MAS Seeks Suggestions of Interested Parties upon Review of Risk-based Capital Framework for Insurance Companies
The Monetary Authority of Singapore (MAS) is inviting interested parties to give their comments and suggestions on a consultation paper for the review of the Risk-based capital framework for insurance companies. The paper will be available on the MAS website until August 26, 2012.
The consultation paper seeks advice on amending the RCF—which covers issues that need to be included, an enhanced methodology for finding the solution to the risks, and schedule of implementation.
The framework was introduced by the Singapore government in 2004. It incorporates a risk-focused strategy on evaluating the capital sufficiency of insurance companies as well as help the latter protect themselves from current risks in the market.
The MAS is currently revisiting the RCF following the changing market traditions in the insurance sector as well as in the practice of global accounting. The RCF doesn’t necessarily require major revisions but could do some improvements in terms of the range of risk coverage and vulnerability of the framework.
Neighbouring countries have also proposed reviewing their RCFs. Malaysia, in particular, has passed amendments to its RCF last February which will be implemented January next year or late this year. Sample changes to Malaysia’s RCF include changes to its interest-free loan program and updating its supervisory capital-adequacy ratio.
Singapore relies on its insurance sector for cushion during hard economic times. Despite economic slowdowns in Europe and Asia, the Singapore insurance industry has shown rosy forecasts from 2010 up to recent.
According to MAS-registered non-profit organization Life Insurance Association, Singapore insurance sales has increased by 17 percent last year from SG$963 million to a whopping SG$1.125 billion.
The resilience of the insurance industry in Singapore comes from an increasing demand for life insurance products as the economy gains stabilization.
Singapore’s insurance industry will continue to enjoy tremendous growth following the review of the RCF, considering that it serves home to the largest global insurers such as China Life, Manulife, Prudential Life, AXA, Ace, Allianz, and Zurich.