No. S 466
Insurance Act
Insurance (Amendment No. 2) Regulations 2002
In exercise of the powers conferred by sections 35Y, 35ZA, 35ZC, 35ZD, 35ZE, 35ZG, 35ZN, 35ZO, 56A(3) and 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 No. 2) Regulations 2002 and shall come into operation on 1st October 2002.
Amendment of regulation 18
2.  Regulation 18 of the Insurance Regulations (Rg 1) is amended —
(a)by deleting paragraph (1) and substituting the following paragraph:
“(1)  Subject to paragraphs (3) and (4), the extent to which the Singapore Insurance Fund Assets shall be taken into account under regulation 17 shall be subject to the investment limits specified in the Schedule.”; and
(b)by inserting, immediately after paragraph (2), the following paragraphs:
“(3)  The investment limits imposed on overseas assets specified in the Schedule shall not apply to Singapore Dollar denominated fixed income or floating rate securities issued by non-residents that are accorded —
(a)a rating of “Baa” or higher by the rating agency “Moody”s”; or
(b)a rating of “BBB” or higher by the rating agency “Standard and Poor”s”.
(4)  The investment limits imposed on foreign currency denominated and overseas assets in the Schedule shall not apply to Synthetic Singapore Dollar Assets.
(5)  In paragraph (4), “Synthetic Singapore Dollar Asset” means a foreign currency denominated fixed income or floating rate security that —
(a)is fully hedged to the Singapore Dollar where —
(i)any forward foreign exchange contract used for hedging matches the underlying foreign currency-denominated security in terms of cash flow and term-to-redemption; and
(ii)any forward foreign exchange contract used for hedging is entered into with a financial institution licensed by the Authority that has an individual or financial strength rating of a category higher than “C”, as accorded by the rating agency “Fitch Inc.” or by the rating agency “Moody”s”;
(b)is accorded —
(i)a rating of “Baa” or higher by the rating agency “Moody”s”; or
(ii)a rating of “BBB” or higher by the rating agency “Standard and Poor”s”; and
(c)has been classified by the insurer as a Synthetic Singapore Dollar Asset.”.
Amendment of regulation 18A
3.  Regulation 18A of the Insurance Regulations is amended —
(a)by deleting the word “The” in the 1st line of paragraph (2) and substituting the words “Subject to paragraph (4), the”; and
(b)by inserting, immediately after paragraph (3), the following paragraph:
“(4)  An insurer may take into account deposits made with any approved financial institution, group of financial institutions, bank or merchant bank, if any, of an amount not exceeding $3 million notwithstanding that the amount of the deposits exceeds the counterparty exposure limits referred to in paragraph (2)(a) and (c).”.
New Part VA
4.  The Insurance Regulations are amended by inserting, immediately after regulation 27, the following Part:
“PART VA
insurance intermediaries
Definitions of this Part
27A.—(1)  In this Part, unless the context otherwise requires —
“applicant” means an applicant for registration as an insurance broker referred to in section 35X of the Act;
“exempt direct general insurance broker” means an exempt insurance broker carrying on business as a direct general insurance broker;
“exempt insurance broker” means any person who is exempt from registration as an insurance broker under section 35ZN(1)(a) to (e) of the Act in respect of carrying on business as an insurance broker;
“net asset value”, in relation to a company, means the excess of the value of the assets owned by the company over its liabilities.
(2)  For the purposes of this Part —
(a)in determining the value of the assets owned by a company, any amount on account of goodwill or of any other intangible assets shall be disregarded; and
(b)in determining the amount of the liabilities of a company, all contingent or prospective liabilities shall be taken into account but not any amount on account of any liability related to the share capital of the company.
Minimum paid-up share capital
27B.—(1)  For the purposes of section 35Y(1)(b) of the Act, an applicant who intends to be registered as either a direct general insurance broker, a general reinsurance broker or a life reinsurance broker shall have a paid-up share capital of an amount not less than $300,000.
(2)  An applicant who intends to be registered as an insurance broker in respect of more than one type of insurance broking business shall have a paid-up share capital of not less than the aggregate of the amounts of paid-up share capital specified in paragraph (1) in respect of each of those businesses.
(3)  A registered insurance broker shall maintain at all times a paid-up share capital of an amount that is not less than the minimum amount of paid-up share capital applicable to it by virtue of paragraph (1) or (2), as the case may be.
Professional indemnity insurance
27C.—(1)  For the purposes of section 35Y(1)(c) of the Act, the limit of indemnity to be covered under a professional indemnity insurance policy for an applicant who intends to be registered as a direct general insurance broker, a general reinsurance broker or a life reinsurance broker shall be an amount of not less than $1 million, under which the deductible allowed shall be —
(a)where the applicant is in its first financial year of operation, not more than 20% of the paid-up capital; and
(b)in any other case, not more than 20% of the applicant’s net asset value as at the end of its preceding financial year.
