sustained and Income's capital buffers have repeatedly come under pressure. NTUC Enterprise has supported Income with capital injections and will continue to do so. But NTUC Enterprise cannot do this on its own. That is why Income sought to corporatise in 2022, so that it could consider more options to access more capital.

Questions have been raised about the corporatisation exercise. When this was surfaced to the Registry of Co-operative Societies (RCS), RCS had advised all parties that this was a matter for NTUC Income and its members to collectively determine and resolve. What was important was the need to be upfront and transparent about the arrangements and to allow Income's members to decide whether or not to proceed with the corporatisation. We note that Income had done so. Eventually, members voted overwhelmingly in favour of corporatisation. And from a regulatory perspective, therefore, RCS is satisfied that due process was followed.

Mdm Deputy Speaker, NTUC has stated its preference was to keep a majority stake and also, local ownership. Majority stake, local ownership. But Income was unable to find a willing partner. Hence, Income assessed that the deal with Allianz provides the best alignment of interests.

I can understand why many Singaporeans are concerned that the partnership with Allianz may impact Income's social objectives. As I have explained, we need to first appreciate that Income, today, operates in a very different competitive and regulatory environment. Allianz has committed to honour Income's existing policies; participate in national insurance programmes; and continue its charity commitments, including the pledge of $100 million over 10 years from 2021 to provide social mobility among the lower-income and support the well-being of seniors.

NTUC and Income have also given their assurance to keep premiums affordable for Income's low-cost schemes for its members. In fact, NTUC's Secretary-General has put out a statement yesterday, re-affirming NTUC's full commitment to its social mission.

On Mr Saktiandi Supaat's question, the Government has introduced the Significant Investments Review Act, or SIRA, safeguards, to designate entities that provide a critical function to national security interests. Companies that provide a "social purpose" will not meet this high bar.

In fact, many companies in Singapore will want to do well and to do good at the same time. It will not be feasible to legislate and prevent ownership changes in all of these companies. Ultimately, the best way to keep prices affordable is to facilitate competition, ensure options for customers and put in place a sound regulatory framework. And that is what the Government is committed to doing.

Mdm Deputy Speaker: Before I take questions, Minister Chee, will you be covering for MAS now? Later? Alright, Mr Liang Eng Hwa.

Mr Liang Eng Hwa (Bukit Panjang): Thank you, Mdm Deputy Speaker. Madam, the crux of the matter here is that we expect entities under the NTUC Enterprise to not only do well, but also to do good, such as offering affordable and inclusive insurance to the mass consumers as well as to the underserved. This has always been ethos and mindsets of the management and board of NTUC entities.

So, my first question to the Minister of State is with NTUC Enterprise ceding control of Income to a foreign company, how is NTUC Enterprise able to ensure that the acquired company, which will be foreign-owned now, will be able to continue to do good, like what they have always done before. And if the acquired entity is no longer able to do as much good, will the Government be prepared to step in to plug the gap?

My second question is, in Singapore's context, entities that run as social co-operatives have always been an added and valuable instrument for the Government to do some of the public good, such as helping to stabilise inflation, to manage cost of living and launch more affordable, inclusive products, whether it is healthcare, childcare, groceries or insurance. So, my second question is, in the light of this sale of Income and its earlier corporatisation, do

social co-operatives still have a role in our society?

Mr Alvin Tan: Madam, I thank Mr Liang Eng Hwa for his supplementary questions. I can understand why and, in fact, there have been many questions with regard to if NTUC had only a significant ownership in the proposed deal, whether NTUC and Income Insurance can fulfil its social mission.

I think if we take a step back, the reasons why Income has gone into this proposed deal is well laid out. There are realities on the ground – competitive, Government stepping in to provide that social assurance, as well as the capital requirements. The capital buffers, for example, were under pressure. So, that is the first principle.

