ROBUST, TRUSTED, DYNAMIC AND

PURPOSEFUL FINANCIAL CENTRE

A ROBUST FINANCIAL CENTRE
INSURANCE

Accident and Health Regulatory Framework
Following the MediShield Life Review Committee's recommendation to enhance the regulatory and accountability framework for Integrated Shield Plans (IPs), MAS worked with the Ministry of Health and life insurance industry to enhance disclosure requirements for insurance policies, strengthen protection for policyholders and improve the conduct of intermediaries for IPs. MAS also reviewed the disclosure requirements for other accident and health policies, including short term policies.

MAS has refined the proposals based on the feedback received from its public consultation on the proposed accident and health regulatory framework. With effect from 1 November 2015:

  • Only Medisave-approved policies may have the word "Shield" in their product names to avoid confusion with non Medisave-approved policies;
  • Insurance intermediaries are required to understand their clients' financial commitments and affordability concerns (including their clients' hospital ward preferences) to help their clients identify the appropriate coverage;
  • Insurance intermediaries are required to highlight free-look periods, exclusions and disclaimers as part of their disclosures; and
  • Insurance intermediaries who provide advice on IPs need to undergo specific training.

Certain disclosure requirements for non Medisave-approved policies took effect on 30 June 2016 to give insurers sufficient time for implementation.

Risk Based Capital Framework
Following the second consultation and first comprehensive quantitative impact study (QIS) for the Risk Based Capital (RBC) 2 framework in 2014, MAS has engaged various stakeholders such as insurers, industry associations, external auditors and actuaries to exchange views on RBC 2.

MAS has further refined the proposed RBC 2 framework after reviewing the results of the first QIS and the extensive feedback received. Although the results showed that insurers were well-capitalised, some adjustments were needed to avoid any unintended consequences.

In particular, asset and operational risk charges have been recalibrated and more diversification benefits recognised. MAS has also widened the criteria for the application of a matching adjustment for life business. For cases where a matching adjustment cannot be used, other broader adjustments that similarly recognise the illiquid nature of long-term liabilities have been introduced. These changes will allow insurers to better carry out their important roles in the economy and society on a sustainable basis.

MAS is conducting the third consultation setting out the revised enhancements and second QIS in Q3 2016. Overall, MAS does not expect the insurance industry on the whole to hold higher levels of capital under RBC 2.