Insurance in Singapore has long been dominated by a quartet of players that control 80% of the market thanks to their elite agency network. But British newcomer CGU, which last year acquired local player Insurance Corporation of Singapore (ICS), intends to smash the reigning oligopoly.

"There will be a rapid shake-up of the market in the next two years," says Keith Perkins, CEO and general manager at ICS. He predicts ICS will have 15% of the life insurance market by that time, up from today's 6%, with about S$2 billion ($1.1 billion) of assets under management.

CGU, ICS and their UK holding company CGNU will be changing their name to Aviva later this year, to present a clean brand identity.

Driving the group's growth is the explosion of bancassurance in Singapore and ICS' relationship with its former parent, DBS Bank. When CGU bought the insurer it also made a 10-year distribution agreement with DBS.

Bancassurance is now the leading driver of growth, and the local banks are the main beneficiaries. The leader is OCBC Bank, which now accounts for 48% of all insurance products sold via banks û up 43% from last year. DBS is in second place with 22% and UOB in a close third with 19%. Moreover, DBS has announced its goal to take the lead by 2005, as well as grow its bancassurance business in Hong Kong and other regional markets.

UOB is the only bank that hasn't established a relationship with an insurance company and is now in negotiations with potential partners.

Meanwhile the market's longstanding quartet of leaders û locals Great Eastern Life and NTUC plus AIG of the US and Prudential of the UK û rely mainly on the traditional sales force for distribution. The rapid growth of bancassurance is steadily eating into their position.

In the past year bancassurance has grown to account for 26% of the total insurance market, up from 8%, and will grow to 50% in two years, say market players. Aiding this rise is the fact that in tiny Singapore, bank branches are powerful distribution tools. Local banks garner a high level of trust.

Recently standards for sales forces have been raised by the Monetary Authority of Singapore. This is leading to the streamlining and professionalization of agencies. Although this will prompt insurers with large sales forces to upgrade their staff and services, ICS' Perkins believes "They cannot achieve a quantum leap." Rather the future belongs to companies such as his that have no sales force and rely on banks, independent advisors and brokers for distribution.