In this new proposed deal, NTUC as well as Allianz has made assurances. I have outlined these assurances in NTUC's statement, that it will continue with the two schemes, NTUC Gift and Income Insurance's "LUV Life Insurance", and to keep these premiums affordable for policyholders, especially for the low-income segments. And NTUC has stated publicly that Income will uphold this commitment.

NTUC has also stated publicly that NTUC's social mission will not change. On its part, Allianz has also said that the proposed deal will not affect the current policy and they will continue to uphold the pledge to disburse the $100 million over 10 years, from 2021.

Ultimately, this is something that NTUC, Income and Allianz, if the proposed deal goes through, they will have to decide together, but Income Insurance will have board members, they will have substantial share in this and they will work together with this proposed entity to fulfil that mission.

On Mr Liang Eng Hwa's second question, there are a variety of social enterprises, co-ops, many of which many Members know about. For NTUC, there will be a huge portfolio of enterprises, be it in insurance, in childcare and eldercare, supermarket, skills' training, many that I have outlined.

The co-op sector, social enterprises continue to play a very, very important role to provide affordable products that particularly those that are vulnerable and are low income will continue to enjoy. I think that is not just NTUC, but the whole slew of the co-op sector which we have been supporting. And I have shown how we have been supporting them – with training, with grants and also with tweaks in the Co-operative Societies Act. We will continue to support them because we value them and we know that they are a huge value to society.

Mdm Deputy Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai (Non-Constituency Member): Thank you, Mdm Deputy Speaker. May I first declare that I am an independent director of a life insurance company registered and operating in Singapore. I have three supplementary questions for Minister of State Alvin Tan.

My first question is, although he has touched on the assurances that Allianz has given for the deal, but I would still like to ask whether Allianz has given a commitment in writing to allow Income to continue its social mission. If yes, is there a time limit to their commitment? If no, would he agree that NTUC or NTUC Enterprise, has no basis to give the assurance that Income's social mission will be continued? Because after all, if you sell a majority stake to a private company, you cannot have that assurance given to Singaporeans for the very long term.

My next question is whether the Government actually continues to view NTUC Enterprise and Income as social enterprises or private companies. Because Singaporeans are confused that NTUC Income's CEO, Mr Andrew Yeo, had stated two years ago, that the corporatised Income will remain an NTUC social enterprise, while NTUC Enterprise Chairman, Mr Lim Boon Heng, has just implied in a recent interview that Income should be treated as a private enterprise and thus, we should not interfere in this transaction.

My third question is, if the Government continues to view NTUC Enterprise and Income as social enterprises, is it not in the interest to intervene in this transaction to ensure that Income continues to be majority-owned by Singaporeans, so that the social mission of Income will not be affected? After all, NTUC Enterprise is a co-operative set up by NTUC and affiliated unions, and the Singapore Labour Foundation – which is a Statutory Board of the Ministry of Manpower – has been providing funding to NTUC over the years.

Mr Alvin Tan: Mdm Deputy Speaker, I thank Mr Leong Mun Wai for his questions. First, I want to say that Income's social mission has already evolved. It only offers two low-cost options right now, and the other products have competitive options and are well- regulated.

But allow me to also, as I answer his questions, take a step back, because he has questions about Allianz's commitment in writing, social enterprise and private companies. I have answered the second one.

And then this other question, with regard to the social mission. I have explained and in NTUC's statement, it has already said that Allianz is committed to honouring Income's existing policies, participating in national insurance programmes, continuing its charity commitments, also including the pledge of $100 million over 10 years.

But Mdm Deputy Speaker, maybe I can take a step back, to again remind Members here why. Because the questions have been: "Why sell?", "Why sell to foreign owners?" and "Can NTUC continue to fulfil its social mission?" I think that is the crux of Mr Leong Mun Wai's question.

Let me also state that the reasons why these questions arise. And I think Mr Leong Mun Wai has also expressed that, as well as others who have asked the questions: why is this such an emotive topic? This is an emotive topic because Income is special to all of us. For many years, since 1970, it is a trusted brand, it is a brand that Singaporeans identify with, it is a brand that Singaporeans trust.

