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No. S 665

Insurance Act

(Chapter 142)

Insurance (Lloyd’s Asia Scheme) (Amendment) Regulations 2010

In exercise of the powers conferred by sections 35B and 35L 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 (Lloyd’s Asia Scheme) (Amendment) Regulations 2010 and shall come into operation on 4th November 2010.

Amendment of regulation 2

2. Regulation 2 of the Insurance (Lloyd’s Asia Scheme) Regulations (Rg 9) (referred to in these Regulations as the principal Regulations) is amended by inserting, immediately after the definition of “final judgment”, the following definition:

“ “holding company” has the same meaning as in section 5 of the Companies Act;”.

Deletion and substitution of regulation 5

3. Regulation 5 of the principal Regulations is deleted and the following regulation substituted therefor:

“Requirements for Service Company

5. No person shall act as an agent in Singapore for any member of Lloyd’s under these Regulations unless it is a company registered under the Companies Act (Cap. 50) and meets the following requirements:

(a)

the company must be registered with the administrator under regulation 6; and

(b)

the company must, unless the Authority otherwise permits, be —

(i)	a subsidiary of a managing agent at Lloyd’s; or
(ii)	a subsidiary of the holding company of a managing agent at Lloyd’s.”.

Deletion and substitution of regulation 6A and new regulation 6B

4. Regulation 6A of the principal Regulations is deleted and the following regulations substituted therefor:

“Duties of Service Company

6A.—(1) No Service Company shall, without the approval of the Authority —

(a)	enter into any contract of insurance on behalf of the members of any syndicate;
(b)	cause or permit any amendment or alteration to be made to its memorandum or articles of association; or
(c)	participate in any pool business other than pools formed by the Singapore insurance industry to cover special risks.

(2) No Service Company shall write any insurance business, unless it has reason to believe that suitable arrangements for the reinsurance of the business written in Singapore are in place at all times and that the reinsurers are of good security.

(3) Every Service Company shall immediately inform the Authority if —

(a)	it becomes aware that any arrangement referred to in paragraph (2) has been, is being or is likely to be rendered inadequate or ineffective; or
(b)	for any accounting period, the permitted trust outgoings of any insurance fund established by it under regulation 11 exceed the premium receipts of that insurance fund.

Cancellation of registration of Service Company

6B.—(1) The Authority may, on any of the grounds set out in paragraph (2), in writing direct the administrator to cancel the registration of any Service Company.

(2) The grounds referred to in paragraph (1) are —

(a)	that the Service Company has not commenced business within 12 months after being registered under regulation 6;
(b)	that the Service Company has ceased to act as an agent in Singapore for any member of Lloyd’s;
(c)	that it appears to the Authority that the Service Company has failed to satisfy an obligation to which it is subject by virtue of these Regulations;
(d)	that the Service Company proposes to make, or has made, any composition or arrangement with its creditors or has gone into liquidation or has been wound up or otherwise dissolved;
(e)	that the Service Company is carrying on its business in a manner likely to be detrimental to the interest of the policy owners of insurance policies issued by any member of Lloyd’s or syndicate for which it acts as an agent;
(f)	that the Service Company has failed to ensure that suitable reinsurance arrangements have been effected as required under regulation 6A(2);
(g)	that the Service Company has contravened any of the provisions of the Act, any of the regulations made thereunder or any direction given by the Authority under the Act or the regulations made thereunder;
(h)	that any of the officers of the Service Company holding a managerial or executive position has been convicted of any offence under the Act or the regulations made thereunder;
(i)	that the Service Company has, in its application for registration under regulation 6(1), furnished false, misleading or inaccurate information, or concealed or failed to disclose material facts; or
(j)	that it is in the public interest to cancel the registration of the Service Company.

(3) Before the Authority directs the administrator to cancel the registration of a Service Company under paragraph (1), the Authority shall —

(a)	give the administrator and the Service Company notice in writing of its intention to do so; and
(b)	in the notice referred to in sub-paragraph (a), call upon the administrator and the Service Company to show cause, within such time as may be specified in the notice, why the Service Company’s registration should not be cancelled.

