Income Insurance Explores New Business Model to Boost Growth
Income Insurance, a composite insurer, is venturing into a new business model to expand its distribution abilities and boost its topline. The company is looking to partner with individuals who want to start their own financial advisory (FA) firms, according to market sources.
New Business Partner
Income’s wholly-owned subsidiary, Income Advisory Group Holdings (IAG), will hold a stake in the new FA firm, led by Grace Tng. The FA firm can choose to join IAG and sell either Income’s products or plans from other insurers.
Support and Services
IAG will provide support to the new FA firms through shared services in areas such as administrative matters, processes, technology, and compliance. This can be a costly component for FA firms, according to industry players.
Benefits to FA Firms
Industry players noted that the IAG business model can be appealing as it plays to the strengths of the people who join. It allows them to focus on what they do best – sales and recruitment. "In the constantly evolving Singapore market, having scale in distribution is necessary to serve a relatively mature insurance market in Singapore," Income said.
Current FA Arm
Income currently has a FA arm, Infinitum Financial Advisory, which was formed in June 2019 following the acquisition of two FA firms. Infinitum has around 180 advisers.
Omni-Channel Distribution Strategy
Income’s new strategy complements its omni-channel distribution strategy, which includes its tied agents or agents who only sell Income products; and those who offer a range of plans from different insurers, including financial advisers and retail branches.
Industry Reaction
Some observers described the business model as "clever," but it has raised several questions, including how sustainable this could be in a highly-competitive insurance market in Singapore. The development has also created unease among industry players, who are watching this with a keen eye.
Recruitment and Poaching
IAG has been actively recruiting with attractive buyout packages, sources told ST. While recruitment or poaching in the industry is nothing out of the ordinary, the possible carrots dangled at potential candidates, typically insurance agents and agency leaders, are making some uncomfortable. Industry veterans said that the norm for buyout packages is 150% or so, and if it goes past that, it would not be sustainable.
Conclusion
Income’s new business model presents an opportunity for the company to expand its distribution abilities and boost its topline. However, the success of this model depends on various factors, including the competitiveness of the insurance market in Singapore and the ability of the FA firms to thrive in a highly-regulated environment.
Frequently Asked Questions
Q: What is Income Insurance’s new business model?
A: Income Insurance is looking to partner with individuals who want to start their own financial advisory (FA) firms.
Q: What is Income Advisory Group Holdings (IAG)?
A: IAG is Income Insurance’s wholly-owned subsidiary that will hold a stake in the new FA firm.
Q: What services will IAG provide to the new FA firms?
A: IAG will provide support to the new FA firms through shared services in areas such as administrative matters, processes, technology, and compliance.
Q: How will this new business model benefit FA firms?
A: The IAG business model can be appealing as it allows FA firms to focus on what they do best – sales and recruitment.
Q: How sustainable is this business model in a highly-competitive insurance market in Singapore?
A: The success of this model depends on various factors, including the competitiveness of the insurance market in Singapore and the ability of the FA firms to thrive in a highly-regulated environment.