(2)  Where the applicant intends to be registered as an insurance broker in respect of more than one type of insurance broking business, the limit of indemnity to be covered under a professional indemnity policy shall be not less than the aggregate of the amounts of the limit of indemnity specified in paragraph (1) for each of those businesses, under which the deductible allowed shall be —
(a)where the applicant is in its first financial year of operation, not more than 20% of the paid-up capital; and
(b)in any other case, not more than 20% of the applicant’s net asset value as at the end of its preceding financial year.
(3)  A registered insurance broker shall have in force at all times a professional indemnity insurance policy —
(a)under which the limit of indemnity covered is an amount not less than the minimum limit of indemnity applicable to it by virtue of paragraph (1) or (2), as the case may be; and
(b)under which the deductible allowed is —
(i)where the registered insurance broker is in its first financial year of operation, not more than 20% of the paid-up capital; and
(ii)in any other case, not more than 20% of the registered insurance broker’s net asset value as at the end of its preceding financial year.
Net asset value
27D.  For the purposes of section 35ZC of the Act, the net asset value to be maintained at all times by any registered insurance broker shall be an amount that is not less than 50% of the minimum paid-up share capital required to be maintained by the registered insurance broker under regulation 27B(3).
Financial requirements for exempt insurance brokers
27E.—(1)  Regulations 27B and 27D shall apply to all exempt insurance brokers.
(2)  Regulation 27C shall apply only to persons exempt from registration as insurance brokers under section 35ZN(1)(c) and (d) of the Act.
(3)  Regulation 27E shall not apply to an exempt insurance broker carrying on only direct general insurance business for a period of 6 months from 1st October 2002 if the exempt insurance broker earns $25,000 or less in brokerage income in respect of its direct general insurance business during that 6 month period.
Insurance broking premium accounts
27F.—(1)  An exempt insurance broker or a registered insurance broker shall pay into a bank account maintained by it under section 35ZD(1) of the Act, all moneys received by it —
(a)from or on behalf of an insured or intending insured for or on account of an insurer in connection with a contract of insurance or proposed contract of insurance; or
(b)from or on behalf of an insurer for or on account of an insured or intending insured.
(2)  No exempt insurance broker or registered insurance broker shall withdraw moneys from a bank account maintained by it under section 35ZD(1) of the Act without the prior written consent of the Authority.
(3)  Paragraph (2) shall not apply to any withdrawal of moneys from a bank account maintained by the exempt insurance broker or the registered insurance broker under section 35ZD(1) of the Act for —
(a)any payment to or for a person entitled to receive payment of the moneys, including itself in so far as it is entitled to receive payment for itself;
(b)any payment to or for an insurer in respect of amounts due to the insurer under or in relation to a contract of insurance;
(c)any investment by way of deposits placed with any bank licensed under the Banking Act (Cap. 19); or
(d)any repayment of moneys that were paid into the account in error.
(4)  An exempt insurance broker or a registered insurance broker shall pay moneys received from the realisation of any investment made under paragraph (3)(c) into a bank account maintained by it under section 35ZD(1) of the Act.
(5)  If, upon the realisation of any investment made under paragraph (3)(c), the amount of moneys received in respect of the realisation is less than the amount of moneys invested, the exempt insurance broker or the registered insurance broker shall pay into the account from which the moneys were withdrawn for investment, an amount equal to the difference between the amount invested and the amount realised.
(6)  Subject to paragraphs (7) to (10), an exempt insurance broker or a registered insurance broker shall pay into, or retain in, a bank account maintained by it under section 35ZD(1) of the Act any interest or other income that is received by it under the bank account or from any deposit made under paragraph (3)(c).
(7)  Subject to paragraph (8), interest or other income arising from any payment which is due to the insurer under or in relation to a contract of insurance where the cover commences on or after 1st October 2002 that is received by an exempt direct general insurance broker or a direct general insurance broker from —
(a)any bank account maintained by it under section 35ZD(1) of the Act; or
(b)any deposit made under paragraph (3)(c),
shall belong to the insurer, but may be retained by the insurance broker for its own benefit with the insurer’s prior consent, and need not be paid into, or retained in, a bank account maintained by it under section 35ZD(1) of the Act.
(8)  Interest or other income arising from any payment which is due to an insurer under or in relation to a contract of insurance where the cover commences on or after 1st October 2002 that is received by an exempt direct general insurance broker or a direct general insurance broker from —
(a)any bank account maintained by it under section 35ZD(1) of the Act; or
(b)any deposit made under paragraph (3)(c),
after the credit period shall not be retained by the insurance broker for its own benefit and shall immediately be paid to the insurer to whom such payment is due.
