Singapore, 22 February 2012...The Monetary Authority of Singapore (MAS) has issued a consultation paper proposing an extension of the MAS Corporate Governance (CG) Framework, which comprises the Regulations and Guidelines¹, to all direct insurers and reinsurers incorporated in Singapore. This is in line with MAS’ emphasis on the importance of effective corporate governance, given insurers’ responsibilities to safeguard policyholders’ interests and the important role they play in the financial system and economy.

2   Currently, the CG Regulations are applicable to only the significant insurers² while the CG Guidelines apply to direct insurers incorporated in Singapore. In 2010, MAS had stated our intention to extend the CG Framework to cover other financial institutions that we supervise in the next phase of our review.

3   Key recommendations in the proposal are:

• To  categorise locally-incorporated direct insurers and reinsurers into two tiers based on the size of total assets or annual gross premiums;
• To subject Tier 1 insurers to higher CG standards. The Regulations that are currently applicable to significant insurers will be applied to Tier 1 insurers;
• To require Tier 2 insurers to have a board comprising at least one third of directors who are independent directors;
• To extend the CG Guidelines to all locally-incorporated reinsurers; and
• To introduce a disqualification rule for the directors, executive officers and employees of an insurer. The insurer will be required to obtain MAS’ written consent to employ persons disqualified under the rule.

4   The proposed recommendations requiring insurers to appoint new independent directors to the board are targeted to take effect no later than from the first Annual General Meeting (AGM) of each insurer held on or after 1 January 2015. This is to take into consideration that affected insurers may need more time to find suitable independent directors. The other recommendations are targeted to take effect no later than from the first AGM of each insurer held on or after 1 January 2013. The proposed disqualification rule is targeted to take effect in mid 2013.

5   Detailed proposals relating to the Regulations and Guidelines of the CG Framework are contained in the consultation paper which is available on MAS website. [Click here to view the consultation paper (9.96 KB)]. Interested parties should forward their comments on the proposals in the consultation paper by 23 Mar 2012.

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¹ Regulations are legislation issued under the authority of the relevant Acts which flesh out the provisions of an Act and spell out in greater detail the requirements that financial institutions have to adhere to.  Regulations have the force of law and may specify that a contravention is a criminal offence.

Guidelines set out principles or "best practice standards" that govern the conduct of financial institutions. While contravention of guidelines is not a criminal offence and does not attract civil penalties, the degree of observance with the spirit of the guidelines by an institution will impact MAS' overall risk assessment of that institution. 

² In the Insurance (Corporate Governance) Regulations, “significant insurer” means any direct life insurer which (a) is incorporated in Singapore; and (b) has total assets of at least $5 billion or its equivalent in any foreign currency in its Singapore Insurance Fund and Offshore Insurance Fund.