The Regulatory Landscape & Industry Frameworks

The Monetary Authority of Singapore (MAS) is Singapore's central bank and integrated financial regulator. It supervises banks, insurers, capital markets, payment services and financial advisers under a single roof, and also acts as the country's central bank (managing monetary policy, currency issuance and the official foreign reserves).

For insurance, MAS administers and enforces the Insurance Act 1966 and the Financial Advisers Act 2001 (FAA). It licenses insurers, approves key appointments (such as directors, CEO and the appointed actuary), sets prudential (capital/solvency) requirements, and issues legally binding Notices as well as Guidelines that state good practice standards.

MAS's regulatory objectives include a sound and progressive financial services sector, financial stability, and fair dealing with consumers. It supervises through a risk-based framework — the greater the potential impact of a firm on the system or on consumers, the more intensive the supervision.

The Insurance Act 1966 is the principal legislation governing the carrying on of insurance business in Singapore. No person may carry on insurance business unless licensed (registered) by MAS as an insurer. Insurers are authorised by class — broadly life business and general business — and a composite insurer is one licensed to write both.

The Act distinguishes direct insurers (who deal with the public), reinsurers (who insure other insurers), and captive insurers (who insure the risks of their related corporate group). MAS may impose conditions, and can vary, suspend or withdraw a licence where an insurer fails to meet requirements.

Insurers must maintain insurance funds — assets segregated to back policy liabilities — and meet risk-based capital (RBC) solvency requirements. Life and general businesses, and Singapore-policy and offshore business, are held in separate funds so that the assets of one fund cannot be used to meet the liabilities of another.

Insurance intermediaries are also regulated: insurance agents are appointed by and represent insurers, while are registered under the Insurance Act and generally act for the customer. Persons who advise on and arrange life policies and investment-linked products act as regulated under the FAA.