Insurance (Amendment) Regulations 2002

Status:

Published in Subsidiary Legislation Supplement
on 08 Jan 2002

No. S 16

Insurance Act

(Chapter 142)

Insurance (Amendment) Regulations 2002

In exercise of the powers conferred by section 64 of the Insurance Act, the Monetary Authority of Singapore hereby makes the following Regulations:

Citation and commencement

1. These Regulations may be cited as the Insurance (Amendment) Regulations 2002 and shall come into operation on 8th January 2002.

Amendment of regulation 20

2. Regulation 20 of the Insurance Regulations (Rg 1) is amended —

(a)

by inserting, immediately after paragraph (2), the following paragraph:

“(2A) In respect of the general business of an insurer, the amount of insurance policy liabilities shall not be less than the amount of premium liabilities and claims liabilities as valued by the actuary under section 37(1)(b) of the Act.”;

(b)

by deleting the words “reserves for unexpired risks” in the 1st line of paragraph (3) and substituting the words “unearned premium reserves”;

(c)

by deleting the words “and (c)” in paragraph (3)(a) and substituting the words “, (c) and (d)”;

(d)

by deleting the word “and” at the end of paragraph (3)(b);

(e)

by deleting the full-stop at the end of sub-paragraph (c) of paragraph (3) and substituting the word “; and”, and by inserting immediately thereafter the following sub-paragraph:

“(d)

calculated —

(i)	where the 1/24th method or some other more accurate method is used, on premiums reduced by the actual commissions payable; or
(ii)	in any other case, on premiums without any deduction of commissions payable therefrom.”; and

(f)

by inserting, immediately after paragraph (8), the following paragraphs:

“(9) Paragraph (2A) shall not affect any statements of account which an insurer is required to lodge with the Authority in respect of any accounting period before the year 2002.

(10) In this regulation and regulation 20A —

“claims liabilities” means the obligation, whether contractual or otherwise, to make future payments in relation to all claims that have been incurred as at balance-sheet date and includes reserves for claims reported, claims incurred but not reported, claims incurred but not enough reported and direct and indirect claims expenses;

“premium deficiency reserves” means the reserves for the expected loss on unexpired policies after taking into consideration all benefits, claims, claims adjustment expenses, acquisition cost, maintenance costs, and policyholders’experience participation, and shall be calculated net of reinsurance;

“premium liabilities” means the reserves for unexpired risks and includes liabilities for all benefits, claims and expenses, acquisition costs, maintenance costs and policyholders’ experience participation to be incurred after the end of the particular accounting period on which the actuarial investigation is conducted;

“reserves for unexpired risks” shall be the sum of unearned premium reserves and premium deficiency reserves.”.

New regulation 20A

3. The Insurance Regulations are amended by inserting, immediately after regulation 20, the following regulation:

“Valuation of liabilities of general business

20A.—(1) In determining the amount of insurance policy liabilities in respect of the general business of an insurer under section 37(1)(b) of the Act, the actuary shall calculate —

(a)

for each line of business —

(i)	a best estimate of the value of premium liabilities; and
(ii)	a best estimate of the value of claims liabilities; and

(b)

for each insurance fund established under the Act, an estimate of the provision for adverse deviations that relates to the inherent uncertainty in each of the best estimate values, calculated based on 75 per cent level of sufficiency.

(2) For the purposes of paragraph (1)(a), the value of premium liabilities and claims liabilities shall be estimated for each line of business set out in Form 7 of the First Schedule to the Insurance (Accounts and Statements) Regulations (Rg 2).

(3) For the purposes of paragraph (1), the insurance policy liabilities shall, subject to paragraph (4), be determined by the actuary either —

(a)	on a gross basis, in which case a separate estimate of the reinsurance recoveries shall also be determined; or
(b)	on a net of reinsurance recoveries basis.

(4) Notwithstanding anything in paragraph (3), if there have been significant changes in the reinsurance arrangements, or if the outstanding reinsurance recoveries have a material impact on the actuary’s estimate of the value of the liabilities, the insurance policy liabilities shall be determined on both gross and net of reinsurance recoveries bases.

(5) Without prejudice to any other factor that the actuary may consider necessary, the actuary shall, in determining insurance policy liabilities under paragraph (1), take into account the following:

(a)	the probability of recovery of outstanding reinsurance recoveries; and
(b)	the presence of non-reinsurance recoveries such as salvage and subrogation.

(6) For the purposes of section 37(1)(c) of the Act, the actuary shall include in the actuarial report, each of the values as are required to be estimated under this regulation.”.

[G.N. No. S 583/99]

Made this 4th day of January 2002.

KOH YONG GUAN

Managing Director,
Monetary Authority of Singapore.

[ID 05.1 Vol. 27; AG/LEG/SL/142/2002/1 Vol. 1]

Search within Legislation