An agent or nominee agent (including a nominee agent of a TSA) who is a natural person must possess:

(i)    Certificate in General Insurance (CGI) which comprises:

• Basic Insurance Concepts & Principles (BCP) and Personal General Insurance (PGI) if he wishes to sell only personal insurance products; or
• BCP and Commercial General Insurance (ComGI) if he wishes to sell only commercial insurance products; or
• BCP, PGI and ComGI if he wishes to sell both personal and commercial insurance products.

OR

(ii)   Acceptable qualifications in lieu of CGI as set out in the Notice No.: MAS 211 on “Minimum and Best Practice Training and Competency Standards for Direct General Insurers”.

• To remain registered with the ARB, agents, nominee agents and nominee agents of a TSA, who are natural persons are required to undergo and complete CPD training for a minimum number of hours each year as may be determined by the ARB.
• The CPD training shall comprise such training and include such activities as may be determined by the ARB from time to time.
• All agents are required to fulfil their outstanding CPD hours by 31 December of the year. Failing which, the General Insurance Certificate of Registration will lapse. An agent whose renewal has been lapsed may apply for registration only after a period of one year. CPD training hours should only be awarded for the training attended by the applicant after he becomes an agent. General insurance agents are required to fulfil 24 hours each in the first and second year, and 15 hours per annum from the third year onwards. Eight hours of CPD will be required for life agents who also sell general insurance, in addition to the minimum hours which they have accumulated as agents for life insurance products.
• However, those in respect of motor car dealers are required to fulfil four CPD hours yearly, before they can be renewed as TSAs selling Motor Insurance. All other TSAs and their nominee agents are exempted from the CPD requirements.

Generally known as agencies, namely sole proprietorships, partnerships, limited liability partnerships, and companies registered with ACRA. This also includes societies registered with the Registry of Societies and co-operative societies registered with the Registry of Co-operative Societies.

TSAs are engaged in a business of which insurance is not their core business, and they usually sell only one type of insurance product (e.g. travel agents selling Travel Insurance) in the course of their core business activities.

The various types of TSAs engaging in insurance sales and/or advisory services are:

• Credit card providers
• Electrical and electronic retailers
• Freight forwarders
• Foreign domestic worker agencies
• Foreign worker agencies
• Mobile device dealers
• Motor dealers
• Travel agencies

A nominee agent is one who acts for an agent and such agent is registered with the ARB in accordance with the mandatory requirements of Notice No.: MAS 211.

The requirement for corporate agents to transact through its nominees will be codified in the revised GIARR effective January 2020. An Agent (other than an Agent who is an individual) must only solicit general insurance business or engage in general insurance selling or advisory activities through its Nominee Agents.

• Insurance brokers in Singapore are generally classified under the following categories:

  • Direct insurance broker, to carry on general business and long-term accident and health policies
  • General reinsurance broker, to carry on general reinsurance broking business
  • Life reinsurance broker, to carry on life reinsurance business
  • Insurance broker, to carry on any combination of the above.

• Lloyd’s underwriters do not generally deal directly with policyholders. Insurance business is generally brought in by brokers that have been accredited (by Lloyd’s) to place insurance risks at Lloyd’s.

   

  A policyholder who wishes to insure its risks at Lloyd’s must place those risks through a Lloyd’s broker, which will have to satisfy the Committee of Lloyd’s its experience, integrity, and financial standing in the insurance market. A Lloyd’s broker may also place business with other insurance companies in the insurance market.

   

  In Singapore, the Insurance Act (Cap. 142) requires any broker who wishes to place business with a foreign insurer under a foreign insurer scheme (such as the Lloyd’s Asia Scheme) to obtain a licence from MAS.

   

  The Lloyd’s Asia Scheme was established on 1 February 2002 under Part IIA of the Insurance Act (Cap. 142), in accordance with the Insurance Regulations. It replicates in Singapore the Lloyd’s insurance marketplace i.e. Lloyd’s members may carry on insurance business in Singapore through locally-incorporated service companies registered with the Administrator of the Scheme, which is Lloyd’s of London (Asia) Pte Ltd.

These are companies who act as insurers to direct insurers. They are licensed in Singapore and are restricted to carrying out life reinsurance and/or general reinsurance business in Singapore.

They are not permitted to write direct business and are only allowed to assume all or part of the insurance or reinsurance risks written by another insurer. They do not deal with the general public; instead, they liaise with the direct insurers directly or through reinsurance intermediaries (reinsurance brokers).

Under the Insurance (Authorised Reinsurers) Regulations of the Insurance Act (Cap. 142), overseas reinsurers may apply for authorisation in respect of life and/or general reinsurance business. Once authorised, they are allowed to solicit business and collect premiums from insurers in Singapore. 