(9)  Interest or other income arising from any payment which is due to an insurer under or in relation to a contract of insurance where the cover commences on or after 1st October 2002 that is received by an exempt insurance broker carrying on business as a reinsurance broker or a general reinsurance or a life reinsurance broker from —
(a)any bank account maintained by it under section 35ZD(1) of the Act; or
(b)any deposit made under paragraph (3)(c),
may be retained by the insurance broker unless the insurer and the insurance broker have agreed otherwise.
(10)  Interest or other income arising from any payment which is due to an insurer under or in relation to a contract of insurance where the cover commences before 1st October 2002 received by an insurance broker from —
(a)any bank account maintained by it under section 35ZD(1) of the Act; or
(b)any deposit made under paragraph (3)(c),
may be retained by the insurance broker for its own benefit and need not be paid into, or retained in, a bank account maintained by it under section 35ZD(1) of the Act
(11)  An exempt direct general insurance broker or a direct general insurance broker who receives any payment which is due to the insurer under or in relation to a contract of insurance shall —
(a)where the cover commences before 1st October 2002, pay the amount to the insurer not later than 31st December 2002; and
(b)where the cover commences on or after 1st October 2002, pay the amount within the credit period.
(12)  Paragraph (11)(a) shall not affect any agreement between the insurance broker and the insurer to pay any sum that is due to the insurer under or in relation to a contract of insurance before 31st December 2002.
(13)  An exempt insurance broker or a registered insurance broker shall designate any bank account maintained by it under section 35ZD(1) of the Act, and any deposit placed with a bank under paragraph (3)(c), as an insurance broking premium account, with or without other words of description.
(14)  In this regulation —
“contract of insurance” includes a contract of insurance that is subsequently cancelled;
“credit period” means —
(a)the period within which the insurance broker has agreed with the insurer to make payments of any amount due to the insurer under or in relation to a contract of insurance; or
(b)90 days from the date of commencement of cover under the contract of insurance,
whichever is the earlier.
Registers
27G.—(1)  The register of registered insurance brokers to be established and maintained by the Authority under section 35ZO(1)(a) of the Act shall contain the following particulars:
(a)the name of each registered insurance broker; and
(b)the address of the principal place of business at which each registered insurance broker carries on its insurance broking business.
(2)  The fee payable for inspection of any register kept under section 35ZO of the Act shall be $20 per name submitted for the inspection.
Registers to be maintained by registered insurance brokers and exempt insurance brokers
27H.  Every registered insurance broker and exempt insurance broker shall establish and maintain a register of its broking staff containing the following particulars:
(a)the names of each of its broking staff;
(b)the type or types of insurance broking activity which each of its broking staff is carrying on;
(c)the date or dates on which each of its broking staff commenced carrying on each type of insurance broking activity; and
(d)any qualification obtained by each of its broking staff to fulfill any requirement imposed by the Act, any regulations made thereunder or any directions issued by the Authority and the date of obtaining such qualification.
Risks excluded from section 35ZE (1) of Act
27I.  The reference in section 35ZE(1) of the Act to a contract of insurance shall not apply to insurance risks relating to maritime liabilities of ship owners insured by Protection and Indemnity Clubs.
Annual fees for registered insurance brokers
27J.—(1)  A registered insurance broker shall pay to the Authority —
(a)if it is registered as a direct general insurance broker, an annual fee of $7,000;
(b)if it is registered as a general reinsurance broker, an annual fee of $5,000; or
(c)if it is registered as a life reinsurance broker, an annual fee of $2,500.
(2)  The annual fee payable by a registered insurance broker shall be paid to the Authority on or before 1st January of every year.
(3)  A registered insurance broker who is licensed under section 35ZG(1) of the Act shall pay to the Authority on or before 1st January of every year an annual fee of $5,000.”.
New regulation 29A
5.  The Insurance Regulations are amended by inserting, immediately after regulation 29, the following regulation:
“Free look for life policies
29A.—(1)  No registered insurer shall, in the course of carrying on insurance business in Singapore, issue a life policy (other than an investment-linked life insurance policy) without a clause providing that the policy owner —
(a)shall have 14 days from the date of receipt of the policy to examine the terms and conditions of the policy; and
(b)may terminate the policy within the 14 day period referred to sub-paragraph (a).
(2)  Where a policy is terminated under paragraph (1)(b) any sum which the policy owner had paid in connection with the policy (whether by way of premium or otherwise) shall be returned by the insurer to the policy owner except any expenses incurred by the insurer in underwriting the policy.
(3)  In this regulation, “investment-linked life insurance policy” has the same meaning as in regulation 2 of the Insurance (Investment-Linked Life Insurance) Regulations (Rg 4).”.
