On 20 March 2024, the Monetary Authority of Singapore (“MAS“) issued Circular No. ID 05/24 on its Response to feedback (“Response“) received on the Consultation Paper on Amendments to the Insurance Act 1966 (“IA“) and the Insurance (Intermediaries) Regulations (“IIR“) (“Consultation Paper“). The Consultation Paper contains MAS’ proposals to amend the IA and IIR to: (i) enhance MAS’ supervisory powers by, among other things, introducing an anti-commingling policy for licensed insurers and registered insurance brokers; (ii) clarify MAS’ existing policy intent; (iii) align with other IA provisions or other MAS-administered Acts; and (iv) reflect changes in policy intent. MAS also proposed amending the IIR to align the regulations governing insurance brokers with other MAS-administered regulations, namely to require registered insurance brokers to: (i) notify MAS of material adverse developments, and (ii) put in place the appropriate compliance, risk management and internal controls.
Key proposed changes include:
(a) Anti-commingling policy on permissible businesses. MAS clarified that the proposed anti-commingling policy will apply to all licensed insurers. MAS will consult on the types of non-insurance businesses to be included in the proposed list of prescribed businesses, and examples on what business is “incidental to insurance business” in its next consultation paper. Anti-commingling requirements proposed for licensed insurers will not be imposed on registered insurance brokers.
(b) Circumstances where the sharing of name, logo or trademark of licensed insurer requires MAS approval. MAS explained the treatment for locally-owned insurers and foreign-owner insurers. Insurers will have a one year transition period from the effective date of the IA amendments to seek MAS’ approval where required.
(c) Strengthening MAS’ oversight of insurers’ outsourcing arrangement. MAS proposed issuing an Outsourcing Notice to define a set of minimum standards for outsourcing management and provide for specific requirements. Outsourcing requirements will also apply to material intra-group arrangements of the insurer in Singapore.
(d) MAS’ powers to require insurers to restitute their insurance funds for participating (“Par”) and investment-linked (“IL”) policies will be confined to circumstances where there had been a breach of MAS’ requirements.
(e) Requirement for reinsurers to establish and maintain separate insurance funds for IL Policies, Par Policies and Non-Par Policies, where appropriate.
(f) Revision to the definition of marine mutual insurance business.
(g) Revisions to align with other provisions in the IA or other MAS-administered Acts on the penalty amount for contravening submission of return requirements, the scope of penalty provisions to apply to all documents lodged or information submitted to MAS, and requiring insurers and registered insurance brokers to notify MAS if any of their chairpersons, directors and key executive persons are no longer fit and proper.
(h) Limit on term of a key executive person’s appointment. MAS will consult on subsidiary legislation to implement this.
(i) Giving MAS power to remove an executive officer who is not fit and proper, and including additional considerations for the removal of a chairperson, director, key executive person and executive officer.
(j) Expanding the scope of circumstances under which statements made by insurance intermediaries would be deemed false and misleading.
(k) Updating provisions to reflect changes in MAS’ policy intent on reinsurance deposit requirement and the nomination of beneficiaries (NOB) framework.
MAS will hold another public consultation on the amendments in the proposed Insurance (Amendment) Bill and proposed amendments to the IIR. To read more, refer to the Consultation Paper (here) and Response (here). Read more about the proposals in the Consultation Paper in our earlier Legal Update here.
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