The insurer that transfers the risks is known as the ceding company, the cedant or the reinsured. Reinsurers also transfer some of their risks to other reinsurers. This process of risk transfer is known as retrocession. The assuming reinsurer is called the retrocessionaire, while the ceding reinsurer is called the retrocedent.

Lloyd’s is not a single insurance company. Instead, it is a specialist insurance market created in 1871 by an Act of Parliament in England (called the Lloyd’s Act). Lloyd’s does not write insurance business, but merely provides the infrastructure, including the premises and facilities for its “underwriting” members to conduct insurance business.

Click the link below to obtain a deeper insight on how Lloyd’s work, how it is being regulated and how it settles claims.

Captive insurers are licensed in Singapore to insure principally the risks of their parents and related companies as defined under Section 6 of the Companies Act (Cap. 50).

Normally, they are subsidiaries of, or wholly-owned by large multinational corporations, whereby the parent and the related companies will first purchase insurance covers from their own captive insurers, who then transfer part of the risks to the reinsurers. 

Singapore has become an attractive place for captive insurance companies and currently hosts a number of such companies. One such example is SembCorp Captive Insurance Pte Ltd, being a wholly-owned subsidiary of SembCorp Industries.

However, establishing a captive insurance company requires a substantial amount of initial capital to ensure that the company remains financially healthy during tumultuous times.

Co-operatives are business organisations owned by members who use their services. The members of the co-operatives are people or groups of people who need and use the services and products that a co-operative provides. If the co-operative is created to provide work, the workers are the member-owners. If the co-operative is created to purchase goods and services, the consumers (buyers) are the members. 

A co-operative can also be set up to provide the insurance needs of its members. All policyholders of the insurance co-operative are the members and co-owners of the company. Interests of the co-operative’s policyholders are placed foremost, instead of maximising profits for shareholders. A portion of the company’s operating profits is from time to time distributed to its policyholders in the form of policy dividends.

In Singapore, there is currently one such co-operative, which is NTUC Income Insurance Co-operative Limited. It is also a composite insurer, transacting both life and general insurance business.

It is common for shipowners or other maritime operators to come together to form an insurance mutual that provides various types of insurance, including purchasing reinsurance protection, to cover the risks of the group.

These insurance mutuals are commonly referred to as marine mutuals. These mutuals are typically called “Clubs”; for example Protection and Indemnity Clubs (P&I Clubs), Hull Clubs, and War Risks Clubs. These Clubs are differentiated by the types of cover that they provide. P&I Clubs are essentially associations of shipowners that agree to insure each other for third-party liabilities on an indemnity basis.

These mutuals are an important part of the maritime sector, providing capacity and insurance cover to maritime operators. Similar cover may also be provided on a non-mutual basis.

A marine mutual insurer is licensed under the Insurance Act (Cap. 142) as a direct insurer permitted to carry on marine mutual insurance business only.

The Life Insurance Association of Singapore (LIA) is a not-for-profit trade body of life insurance product providers and life reinsurance providers based in Singapore which are licensed by the MAS. It is committed to promoting a progressive life insurance industry by collectively enhancing consumer understanding, promoting industry best practices, and fostering a spirit of collaboration and mutual respect with the government and business leaders.

The Singapore Insurance Brokers’ Association (SIBA) is a trade association comprising international and Singapore insurance brokers. SIBA advances professional insurance broking and fosters public confidence in insurance brokers. It sets minimum standards of education and experience, and also ensures that insurance brokers undertake ongoing development and training to maintain and enhance their capabilities and professionalism.

SRA’s members comprise all major non-life reinsurance companies with a presence in Singapore, as well as some other regional reinsurers. It collectively represents its members in matters affecting their interests in the reinsurance business, and aims to upgrade reinsurance expertise in Singapore by promoting education and training in all aspects of the industry. This includes being one of the organisers of the Singapore International Reinsurance Conference (SIRC).

The Reinsurance Brokers’ Association (Singapore) (RBAS) represents reinsurance brokers licensed in Singapore. RBAS supports the professional efforts of its members. It also supports the development of Singapore as the leading regional reinsurance centre in Asia. It encourages regular communications among regulators, members and markets.

The Loss Adjusters’ Association (Singapore) (LAAS) represents loss adjusting firms in Singapore. It advances the study and practice of loss adjusting among members, and co-operates with the relevant authorities on matters relating to the rules and regulations affecting the loss adjusting profession.

The Association of Financial Advisers (Singapore) – AFA(S) represents relevant licensed Financial Advisers (Firms) that provide advice on and engage in sales of Financial Products (Exempt Financial Advisers Companies are excluded). AFA(S) aims to provide a forum for its members to develop opinions, recommendations, and educational programmes, which can contribute to the further development of the financial services industry for the benefit of the Singapore public.