And for many of us, that is our first policy. For example, if you go to National Service, it was your first policy. And that is why this is something which we all care about and care about deeply, and all Members do so. Can I also just say that because it is something we care about, we all want the best for NTUC Income, we want the best for Singaporean policyholders, we want the best for Singapore. And therefore, you have raised these questions.

But there are different views about this on the ground, there are different views about this in the House and there are also different approaches to how NTUC Enterprise, as well as Income, will have to deal with the realities on the ground.

And so, the question is whether NTUC Enterprise and Income's approach is the right one. Because that is what the discussions have been publicly – whether NTUC Enterprise and Income's approach is the right one.

Time is the best judge, but let me, again, put it out very clearly, that, number one, Income's capital buffers have been under pressure. There is no doubt about this. And in fact, if you think about the insurance industry, there are also other insurance companies and financial institutions who have gone through repeated financial crises – be it the Asian Financial Crisis, the Global Financial Crisis, SARS or the COVID-19 pandemic that has just passed – where they have been unable, for example, or have faced challenges to adhere to capital adequacy ratios and solvency standards. And therefore, NTUC Enterprise had to put in capital injections of up to, it is publicly known, about up to $630 million. But it cannot do so alone and it cannot do so in perpetuity. So, that is one, the financial capital adequacy that is the reality that Income faces.

The second reality is that, both in the private insurance market as well as the public insurance market, the landscape has changed. In the public insurance market, the Government, over time, has stepped in, provided very comprehensive healthcare, comprehensive insurance, and therefore, that it has become more competitive for Income.

On the private space, because we have a well-regulated insurance industry, with a whole variety and suite of options for Singaporeans to choose from, Income also finds itself in that competitive space. So, this is why. These are the rationales which they have articulated and these are the realities.

Then, it also begs the question, could Income and NTUC Enterprise then have looked for other funding sources, which is the question on the ground. They have. In their statements, said that they have. They have looked at financial institutions and non-financial institutions, locally and foreign. They have also tried their very best, as they had mentioned in their statement, and they have said their preference is that they want, ideally, the deal to be majority-owned and, ideally, for it to be locally.

So, they have tried. And make no mistake about that, they have tried, which is an answer to many of these questions that are floating on the ground. But after having tried so many of this and being cognisant of the fact of the challenges on the ground, they said "Allianz has the best alignment with NTUC Income."

What is the purpose for that then? It is not just to address all of the challenges which I have lined up, the capital side and the competitive side, but it is also one central reason why they do so. That is a long-term view to protect Singaporeans for the long term.

Because right now, these challenges are apparent in the near term and the medium term. But insurance is a long-tailed business, as the Members would know. And if you can fulfil your liabilities now, all well and good. But if you are unable to fulfil your liabilities 50 years down the road, then who picks up the tab?

So, we can have a very good debate about the approaches. I think this is what we are trying to do. Ultimately, time will tell. It is a judgement call. That is what leadership is. That is what a judgement call is and that is what I think is already stated clearly. What NTUC Enterprise, Income Insurance have already stated very, very clearly. So, I thought that this is very useful for us to put out there, so that all Members are very clear.

Mdm Deputy Speaker: Mr Leong Mun Wai.

Mr Leong Mun Wai: Thank you, Madam. I would like to further ask the Minister of State about what he has just mentioned. I think this whole debate today is that we want clarity. What the Minister of State has mentioned is that the social mission of Income is no longer a very important part. Because he mentioned that currently, there are only a few policies with regard to that.

That may be the case. But, however, social mission also means intact. Maybe today, the condition of the market, Income does not need to do that much on social mission, but it gives Singaporeans a sense of security that we always have a life insurance company there, protecting us. Just like we seek comfort in the fact that FairPrice is always there. FairPrice is no longer the cheapest in Singapore, we know. But when there is a food crisis, we have FairPrice. So, we are also talking about the long term.

Mdm Deputy Speaker: Mr Leong, please ask your question.