New Part VII
6.  The Insurance Regulations are amended by inserting, immediately after regulation 34, the following Part:
“PART VII
EXTRA-TERRITORIALITY APPLICATION OF
SECTION 56a(2) OF ACT
Non-applicability of extra-territoriality of Act
35.—(1)  Section 56A(2) of the Act shall not apply in respect of any advertisement issued by or on behalf of a person carrying on insurance business, or carrying on business as an insurance broker, outside Singapore if —
(a)the advertisement is not made to or directed at persons in Singapore, whether electronically or otherwise;
(b)the advertisement does not contain any information especially relevant to persons in Singapore;
(c)the advertisement contains a prominent disclaimer referred to in paragraph (2); and
(d)the advertisement is not referred to in, or directly accessible from, any source which is calculated to draw the attention of persons in Singapore to the advertisement.
(2)  For the purposes of paragraph (1)(c), the disclaimer shall consist of a statement to the effect that the advertisement to which it relates —
(a)is directed at persons outside Singapore; or
(b)shall not be acted on by persons in Singapore.
(3)  Section 56A(2) of the Act shall not apply to any person who carries on reinsurance business outside Singapore, other than as or through an insurance intermediary.
(4)  In this regulation, “advertisement” means the dissemination or conveyance of information, or invitation or solicitation by any means or in any form, including by means of —
(a)publication in a newspaper, magazine, journal or other periodical;
(b)display of posters or notices;
(c)circulars, handbills, brochures, pamphlets, books or other documents;
(d)letters addressed to individuals or bodies corporate or unincorporate;
(e)photographs or cinematograph films; or
(f)sound broadcasting, television, the internet or other media.”.
Miscellaneous amendments
7.  The principal Regulations are amended —
(a)by deleting the words “SECTION 66” below the title “INSURANCE ACT” in the 2nd line and substituting the words “SECTION 64”;
(b)by deleting the words “section 8(1)(c)” in the 1st line of regulation 2 and substituting the words “section 9(1)(c)”;
(c)by deleting the words “section 17(1)(a)” in the 1st line of regulation 3(1) and (2) and substituting in each case the words “section 18(1)(a);
(d)by deleting the words “section 17(1)(b)” in the 1st line of regulation 3(7) and in regulation 4(3) and substituting in each case the words “section 18(1)(b)”;
(e)by deleting the words “section 16” in regulation 4(1) and substituting the words “section 17”;
(f)by deleting the words “section 13” in regulation 15(4)(a) and substituting the words “section 14”;
(g)by deleting the words “section 16(1)(a)” in the definition of “Singapore Insurance Fund” in regulation 16 and substituting the words “section 17(1)(a)”;
(h)by deleting the words “sections 16(5), (7), (8), (9) and (10) and 17(4)(a)” in regulation 17(3)(a) and substituting the words “section 17 (5), (7), (8), (9) and (10) and 18(4)(a)”;
(i)by deleting the words “section 38” in regulation 17(3)(b) and substituting the words “section 36”;
(j)by deleting the words “section 39” in regulations 17(3)(c) and 27(1) and substituting in each case the words “section 37”;
(k)by deleting the words “section 16(15)” in the 2nd and 3rd lines of regulation 21(1) and substituting the words “section 17(15)”;
(l)by deleting the words “section 15(4)” in the 2nd line of regulation 22(1) and substituting the words “section 16(4)”;
(m)by deleting the words “section 62(1)” in the 1st line of regulation 23(1) and in the 3rd line of regulation 24(2) and substituting in each case the words “section 60(1)”;
(n)by deleting the words “section 62(3)” in the 1st line of regulation 24(1) and substituting the words “section 60(3)”;
(o)by deleting the words “section 16(13)” in the penultimate and last lines of regulation 25(5) and substituting the words “section 17(13)”;
(p)by deleting the words “section 63” in the 1st line of regulation 28 and substituting the words “section 61”;
(q)by deleting the words “section 62(1)” in regulation 29(1) and in the 2nd line of regulation 29(2) and substituting in each case the words “section 60(1)”;
(r)by deleting the words “section 49” in the 2nd line of regulation 31 and substituting the words “section 47”;
(s)by deleting the words “section 50(1)(b)” in the 3rd line of regulation 31 and substituting the words “section 48(1)(b)”; and
(t)by deleting the words “section 41(2)” in regulation 34 and substituting the words “section 39(3)”.
[G. N. Nos. S 583/99; S 16/2002]
Made this 11th day of September 2002.
KOH YONG GUAN
Managing Director,
Monetary Authority of Singapore.
[ID 05.1 V. 29; AG/LEG/SL/142/2002/1 Vol. 1]
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