IFPAS is an association for financial services and insurance practitioners dedicated to upholding the ethical and professional standards of the industry. IFPAS advances the interests of its members by representing their views on legislative, regulatory, and policy-related matters. It keeps members informed of new developments and provides them with a forum to air their views on industry issues. It also acts as a channel of communication between members and other industry bodies, and regulatory authorities.

The Association of Singapore Insurance Agents (ASIA) represents registered general insurance agents in Singapore. ASIA provides a platform for members to exchange views, ideas, and concerns on matters affecting the general insurance industry. It also updates members of latest developments in the insurance industry and acts as a centralised communication vehicle for dissemination of information to its members.

The Insurance Law Association, Singapore (ILAS) comprises members not only from the legal profession but also those from the insurance industry. It focuses on legal matters arising out of Singapore and other countries, insofar as they affect any branch of insurance. It hosts seminars and talks featuring insurance experts from Singapore and the region, thereby enhancing Singaporean insurance practitioners’ knowledge and expertise of insurance law.

The Singapore College of Insurance (SCI) is a not-for-profit professional training and education body, set up in 1974 as part of Singapore’s efforts to develop as a financial hub.

Since its inception, the SCI has remained focused in its efforts to upgrade the technical expertise of insurance and financial services practitioners, and to provide them with professional advancement opportunities through its series of practice-oriented programmes and internationally-accredited qualifications. Since the late 1970s, the SCI has also played the role of industry examination body to conduct regulatory examinations for those wishing to join the financial advisory, life and general insurance industries.

The SCI also publishes a wide range of life, general insurance and financial planning textbooks to address the education and training needs of the industry. In recent years, the SCI has also expanded its role to include talent development programmes that have succeeded in attracting and placing numerous fresh tertiary talent into the various functions in the industry.

The Singapore Insurance Institute (SII) is a professional membership body for professionals in insurance and financial services. The SII organises talks, discussion groups, and other activities and events to upgrade the professionalism of its members, as well as social and sports activities to promote interactions among its members.

All SII members are required to observe a Code of Conduct. SII may exercise its disciplinary powers to reprimand, suspend or cancel the membership of members who violate the Code.

Subsidiary legislation is issued under the authority of the relevant Acts and typically provides greater detail of the provisions of an Act, and spells out in greater detail the requirements that financial institutions or other specified persons (for example, financial adviser representatives) have to adhere to.

Subsidiary legislation has the force of law and may specify that a contravention is a criminal offence. They are also published in the Government Gazette. Examples are the Insurance (Lloyd’s Asia Scheme) Regulations, Insurance (Actuaries) Regulations, and Insurance (Nomination of Beneficiaries) Regulations 2009.

In addition, the MAS is empowered to issue Directions, which detail specific instructions to financial institutions or other specified persons to ensure compliance. These Directions have legal effect; meaning that the MAS can specify whether a contravention of a direction is a criminal offence.

Directions consist of the following:

• Directives – primarily impose legally binding requirements on an individual financial institution or a specified person; and
• Notices – primarily impose legally binding requirements on a specified class of financial institutions or persons. An example is Notice No.: MAS 211 on Minimum And Best Practice Training And Competency Standards For Direct General Insurers.

Guidelines set out principles or “best practice standards” that govern the conduct of specified institutions or persons. While contravention of guidelines is not a criminal offence and does not attract civil penalties, specified institutions or persons are encouraged to observe the spirit of these guidelines.

The degree of observance with guidelines by an institution or a person may have an impact on MAS’s overall risk assessment of that institution or person. Examples are the Technology Risk Management Guidelines for Financial Institutions, and the Guidelines on Standards of Conduct for Insurance Brokers.

Codes set out a system of rules governing the conduct of certain specified activities. Codes are non-statutory and do not have the force of law. However, a breach of a Code may attract certain non-statutory sanctions like private reprimand or public censure. An example is the Code of Conduct for Credit Rating Agencies. A failure to abide by a Code does not in itself amount to a criminal offence but may have certain consequences.

Practice Notes are meant to guide specified institutions or persons on administrative procedures relating to, among others, licensing, reporting, and compliance matters. Contravention of a practice note is not a criminal offence, unless a procedure stated in the practice note is also required by an Act or regulation.

Circulars are documents which are sent to specified persons for their information, or are published on the MAS website for public information. Circulars have no legal effect.

Policy statements outline broadly the major policies of the MAS.

Details of these instruments relating to the financial services industry can be obtained from the MAS website as shown below.