Mr Leong Mun Wai: Yes, so my question is, first of all, does the Government admit that they are only going to concentrate on the capital adequacy of Income and disregard the social mission? This is the first question. Secondly — okay, maybe the Minister of State can answer that first.

Mr Alvin Tan: Mdm Deputy Speaker, I think many other Members also have questions, but I have already articulated to Mr Leong Mun Wai. There were quotes by some of our founding leaders. Let me quote Dr Goh Keng Swee. Dr Goh Keng Swee firmly stressed the key principles for co-ops. He said that co-ops must be competitive, it must be financially sustainable, receiving no privileged treatment from Government. He concluded that a bankrupt co-operative will be of no use.

And I have already outlined why NTUC had done its homework and really wanted to make it as majority-owned as possible and locally-owned. I have already outlined this.

If Members were to take one step back and look at NTUC, and look at its social mission, many of us here are advisors to NTUC unions, we have worked very closely with them. I work very closely with my union's Singapore Industrial and Services Employees' Union (SISEU). I work very closely with the co-ops under SNCF. I meet them very regularly.

But let me put to the Member, Mdm Deputy Speaker, NTUC's history. These are proof points that the social mission remains true. These are the proof points that in crises and in peace time, NTUC remains true. Since its founding in 1961, NTUC has protected and uplifted workers' lives and livelihoods. You meet the workers, they will tell you. We were just there, at the SISEU convention recently. They have kept true to its mission. And since 1969, the Labour Modernist seminar 55 years ago, NTUC has continued to care for workers and families.

More recently, on the social mission, NTUC has worked to raise wages of our low-wage workers through the Progressive Wage Model – again, a social mission, focused on workers, because every worker matters. Then, during COVID-19, it was a lifeline for workers, with the Job Security Council. And throughout the years, throughout the decades, NTUC and the NTUC social enterprises have contributed over $300 million to various charity programmes.

So, NTUC has shown time and time and time and time again, since its founding, since NTUC Income's establishment in 1970, that it has continued its social mission and it has continued to, not just talked about it, but fulfilled the social mission. But it has to be responsible, it has to look long term. It has looked at its books, it has looked at the external environment and it has done its homework, and that is why it is doing what it is doing now.

And it has made commitments, which I have stated in NTUC's statement and Allianz has also made its statement as well. And so, Mdm Deputy Speaker, time will tell whether this approach is right, but if you think about this, it is very clear that all of these things have been lined up quite clearly.

Mdm Deputy Speaker: Mr Saktiandi Supaat.

Mr Saktiandi Supaat (Bishan-Toa Payoh): Thank you, Mdm Deputy Speaker. I thank Minister of State for answering my PQ. I have one supplementary question, a somewhat similar question as that asked by the Member Mr Leong.

In terms of co-ops playing a role, it is very significant. My question is that, in terms of market failure, issues that have been addressed in the past, I think market failure in the insurance industry in the past, has been addressed somewhat like what Minister of State has mentioned.

So, my question is a bit more technical – it is about governance structure of the new entity. If the Minister of State can share, whether there is any reassurance beyond what he has mentioned, from Allianz, in terms of commitment, whether there are any control measures from the governance structure, going forward. And not just for this case, but future cases, for changes or acquisition of co-ops going forward as well, in terms of the legislation.

Mr Alvin Tan: Madam, it is still a proposed deal, yet to be approved. But in public, the structure of the deal is that NTUC Enterprise, up to 49%, and it is a significant shareholding, and Allianz, 51%. So, NTUC Enterprise will have a significant say in how this proposed new entity will run and they have already publicly made very clear statements, on both sides, both NTUC Enterprise, Income, as well as Allianz, about what they will do should this deal progress.

Mdm Deputy Speaker: I do see a few hands coming up, but I do want to allow for those who have filed PQs, to be able to ask their questions. So, I am going to move on to the next related PQ. And then, I will open it up for supplementary questions. Mr Ang Wei Neng.