In a reversal of an unpopular long-standing practice, NTUC Income will soon sell motor insurance that allows car owners to have repairs carried out at any motor workshop.

This is part of a new strategy unveiled by Income's new chief executive, Mr Tan Suee Chieh - installed in February - to regain its prized No. 1 motor insurance position in Singapore.

Income is rolling out two new products next month - including one that allows repairs to be done at any workshop, for about 25 per cent more in premiums.

The strategy is a marked departure from the approach taken by former Income boss Tan Kin Lian, who had insisted that policyholders should have repairs carried out only at workshops approved by Income.

This was introduced in 2002 to cut inflated motor claims - which it did. But Income paid a price as market share fell because many car drivers prefer to have repairs done at non-Income authorised workshops.

Income also faced difficulty penetrating the new car market as distributors of new cars insisted that repairs be carried out at their own workshops.

In May last year, Income relaxed the practice by allowing policyholders to have repairs done at distributors' workshops, if they paid a higher premium. This option was meant for cars less than three years old and still under the manufacturer's warranty.

But Income managed to insure only 12,000 or about 10 per cent of the 117,000 new cars here last year. It is now in talks with two car distributors regarding possible tie-ups.

Next month, Income customers will be able to choose between two plans. The 'drivo Premium' plan will allow car repairs at any workshop while the 'drivo Classic' plan will require repairs to be conducted at Income's authorised workshops.

'Classic' plan premiums will be maintained at current rates - about 20 per cent below the published rate for most customers. The 'Premium' rates will be industry competitive and will be priced 25 per cent above those for the 'Classic' plan, Income said.

At a press conference yesterday, Mr Tan said Income's market position has been challenged by intense price competition, under-representation in the new car market and lost intermediary business.

But the new boss ruled out engaging in a price war as a means of regaining market share - arguing that stability in premium rates is the best way to go.

Income's two new motor plans mean customers will have more options while loyal policyholders who want to continue having repairs done at Income's workshops are assured of affordable premium rates.

Mr Tan hopes to raise gross motor premiums to $220 million for this year, up from $165.4 million last year. If the target is achieved, it would translate into a potential market share of 30 per cent. The firm's market share slipped to 24 per cent last year, compared with 30 per cent in 2005 and 37 per cent in 2004.

Current top motor insurer AIG's market share was only slightly higher than Income's, at 24.8 per cent last year.

Over the next 12 months, Mr Tan expects 15 per cent to 20 per cent of motor premiums to be generated by 'drivo Premium' plans.

Last year, Income's motor underwriting profit was $5.1 million, less than half of the $10.9 million posted in 2005. Its gross motor premiums also fell, from $206.5 million in 2005 and $255.3 million in 2004.

As part of its motor strategy, Income will be working with car distributors and intermediaries such as external and in-house agents, and stepping up its marketing efforts.

Under the new plans, annual premiums for a new two-litre Toyota Camry will come to $1,600 under the 'Premium' plan and $1,281 under the 'Classic'. The rates are based on the assumption that the policyholder is a 35-year-old new driver.