(4) If the administrator or the Service Company —

(a)	fails to show cause within the time given to it to do so or within such extended period of time as the Authority may allow; or
(b)	fails to show sufficient cause,

the Authority shall give notice in writing to the administrator of the date on which the cancellation of registration is to take effect.

(5) Notwithstanding the cancellation of the registration of a Service Company under this regulation, so long as the member of Lloyd’s or syndicate for which the Service Company acts as an agent remains under any liability in respect of insurance policies entered into by the Service Company, the Service Company shall take such action as it considers necessary or as may be required by the Authority to ensure that —

(a)	reasonable provision has been or will be made for that liability; and
(b)	adequate arrangements exist or will exist for payment of premiums and claims on those policies.

(6) Without prejudice to the generality of regulation 14(1), if a Service Company fails to comply with paragraph (5), the administrator shall use all reasonable efforts to procure, in respect of any liability or policies referred to in paragraph (5), the making of —

(a)	reasonable provision for such liability; and
(b)	adequate arrangements for payment of premiums and claims on those policies,

including but not limited to co-ordinating with or arranging for Lloyd’s or any other person to make such provision and arrangements in place of the Service Company.

(7) Where a direction of cancellation under paragraph (1) becomes effective, the Service Company shall, as from the date the cancellation of registration takes effect, cease to act as an agent for any member of Lloyd’s carrying on insurance business in Singapore, otherwise than by the collection or receipt of premiums on insurance policies effected before that date.

(8) Paragraph (7) does not prejudice —

(a)	any right or claim of any policy owner or other person against the member of Lloyd’s or syndicate for which the Service Company had acted as an agent; and
(b)	any right or claim of the member of Lloyd’s or syndicate for which the Service Company had acted as an agent against any policy owner or other person.

(9) Notwithstanding the cancellation of the registration of a Service Company under this regulation, regulations 13 and 21 shall, unless the Authority otherwise directs, continue to apply in relation to the Service Company and the administrator, respectively, in respect of matters that occurred before the cancellation, as if the registration had not been cancelled.”.

Amendment of regulation 7

5. Regulation 7(4) of the principal Regulations is amended by deleting the words “and functions in Singapore” and substituting the words “, functions and operations in Singapore or elsewhere”.

Amendment of regulation 11

6. Regulation 11 of the principal Regulations is amended by deleting paragraph (6) and substituting the following paragraphs:

“(6) Subject to paragraph (7), a Service Company may, at any time, transfer all or any assets of an insurance fund established under paragraph (1) to such premiums trust funds outside Singapore as the Authority may permit if, and only if —

(a)	there is a surplus of cash and deposits in the insurance fund over the claims liabilities of the syndicate concerned in respect of the insurance fund; and
(b)	immediately after such transfer, the cash and deposits in the insurance fund will not fall below the claims liabilities of the syndicate concerned in respect of the insurance fund.

(7) For the purposes of paragraph (6) —

(a)

except as provided in sub-paragraph (b), the amount of assets that the Service Company may transfer shall not exceed the surplus of cash and deposits in the insurance fund over the claims liabilities of the syndicate concerned in respect of the insurance fund, as stated in —

(i)	the audited statement of accounts for the last accounting period lodged with the Authority in accordance with regulation 21; or
(ii)	the statement of accounts for the last quarter lodged with the Authority in accordance with regulation 21,

whichever is the lower; and

(b)

where an audited statement of accounts as at a date after the end of the period to which the statement of accounts referred to in sub-paragraph (a) relates has been lodged with the Authority, the amount of assets that the Service Company may transfer shall not exceed the surplus of cash and deposits in the insurance fund over the claims liabilities of the syndicate concerned in respect of the insurance fund as stated in the first-mentioned audited statement of accounts.”.

