SINGAPORE - The Monetary Authority of Singapore (MAS) is proposing to extend its Corporate Governance (CG) Framework to all direct insurers and reinsurers incorporated in Singapore.
This is to ensure effective corporate governance, given insurers' responsibilities to safeguard policyholders' interests and the important role they play in the financial system and economy, MAS said.
Currently, the CG Regulations are applicable to only the significant insurers, which encompasses any direct life insurer which is incorporated in Singapore and has total assets of at least $5 billion in its Singapore Insurance Fund and Offshore Insurance Fund.
The CG Guidelines apply just to direct insurers incorporated in Singapore.
Key recommendations in the proposal are:
>> To categorise locally-incorporated direct insurers and reinsurers into two tiers based on the size of total assets or annual gross premiums;
>> To subject Tier 1 insurers to higher CG standards. The Regulations that are currently applicable to significant insurers will be applied to Tier 1 insurers;
>> To require Tier 2 insurers to have a board comprising at least one third of directors who are independent directors;
>> To extend the CG Guidelines to all locally-incorporated reinsurers; and
>> To introduce a disqualification rule for the directors, executive officers and employees of an insurer. The insurer will be required to obtain MAS' written consent to employ persons disqualified under the rule.
The proposed recommendations requiring insurers to appoint new independent directors to the board are targeted to take effect no later than from the first Annual General Meeting (AGM) of each insurer, held on or after Jan 1, 2015.
This is to take into consideration that affected insurers may need more time to find suitable independent directors, MAS said.
For the other recommendations, they are to take effect no later than from the first AGM of each insurer, held on or after Jan 1, 2013.
The proposed disqualification rule is targeted to take effect in mid 2013.
More details are available in the consultation paper that can be accessed on the MAS website.
MAS invites interested parties to forward their comments on the proposals in the consultation paper by March 23, 2012.