With a trust nomination, also known as irrevocable nomination, in accordance with Section 49L of the Insurance Act (Cap. 142), the policy owner relinquishes all rights to the policy.

This means that while he is still obliged to pay the premiums due, all policy benefits (whether living and/or death) belong to the nominated beneficiaries.

The policy owner can regain his rights to own the policy benefits only with the written consent of all nominated beneficiaries.

Only a spouse or child of the policy owner is eligible to become a nominated beneficiary in this respect. An advantage of such a nomination is that the policy proceeds are protected from the creditors in the event of bankruptcy.

The Policy Owners’ Protection Scheme, created by the Deposit Insurance and Policy Owner’ Protection Act 2011, that came into effect on 1 May 2011, is an additional safety net that protects the interests of policy owners or policyholders in the event that an insurer fails. The scheme encompasses a Policyholders’ Protection Fund (PPF), administered by Singapore Deposit Insurance Corporation Limited (SDIC). SDIC is a company limited by guarantee under the Companies Act (Cap. 50). The board of directors is accountable to the Minister in charge of the MAS.

All insurance companies are regulated entities in Singapore. The scheme provides added assurance that there is compensation available for policy owners, to reduce the financial impact on individuals in the event that an insurer defaults.

The scheme relating to general insurance provides 100% coverage for the types of general insurance policies covered under the scheme. However, there are also caps, on a per policy basis, for own property damage motor claims (S$50,000) under personal motor insurance policies and property damage claims under personal property insurance (S$300,000). Coverage is automatic, and there is no charge to any policyholder. Levies are paid by the insurers.

All compulsory insurance policies under the Motor Vehicles (Third-Party Risks and Compensation) Act (Cap. 189) and Work Injury Compensation Act (Cap. 354), and Singapore policies of specified lines issued by registered general insurers that are scheme members are covered under the scheme. A Singapore policy insures risks arising in Singapore, or where the insured is a Singapore resident, or has a permanent establishment in Singapore.

The specified lines covered are:

• Private Motor Insurance policies;
• Personal Travel Insurance policies;
• Personal Property (structure and contents) Insurance policies;
• Foreign Domestic Worker Insurance policies; and
• Individual and Group (short-term) Accident and Health Insurance policies.

With the revision of the PPF effective 1 April 2019, motor and property insurance policies bought by an individual are covered even if the car or property is used for commercial purposes.

General insurance policies that are not within the specified lines are not covered. Hence, Property (structure and contents) Insurance policies issued to non-individuals are not covered. Also, tuition fee protection policies issued to individuals are not covered.

Insurers will disclose, in their marketing materials and policy documents, the relevant types of general insurance policies covered under the scheme. 

If an insurer defaults, the SDIC will be required to pay out all outstanding claims as of the date of default.

The Monetary Authority of Singapore (MAS) will then decide on the next step for the failed insurer. This could be a transfer of all or part of the failed insurance business to another insurer, running off existing insurance policies until expiry, or terminating existing policies and returning a value to policy owners.

In the enhanced PPF Scheme, the MAS also has the flexibility to transfer or terminate the failed insurer’s business if it is less cost-effective to continue a run-off.

All insurers registered by the MAS that carry out direct general business (other than captive or specialist insurers) are PPF Scheme Members. Details of the scheme and its Members are available on the SDIC Website at: “www.sdic.org.sg”

The Premium Payment Warranty applies to policies issued for ALL classes of general insurance relating to commercial lines transacted by insurers or intermediaries.

Under the warranty, if the period of insurance is more than 60 days, the policyholder is required to pay the premium due under the policy in full within 60 days from the date of inception of the policy. If this warranty is not complied with, then the policy is automatically terminated from the expiry of the 60-day period, and the insurer will be entitled to a pro-rata premium for the 60-day period that the insurer has been on risk. If the period of insurance is less than 60 days, then the insured is required to pay the premium due under the policy in full within the period of insurance.

Under the Premium Payment Framework, commercial lines refer to commercial general insurance but excludes the following policies:

• Marine Cargo
• Marine Hull
• Marine Liabilities
• Aviation
• Bonds
• Trade Credit
• Political Risk
• Global/Regional Programmes

The Premium Instalment Payment Warranty also applies to policies issued for all classes of general insurance relating to commercial lines business transacted by insurers or intermediaries.

Under this warranty, insurers are at liberty to schedule payments provided that the:

• First instalment must be paid within 60 days from the commencement of the policy; and
• Remaining instalments shall be paid by the subsequent due dates.

There are also provisions (similar to that in the Premium Payment Warranty) in that the automatic termination of the policy applies, and that the insurers are entitled to the pro rata premium if the premiums are not paid within the respective premium due dates.