Amendment of regulation 13

7. Regulation 13 of the principal Regulations is amended —

(a)

by deleting the words “Form 3 (excluding the Notes)” in paragraph (1)(b) and substituting the words “Forms 3 (excluding the Notes) and 4”;

(b)

by deleting paragraphs (3) and (4) and substituting the following paragraph:

“(3) A Service Company shall, in respect of documents prepared under paragraph (1)(a), lodge a certificate in Form 5 in the Fifth Schedule, which shall be signed by 2 directors of the Service Company and by or on behalf of the chief executive officer of the Service Company.”; and

(c)

by deleting the words “Forms 5 and 6” in paragraph (5) and substituting the words “Forms 6 and 7”.

Amendment of regulation 13B

8. Regulation 13B of the principal Regulations is amended by deleting paragraph (2) and substituting the following paragraph:

“(2) For the avoidance of doubt, assets comprised in the deposit made and maintained by the administrator under regulation 16 shall not be treated as assets of an insurance fund.”.

Amendment of regulation 13M

9. Regulation 13M of the principal Regulations is amended —

(a)

by deleting the words “claim liabilities” in paragraph (2)(a)(i) and substituting the words “incurred claims”;

(b)

by deleting the words “data on claim liabilities” in paragraph (3) and substituting the words “claims data”;

(c)

by deleting paragraph (4) and substituting the following paragraph:

“(4) A Service Company shall make separate calculations of the premium liabilities, the unexpired risk reserves and the claim liabilities for each line of business described in Form 3 in the Fifth Schedule that is carried on by the Service Company, and such calculations shall be made in the following manner:

(a)

the premium liabilities shall be an amount not less than the unexpired risk reserves;

(b)

the unexpired risk reserves shall be calculated as the sum of —

(i)	the value of the expected future payments arising from future events insured under policies in force as at the valuation date, including any expense expected to be incurred in administering the policies and settling relevant claims; and
(ii)	any provision for any adverse deviation from the expected experience,

after allowing for the effect of diversification, if any, at the level of the relevant insurance fund under paragraph (1)(a)(ii); and

(c)

the claim liabilities shall be an amount not less than the sum of —

(i)	the value of the expected future payments in relation to all claims incurred prior to the valuation date (other than payments which have fallen due on or before the valuation date), whether or not they have been reported to the Service Company, including any expense expected to be incurred in settling those claims; and
(ii)	any provision for any adverse deviation from the expected experience,

after allowing for the effect of diversification, if any, at the level of the relevant insurance fund under paragraph (1)(b).”;

(d)

by deleting sub-paragraph (b) of paragraph (5) and substituting the following sub-paragraph:

“(b)	in the case of a Service Company which underwrites risks relating to cargo policies, an amount not less than 25% of the net premiums written in the accounting period for those policies or an amount calculated on a basis not less accurate than the ?24th method; or”;

(e)

by deleting sub-paragraph (i) of paragraph (5)(c) and substituting the following sub-paragraph:

“(i)	an amount not less than 25% of the net premiums written in the accounting period in the case of marine and aviation policies and 40% of the net premiums written in the accounting period in other cases; or”;

(f)

by inserting, immediately before the word “premiums” in paragraph (6)(a) and (b), the word “net”; and

(g)

by deleting paragraph (7) and substituting the following paragraph:

“(7) In paragraphs (5) and (6) —

“marine and aviation policies” means policies of insurance —

(a)	upon goods, merchandise or property of any description transported on board vessels, aircraft or other means of conveyance, including incidental transit before and after shipment;
(b)	upon the freight of, or any other interest in or relating to vessels, aircraft or other means of conveyance;
(c)	upon vessels or aircraft, or upon machinery, tackle furniture or equipment of vessels or aircraft;
(d)	against damage arising out of or in connection with the use of vessels or aircraft, including third-party risks; or
(e)	against risks incidental to the construction, repair or docking of vessels, including third-party risks;

“net premiums written” means the net amount of premiums after deduction of return premiums and payments in respect of reinsurance business ceded.”.

