SINGAPORE Law and Practice Contributed by: Simon Goh and Wang Ying Shuang, Rajah & Tann Singapore LLP
1. Basis of Insurance and Reinsurance Law 1.1 Sources of Insurance and Reinsurance Law The main statute governing the regulatory aspect and the conduct of (re)insurance business in Singapore is the Insurance Act 1966 (the “Insurance Act”). Provi- sions from the UK Life Assurance Act 1774 and the UK Fire Prevention Metropolis Act 1774 that deal with insurable interest and accidental fire, respectively, have been adopted (with some modification) in the Insurance Act. There are also other pieces of legislation that govern specific types of insurance contracts or substantive points of insurance law. For example, the Third Parties (Rights against Insurers) Act 1930 gives third parties rights against insurers of third-party risks in the event of the insured becoming insolvent and in certain other events, and the Marine Insurance Act 1906 codifies principles of law applicable to marine insurance. Like- wise, legislation like the Motor Vehicles (Third Party Risks & Compensation) Act 1960 and the Work Injury Compensation Act 2019 govern substantive aspects of insurance law in those areas. As a common law jurisdiction, Singapore relies heav- ily on common law principles and case law authori- ties when it comes to disputes relating to contracts of insurance. Singapore’s highest court and court of final appeal is the Court of Appeal, whose decision is binding on the lower courts (for example, the High Court and the State Courts). In the absence of local case precedent, case authorities from Commonwealth jurisdictions (especially England and, to a larger extent in recent years, Australia) are likely to be of persuasive effect, although they are not binding on Singapore courts. Cases from the United States of America may also be of some persuasive authority before the Sin- gapore courts, but typically less so than Common- wealth cases.
2. Regulation of Insurance and Reinsurance 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance The insurance and reinsurance industry is regulated by the Monetary Authority of Singapore (MAS), and the Insurance Act contains provisions to regulate the conduct of insurance business in Singapore. The Insurance Act is supplemented by various pieces of subsidiary legislation, which consist of regulations set- ting out in greater detail the statutory requirements to which insurance companies and intermediaries must adhere. These regulations have the same legislative effect as if their provisions had been contained in the parent Act. The MAS may also issue various types of papers, which can be legally binding and have the force of law. 2.2 Writing of Insurance and Reinsurance Generally speaking, entities that wish to underwrite insurance and reinsurance business in Singapore and/ or solicit for insurance and reinsurance business from the public in Singapore must be licensed or authorised by the MAS. In a similar vein, the Insurance Act also strictly prohibits licensed insurers from co-branding with unlicensed carriers, so as to prevent any confu- sion for the public. Direct Insurance Business For the purposes of regulation under the Insurance Act, “insurance business” (which includes reinsurance of liabilities) is divided into two classes: • life business, which includes all insurance business concerned with life policies, long-term accident and health policies, or both; and • general business, which is essentially any insur- ance business that is not life insurance business. Applicants for (re)insurance licences are expected to comply with the insurance regulatory requirement of obtaining the requisite licence to carry on the appro- priate class of insurance business from the MAS. As the MAS has been adopting a risk-focused approach to assessing the capital adequacy of insur- ance companies since 2004, insurers that underwrite
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