Policy Owners’ Protection Fund
46.—(1)  The Authority shall establish and maintain in accordance with this section and regulations prescribed, a Policy Owners’ Protection Fund (referred to in this section as the Fund) for the purposes of indemnifying in whole or in part, or otherwise assisting or protecting, policy owners and others who have been or may be prejudiced in consequence of the inability of registered insurers to meet their liabilities under life policies and compulsory insurance policies issued by them.
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(2)  Subject to such exceptions or restrictions as may be prescribed, the Authority shall —
(a)secure that a sum equal to —
(i)the full amount of any liability of a registered insurer in liquidation in respect of a sum payable to any person entitled to the benefit under the terms of any compulsory insurance policy, being a liability arising in respect of a liability of the policy owner which is a liability subject to compulsory insurance; and
(ii)90% of the amount of any liability of a registered insurer in liquidation towards a policy owner under the terms of any life policy which was a Singapore policy or an offshore policy and not being a contract of reinsurance,
is paid to the person or policy owner as soon as reasonably practicable after the beginning of the liquidation; and
(b)make arrangements so far as reasonably practicable for securing continuity of insurance for every policy owner of a registered insurer in liquidation or in financial difficulties who is a policy owner in respect of a life policy which was a Singapore policy or an offshore policy and not being a contract of reinsurance, and for this purpose the Authority may take measures to secure or facilitate the transfer of the life business of the insurer, or part of that business, to another registered insurer or to secure the issue by another registered insurer to the policy owners of life policies in substitution of their existing policies.
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(3)  For the purposes of financing the expenditure of the Fund, the Authority may from time to time by regulations impose a levy on registered insurers carrying on —
(a)general business in Singapore (referred to in this section as a general business levy); and
(b)life business in Singapore (referred to in this section as a life business levy).
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(4)  The proceeds of general business levies and life business levies shall be paid into the Fund.
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(5)  The amounts required to be paid by any registered insurer under general business levies or life business levies imposed under subsection (3) in any financial year shall not exceed one per cent of any income of the insurer for the year ending last before the beginning of that financial year which income is liable to the general business levy or the life business levy, as the case may be.
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(6)  The amount each registered insurer may be required to pay under general business levies imposed in any financial year shall be calculated by reference to the gross premium income of Singapore policies of the insurer for the year ending last before the beginning of that financial year in respect of general business carried on in Singapore other than reinsurance business; and any such income is hereinafter in this section referred to, in relation to any registered insurer, as income of the insurer for the year in question which is income liable to the general business levy.
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(7)  The amount each registered insurer may be required to pay under life business levies imposed in any financial year shall be calculated by reference to the gross premium income of the insurer for the year ending last before the beginning of that financial year in respect of life business carried on in Singapore other than reinsurance business; and any such income is hereinafter in this section referred to, in relation to any registered insurer, as income of the insurer for the year in question which is income liable to the life business levy.
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(8)  In subsections (6) and (7), the gross premium income of a registered insurer for any year in respect of any class of insurance business carried on in Singapore other than reinsurance business means the gross amounts after deducting any return of premiums recorded in the accounts of the insurer during that year as paid or due to the insurer by way of premiums under that class.
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(9)  Subject to subsection (10) —
(a)the proceeds of general business levies may be applied only on expenditure incurred by the Authority under subsection (2)(a)(i); and
(b)the proceeds of life business levies may be applied only on expenditure incurred by the Authority under subsection (2)(a)(ii) and (b).
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(10)  The Authority may deduct any expenditure incurred by it in performing its functions under this section from the Fund.
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(11)  Where it appears to the Authority that any circumstances have occurred in relation to a registered insurer incorporated outside Singapore which are the equivalent of a registered insurer in liquidation or in financial difficulties under the law relating to companies in force in the country in which it is incorporated, the Authority may treat that insurer as a registered insurer in liquidation or in financial difficulties for the purposes of this section, and this section shall apply to that insurer subject to such modifications as appear to the Authority to be necessary.
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(12)  Without prejudice to the generality of section 64, regulations made under this Act may provide —
(a)for the imposition, distribution and enforcement of general business levies and life business levies and other matters in connection with or in relation to those levies; and
(b)for the investment of such part of the Fund as appears to the Authority to be surplus to its requirements for the time being.
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(13)  For the purposes of this section —
(a)“compulsory insurance policy” means any policy or security which satisfies the requirements of the Motor Vehicles (Third-Party Risks and Compensation) Act (Cap. 189) or the Workmen’s Compensation Act (Cap. 354);
(b)references to a registered insurer in liquidation are references to an insurer in whose case —
(i)a resolution has been passed after 1st January 1987 in accordance with the provisions of the Companies Act (Cap. 50) for the voluntary winding up of the insurer, otherwise than merely for the purpose of reconstruction of the insurer or of amalgamation with another insurer;
(ii)without any such resolution having being passed beforehand, an order has been made after that date for the winding up of the insurer by the High Court under the Companies Act on a petition presented after that date; or
(iii)an order has been made after that date for the winding up of the insurer by the Registrar of Co-operative Societies under section 83 of the Co-operative Societies Act (Cap. 62);
(c)references, in relation to a registered insurer in liquidation, to the beginning of the liquidation, are references to the passing of any such resolution or the making of any such order referred to in paragraph (b), as the case may be; and
(d)a registered insurer, not being an insurer in liquidation, is an insurer in financial difficulties if —
(i)a provisional liquidator has been appointed in respect of the insurer under section 267 of the Companies Act;
(ii)it has been proved, in any proceedings on a petition for the winding up of the insurer under the Companies Act (Cap. 50), to be unable to pay its debts; or
(iii)an application has been made to the High Court under section 210 of the Companies Act for the sanction of a compromise or arrangement proposed between the insurer and its creditors or any class of them (whether or not any of its members are also parties thereto) and the terms of the compromise or arrangement provide for reducing the liabilities or the benefits provided for under the insurer’s life policies,
and the petition is presented or the application is made after that date.
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