Amendment of regulation 15

10. Regulation 15(2) of the principal Regulations is amended by deleting the words “and functions in Singapore” and substituting the words “, functions and operations in Singapore or elsewhere”.

Amendment of regulation 16

11. Regulation 16 of the principal Regulations is amended —

(a)

by deleting “55%” in paragraph (2) and substituting “30%”;

(b)

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

“(2A) A deposit under paragraph (2) shall be made in the form of assets of such nature as may be directed by the Authority.”; and

(c)

by inserting, immediately after paragraph (7), the following paragraph:

“(8) In this regulation, “premiums” means gross premiums less commissions and credit for reinsurance ceded, in Form 3, where —

(a)

“commissions” means the amount shown in the column titled “Total” at row 28 of the table on Singapore Insurance Fund in Form 3;

(b)

“credit for reinsurance ceded” means an amount computed as follows:

A x (1 – (B x C)),

where A

is the amount of reinsurance business ceded to a person carrying on insurance business that is accounted for in row 6, 7 or 8 of the table on Singapore Insurance Fund in Form 3;

is the reinsurance counterparty factor described in paragraph 1(11) of the First Schedule to the Insurance (Valuation and Capital) Regulations 2004 (G. N. No. S 498/2004); and

is the appropriate counterparty risk factor described in paragraph 1(11) of the First Schedule to the Insurance (Valuation and Capital) Regulations 2004;

(c)

“Form 3” means the audited statement of accounts for the last accounting period lodged with the Authority in accordance with regulation 21 in Form 3 in the Fifth Schedule; and

(d)

“gross premiums” means the sum of the figures shown in the column titled “Total” at rows 1 and 5 of the table on Singapore Insurance Fund in Form 3.”.

Deletion of regulation 17

12. Regulation 17 of the principal Regulations is deleted.

Amendment of regulation 18

13. Regulation 18 of the principal Regulations is amended by inserting, immediately after paragraph (3), the following paragraphs:

“(4) The administrator shall notify the Authority, in writing, at least 14 days before effecting any change to the particulars set out in paragraphs (a), (b), (ba) and (bb) of the Fourth Schedule in the register of Service Companies.

(5) The administrator shall lodge with the Authority a copy each of the registers referred to in paragraph (1)(b) and (c) on an annual basis by 31st January in each year.”.

Amendment of regulation 20

14. Regulation 20(1) of the principal Regulations is amended —

(a)

by deleting sub-paragraph (b) and substituting the following sub-paragraph:

“(b)	if the managing agent that is related to a Service Company in a manner described in regulation 5(b) ceases to be permitted by Lloyd’s to act as a managing agent of Lloyd’s;”; and

(b)

by deleting sub-paragraph (ii) of sub-paragraph (c) and substituting the following sub-paragraph:

“(ii)

where the member of Lloyd’s carrying on insurance business in Singapore under these Regulations enters into contracts of insurance through a managing agent that is related to any Service Company in a manner described in regulation 5(b), ceases to enter into contracts of insurance through the managing agent;”.

Amendment of regulation 21

15. Regulation 21 of the principal Regulations is amended —

(a)

by inserting, immediately after paragraph (1), the following paragraph:

“(1A) The administrator shall lodge with the Authority one copy of the annual report of Lloyd’s for the most recently concluded financial year.”;

(b)

by deleting the words “other than those referred to in paragraph (1)(a)” in paragraph (2) and substituting the words “referred to in paragraph (1)(b)”; and

(c)

by inserting, immediately after the word “returns” in the regulation heading, the words “and annual report”.

Amendment of regulation 25

16. Regulation 25(1) of the principal Regulations is amended by deleting sub-paragraph (a) and substituting the following sub-paragraph:

“(a)	in the case of any document referred to in regulation 13(3) or (5), by sending to the Authority the original of the document; and”.

