by Jared Heng
Singapore’s central bank has issued a consultation paper proposing an extension of the MAS (Monetary Authority of Singapore) Corporate Governance (CG) Framework to all direct insurers and reinsurers incorporated in the country.
The framework comprises regulations and guidelines.
MAS said Wednesday that the proposal is in line with its “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.”
Currently, the CG Regulations are only applicable to the significant insurers, while the CG Guidelines apply to direct insurers incorporated in Singapore.
In Singapore’s Insurance (Corporate Governance) Regulations, a significant insurer refers to any direct life insurer that is incorporated in Singapore and has total assets of at least S$5 billion or its equivalent in any foreign currency in its Singapore Insurance Fund and Offshore Insurance Fund.
MAS highlighted several key recommendations in the proposal.
One is to categorise locally-incorporated direct insurers and reinsurers into two tiers based on the size of total assets or annual gross premiums.
Another recommendation is for regulations currently applicable to significant insurers to be applied to Tier 1 insurers.
In addition, Tier 2 insurers will be required to have a board comprising at least a third of directors who are independent directors.
The CG Guidelines will also be extended to all locally-incorporated reinsurers.
MAS also proposed the introduction of a disqualification rule for the directors, executive officers and employees of an insurer. The insurer will be required to obtain MAS’s written consent to employ persons disqualified under the rule.
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.
MAS said this takes 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, while the proposed disqualification rule is targeted to take effect in mid-2013.
Detailed proposals relating to the Regulations and Guidelines of the CG Framework are found in the consultation paper available on MAS’s website.
Respondents have until March 23 to forward their comments on the proposals in the consultation paper.
