MAS Seeks Comments On Changes To Insurance Act And Regulations Governing Insurance Intermediaries

• Published date: 28 November 2022
• Subject Matter: Insurance, Insurance Laws and Products
• Law Firm: Rajah & Tann
• Author: Mr Simon Goh, Wang Ying Shuang, Regina Liew, Larry Lim and Benjamin Liew

Introduction

On 4 November 2022, the Monetary Authority of Singapore ("MAS") issued the "Consultation Paper on Amendments to the Insurance Act and the Insurance (Intermediaries) Regulations" containing its proposals to amend:

1. the Insurance Act 1966 ("IA") to achieve four main objectives: (1) enhance MAS' supervisory powers; (2) clarify MAS' existing policy intent; (3) align with other IA provisions or MAS-administered Acts; and (4) reflect changes in policy intent; and
2. the Insurance (Intermediaries) Regulations ("IIR") to align the regulations governing insurance brokers with other MAS-administered regulations.

The consultation ends on 13 January 2023.

This Update outlines certain key proposed changes to the IA and IRR.

Key Proposed Amendments to IA

Below we highlight some of the key changes MAS is proposing to achieve its four main objectives.

Objective 1: Enhance MAS' supervisory powers

Anti-commingling policy for licensed insurers and registered insurance brokers

• MAS proposes to introduce an anti-commingling policy for licensed insurers which is primarily intended to
  • Prohibit insurers from directly undertaking businesses other than insurance business and "permissible businesses". MAS proposes to introduce new provisions that spell out what constitute "permissible businesses". "Permissible businesses" refer to
    1. insurance business (similarly defined as "insurance business" under the IA);
    2. any businesses incidental to insurance business. Business is "incidental" to the conduct of insurance business if such business is necessary to ensure that the insurance business can be conducted satisfactorily. Whether or not a business is "incidental" will also in part depend on the business model of the insurer, and insurers should assess each business on a caseby-case basis to determine whether it is incidental to its insurance business. If in doubt, insurers should consult MAS;
    3. any business that may be prescribed or specified by MAS subject to conditions. MAS states that such list will be business that is related or complementary to the insurance business, and will separately consult on the prescribed/specified list; and
    4. any businesses approved by MAS, subject to conditions. If an insurer intends to carry on business arrangements/activities that is not insurance business or incidental thereto or prescribed/specified business, then the insurer has to first seek MAS' approval. Factors that MAS will consider in deciding whether to grant its approval include whether the business is related or complementary to the insurer's insurance business the strategic value of the business and associated risks.
    
    
    A flowchart...