Amendment of regulation 26

17. Regulation 26 of the principal Regulations is amended —

(a)

by deleting the words “14 weeks” in paragraph (a) and substituting the words “4 months”;

(b)

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

(c)

by deleting paragraph (b) and substituting the following paragraphs:

“(b)	any document to be lodged in accordance with regulation 25(1)(b) (other than the documents referred to in regulation 13(1)(a) and Form 4 referred to in regulation 13(1)(b)) shall be lodged with the Authority within 3 weeks from the last day of the period to which the document relates;
(c)	the documents referred to in regulation 13(1)(a) shall be lodged with the Authority within 3 months from the last day of the period to which the documents relate;
(d)	Form 4 referred to in regulation 13(1)(b) shall be lodged with the Authority within 4 months from the last day of the period to which the Form relates; and
(e)	any annual report to be lodged with the Authority under regulation 21(1A) shall be lodged with the Authority within 6 months from the last day of the financial year to which the report relates.”; and

(d)

by inserting, immediately after the word “returns” in the regulation heading, the words “and annual report”.

New regulation 27

18. The principal Regulations are amended by inserting, immediately after regulation 26, the following regulation:

“General obligation to furnish information

27. The Authority may, by notice in writing, require any Service Company or the administrator to furnish it with information about any matter relating to any business carried on in Singapore or elsewhere by the Service Company or the administrator, if the Authority is of the opinion that it requires the information for the discharge of its functions under the Act.”.

Amendment of First Schedule

19. The First Schedule to the principal Regulations is amended —

(a)

by inserting, immediately after item (25) in the second column against item (a) in the first column, the following item:

“(26) Terrorism”;

(b)

by inserting, immediately after item (8) in the second column against item (b) in the first column, the following item:

“(9) Terrorism”;

(c)

by inserting, immediately after item (87) in the second column against item (c) in the first column, the following item:

“(88) Terrorism”;

(d)

by inserting, immediately after item (24) in the second column against item (h) in the first column, the following item:

“(25) Film”; and

(e)

by numbering the existing paragraph as paragraph 1, and by inserting immediately thereafter the following paragraph:

“2. A member of Lloyd’s may enter into any direct insurance policy of any type of general class insurance in respect of Singapore policies in any particular case where the Authority is satisfied that the risk insured against is, or the circumstances are, exceptional.”.

Amendment of Second Schedule

20. Paragraph 1 of the Second Schedule to the principal Regulations is amended —

(a)

by inserting, immediately after the word “applicant” in sub-paragraph (e), the words “, including the relationship between the applicant and the managing agent at Lloyd’s in relation to whom it is to act as agent in Singapore”; and

(b)

by deleting sub-paragraph (g) and substituting the following sub-paragraphs:

“(g)	the types of insurance business proposed to be underwritten by the applicant on behalf of the syndicates referred to in sub-paragraph (f);
(h)	the organisation chart of the applicant;
(i)	the name and the designation of the person whom the proposed chief executive officer of the applicant will report to;
(j)	the names and experience of the underwriters to be employed by the applicant in Singapore;
(k)	the stamped capacity of each syndicate referred to in sub-paragraph (f).”.

Amendment of Fourth Schedule

21. The Fourth Schedule to the principal Regulations is amended —

(a)

by inserting, immediately after sub-paragraph (b), the following sub-paragraphs:

“(ba)	the shareholding structure of the Service Company, including the relationship between the Service Company and the managing agent at Lloyd’s in relation to whom the Service Company is acting as agent in Singapore;
(bb)	the types of insurance business underwritten by the Service Company on behalf of each syndicate referred to in sub-paragraph (b);”;

(b)

by deleting the words “is to act” in sub-paragraph (c) and substituting the words “is acting”; and

(c)

by deleting the full-stop at the end of sub-paragraph (c) and substituting a semi-colon, and by inserting immediately thereafter the following sub-paragraphs:

“(d)	the organisation chart of the Service Company;
(e)	the names and experience of the underwriters employed by the Service Company in Singapore; and
(f)	the stamped capacity of each syndicate referred to in sub-paragraph (b).”.