Question No 925
Notice Paper No. 23 of 2009
For Oral Answer

Date: For Parliament Sitting On/After 3 February 2009

Name and Constituency of Member of Parliament
Penny Low, MP for Pasir Ris-Punggol GRC

Question

To ask the Senior Minister in view of the long history of controversies surrounding section 73 of the Conveyancing and Law of Property Act, if he will elaborate on (a) why the recent amendments to the Insurance Act took so long especially since some insurers have already been using separate beneficiary nomination forms to establish revocable trusts; and (b) what prompted the changes at this time.

Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman:
1. As Ms Low is aware, Parliament passed the Insurance Act (Amendment) Bill on 19 January.  The Bill contained a framework for nomination of beneficiaries in respect of insurance policy proceeds.  Prior to the amendment, the Insurance Act did not contain provisions for the nomination of beneficiaries. 

2. The use of nomination forms by insurance companies created legal uncertainty and ambiguity, given the existence of section 73 of the Conveyancing and Law of Property Act (CLPA). Several court cases also brought to light the inflexibility of these arrangements.  These cases were brought to the courts sporadically over the years, although a few were given a high profile by the media in 2002 and 2003.

3. After studying various approaches, MAS decided to introduce a framework under the Insurance Act to give policy owners clear, simple and economical means to decide on how the proceeds from their insurance policies should be disbursed.

4. In preparing the Bill, MAS conducted two extensive consultations with the industry and the public in 2005 and again in 2007.

5. The issues were complicated and diverse feedback was received from a wide range of stakeholders.  MAS had to take all these views into consideration in addition to the impact of the proposed framework on other pieces of legislation such as the Central Provident Fund Act, the Administration of Muslim Law Act and the Co-operative Societies Act.

6. All this took some time.  The Bill was tabled for Parliament as soon as MAS was able to do so.  The new framework contained in the Insurance Act will clarify the current uncertainty surrounding the disbursement of insurance policy proceeds and give policy owners the assurance that the proceeds from their insurance policies will be disbursed as they intended.