Media Releases
Published Date: 15 July 2016

MAS Proposes Further Revisions to Risk Based Capital Framework for Insurers

Singapore, 15 July 2016…The Monetary Authority of Singapore (MAS) today published its third consultation paper on proposed revisions to the Risk-Based Capital (RBC) framework for insurers, taking into account feedback from the industry. It will also conduct a second quantitative study to assess the impact of the revised proposals.

2   Since the first consultation in 20121, MAS has been closely engaging relevant stakeholders in its review of the RBC framework to ensure that the framework remains relevant to industry’s needs while enhancing protection for policyholders. The review reflects MAS' ongoing efforts to maintain prudent capital requirements that are commensurate with insurers' risk profiles and business activities and in line with international standards and best practices. 

3   The latest consultation paper sets out the revised proposals after taking into account the feedback received from the previous consultation in 20142. Some of the key revisions are as follows:

  • Capital requirements for equity investment, credit spread, counterparty default and operational risk have been re-calibrated downwards to more accurately reflect the risks they pose to insurers. 
  • The discounting of life insurance liabilities has been adjusted to reduce the impact of short-term volatility on insurers’ capital adequacy.  This will enable insurers to continue providing sustainable long-term insurance solutions to policyholders.  

Details on the key revisions can be found in Annex A.

4   The revised RBC framework will create a more conducive environment for insurers to invest in equities and long-dated bonds and offer long-term insurance products for policyholders. Policyholders will benefit from better product pricing and asset allocation decisions made by insurers.

5   Mr Chua Kim Leng, Assistant Managing Director (Banking & Insurance) of MAS, said, "Insurers in Singapore are well-capitalised. The purpose of the RBC 2 review is therefore not to raise regulatory capital requirements, but to ensure that our framework for assessing capital adequacy better reflects an insurer’s activities and risk profile.”

6   The consultation paper is available on the MAS website and comments should reach MAS by 20 October 2016.  

1 The first consultation paper can be accessed at 2012 RBC 2 Consultation Paper
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2 The second consultation paper can be accessed at 2014 RBC 2 Consultation Paper