Parliamentary Replies
Published Date: 28 February 2024

Reply to COS Cuts on insurance practices and safeguarding bank customers' interests

For Parliament Sitting on 28 February 2024

Name and Constituency of MP
Mr Ong Hua Han, NMP

1. To urge MAS to step in when insurers do not carry out an objective risk assessment of a PWD's application for Total Permanent Disability coverage. On the back of the upcoming guidelines, MAS should take action against insurers who are found to have indiscriminately rejected an application solely based on a disability or mental health condition. Could MAS give concrete illustrations of what it considers discrimination?

Name and Constituency of MP
Mr Gerald Giam Yean Song, Aljunied GRC

2. To ask how the MAS guidelines for insurers to adopt fair and responsible practices towards PWDs and those with mental health conditions will be materially different or beneficial to persons with disabilities or special needs from the current status quo. When will these guidelines be issued?

Name and Constituency of MP
Ms Sylvia Lim, Aljunied GRC

3. To acknowledge initiatives by Monetary Authority of Singapore and to suggest what more should be done to safeguard bank customers' interests.

Answer by Mr Alvin Tan, Minister of State, Ministry of Trade and Industry and Ministry of Culture, Community and Youth, and Board member of MAS, on behalf of Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Chairman of MAS:

On Fair and Responsible Insurance Practices

1 Chairman, with your permission I would be taking clarifications after this reply if there is available time.

2 I thank the Members for their questions and comments. Allow me to start by addressing Mr Ong Hua Han and Mr Gerald Giam’s questions on adopting fair and responsible practices towards persons with disabilities and persons with mental health conditions. The Monetary Authority of Singapore (MAS) expects all insurers to deal fairly with their customers, including persons with disabilities and persons with mental health conditions.

3 Over the past three years, MAS has reinforced these expectations with insurers. First, MAS has carefully reviewed individual cases that have been highlighted to us to ascertain that customers were treated fairly. Second, MAS has worked with the Ministry of Social and Family Development (MSF) to consult relevant medical professionals and industry practitioners to ensure that the underwriting standards of the insurance industry, in particular, for persons with disabilities and persons with mental health conditions, are grounded in scientific evidence and data. Third, MAS has also worked with insurers to better explain underwriting outcomes to applicants.

4 The upcoming revision to the MAS Guidelines on Fair Dealing – Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers (Guidelines), which Members have raised, formalises all of these expectations. MAS and MSF have engaged individuals and groups representing persons with disabilities as well as industry practitioners in the process of refining these Guidelines. Under the proposed Guidelines, an example of inappropriate differential treatment would be to reject an application solely on the basis of declared personal information, such as a disability or medical condition. This would fall short of the expectation for insurers to conduct an objective assessment of every application, based on reliable information or data relevant to the risks that are being insured. This applies to all types of insurance policies. Where an application is rejected or accepted with condition, insurers are to properly explain to the applicant the basis of the decision. This will also be set out in the revised Guidelines, which we expect to issue by the middle of this year.

5 In other words, insurers should not reject applications from persons with disabilities and persons with mental health conditions without an assessment. After they have conducted the detailed assessments, the insurers may choose to accept applications as is, with higher premiums or with specific benefits excluded. There may also be instances where the insurers assess the risks to be large, and therefore are unable to provide coverage. Such cases are unlikely to be unique to Singapore as insurers typically reference the underwriting guidelines of reinsurers which operate internationally, to which insurers would also transfer some of their risks.

6 Prescribing one-size-fits-all assessment criteria on underwriting would result in some insurers taking on risks that exceed their underwriting expertise and capacity, which will not be prudentially sound. It could also have unintended consequences. For example, it could impair access to insurance protection if insurers stop providing coverage under such circumstances. Where the ability of insurers to adjust coverage and premiums for higher risk individuals is constrained, it could lead to higher premiums for policyholders who pose lower risk.

7 MAS will closely monitor the effective and consistent application and implementation of the revised Guidelines. This is part of our ongoing supervision of insurers. This will include reviewing insurers’ underwriting policies and processes, including via onsite inspections, to ensure that insurers maintain robust underwriting frameworks that are in line with MAS’ regulatory requirements, supervisory expectations and sound international practice. Where an insurer is found to have fallen short, or found to be dealing unfairly with its customers, MAS will take appropriate supervisory actions, such as directing the insurer to review their policies and processes to prevent a recurrence, and to review applications of affected customers.

8 Individuals who have concerns over their insurer's underwriting decision can make an appeal through their insurer's feedback channel. In this vein, MAS expects insurers to have a robust process to handle customer complaints independently and effectively. Individuals can also write to MAS, and MAS will investigate accordingly.

On Safeguarding Bank Customers' Interests

9 Let me turn to Ms Sylvia Lim’s cut. Ms Sylvia Lim asked about efforts to safeguard bank customers' interests. I thank her as well as Mr Derrick Goh in his speech yesterday, for raising this very important topic, and for acknowledging the hard work that MAS, in partnership with our banking industry, has put in to protect customers against scams. Other Members of Parliament (MPs) such as Dr Tan Wu Meng, Dr Lim Wee Kiak, Ms Rachel Ong, Mr Saktiandi Supaat, Ms Yeo Wan Ling, and Mr Gerald Giam, have also spoken about this and advocated strongly about this topic in this House.

10 In her MHA COS speech, MOS Sun Xueling will more comprehensively outline the efforts by government agencies and private sector entities to raise our collective defences against scams. These include initiatives and measures that have been explored under the guidance of MAS, such as banks’ recent anti-malware controls, and the Shared Responsibility Framework (SRF) to strengthen the direct accountability of financial institutions (FIs) and Telcos to consumers.

11 Our efforts are bearing fruit, especially for unauthorised transactions. The number of reported phishing cases in 2023 decreased by 16% compared to 2022, and the amounts lost decreased by 14%. The incidence of malware enabled scams has also reduced significantly after major retail banks introduced anti-malware security features on their banking apps.

12 Despite this progress, we are not resting on our laurels. MAS will build on this progress by continuing to work with banks to further strengthen anti-scam controls. We will better safeguard funds by encouraging people to adopt Money Lock, and enhancing Money Lock’s functionality.In its initial roll out, DBS required customers to open a separate account for Money Lock. DBS announced on 23 Feb, that customers would be able lock up a portion of funds in their existing accounts. MAS is also working with banks to improve their fraud surveillance capabilities and strengthen authentication measures at account logins and when making payment transactions. Admittedly, these will add more friction to the banking process, but these will better safeguard consumers’ interests and reduce the amounts lost through scams in the longer term.

13 I would like to highlight to Members that today, the bulk of scams and amounts lost are cases involving authorised transactions, as compared to unauthorised transactions. Authorised transactions are transactions where victims willingly transfer monies to scammers under social engineering and deception. We cannot address such scams directly through banking sector-related safeguards alone. What we need is a vigilant public, and we must all take steps to protect ourselves by keeping up with new scam typologies, which are rapidly evolving, as well as banking controls and checking for signs of scams. MAS and banks will continue to support national public education efforts, including the Government’s broader public education under the “Add, Check and Tell” anti-scam campaign.

14 I thank Ms Sylvia Lim for her suggestions. We have made some collective progress together, but we must and we will continue to strengthen all of these initiatives that I have outlined to help further safeguard bank customers’ interests.