Singapore, 12 March 2002 .The Monetary Authority of Singapore ('MAS') is seeking industry comments on the following draft documents relating to the Insurance Act:
(a) Insurance (Amendment No 2) Regulations;
(b) Insurance (Accounts and Statements)(Amendment No 2) Regulations; and
(c) A written Notice relating to Code of Conduct for Insurance Brokers and their Broking Staff.
2 The Insurance Intermediaries Act (IIA) will be repealed when the Financial Advisers Act 2001 comes into operation. Provisions in the IIA relating to insurance agents, direct general insurance brokers and all reinsurance brokers, with some modifications, will be migrated to the Insurance Act. The Insurance Regulations and Insurance (Accounts and Statements) Regulations will be amended by the Insurance (Amendment No 2) Regulations and Insurance (Accounts and Statements) (Amendment No 2) Regulations respectively to deal with the migration of the insurance agents, direct general insurance brokers and all reinsurance brokers to the Insurance Act.
3 The regulations dealing with direct general insurance brokers and all reinsurance brokers remain substantively unchanged in the proposed Insurance (Amendment No 2) Regulations and proposed Insurance (Accounts and Statements) (Amendment No 2) Regulations except for the following:
(a) Treatment of interest or other income earned from the insurance broking premium accounts maintained by insurance brokers.
(i) Direct insurance brokers who settle payments due to insurers within the agreed credit period will be allowed to retain interest earned on such balances. However, they must pay over to the insurers the interest earned on balances still unpaid after the agreed credit period.
MAS has proposed this change in treatment of the interest income following consultations with the general insurance industry. In conjunction with the above, the General Insurance Association of Singapore and the Singapore Insurance Brokers' Association will be issuing a Code of Practice for all direct insurers and direct insurance brokers, which will cover model business processes for areas such as policy issuance, business agreements and premium collection.
MAS expects that the above measures will be effective in dealing with the outstanding premium problem.
(ii) The above requirement would not apply to the reinsurance sector. Under the Regulations, reinsurers and reinsurance brokers will be allowed to negotiate and agree with each other as to who should retain the interest or other income earned from the insurance broking premium accounts. This is in view that reinsurance brokers deal largely with offshore risks and abide by global market practices.
(b) Lodgement period for the submission of audited accounts by registered insurance brokers has been shortened from 6 months to 5 months.
(c) Requirement for exempt insurance brokers carrying on insurance broking business to submit returns.
4 Industry participants have until 27 March 2002 to submit their comments on the draft documents. The Insurance (Amendment No 2) Regulations, Insurance (Accounts and Statements)(Amendment No 2) Regulations and Notices are available on MAS' website.
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