SINGAPORE Law and Practice Contributed by: Simon Goh and Wang Ying Shuang, Rajah & Tann Singapore LLP
different types of businesses will be subject to dif- ferent licensing, capital adequacy and fund solvency requirements. The relevant financial, solvency and capital adequacy requirements are set out in the Insur- ance (Valuation and Capital) Regulations 2004 and MAS Notice 133 on Valuation and Capital Framework for Insurers. For example, by virtue of the type of risks they under- write, marine mutual insurers and captive insurers are typically subject to a “lighter” touch regulatory regime and less onerous licensing requirements. Similarly, the regulatory and compliance requirements that a life insurer will have to satisfy are relatively more onerous than those for a general insurer. Apart from satisfying capital adequacy and fund sol- vency requirements, the following factors of an appli- cant are taken into account by the MAS when consid- ering a new (re)insurance company application: • domestic and international rankings by, inter alia, premiums and assets; • past and present credit ratings by international rat- ing agencies; • track record, financial soundness and reputation; • business strategy and feasibility plans; • risk management systems; and Whether or not a licence is required in order to carry on reinsurance business in Singapore depends on the business model of the reinsurer. Broadly speaking, the Insurance Act provides for the following classifications of reinsurers: • licensed reinsurers who have a physical business presence in Singapore; • fitness and propriety. Reinsurance Business • authorised reinsurers who remain offshore but solicit business in the Singapore market; and • unregulated/unlicensed reinsurers who are offshore reinsurers and do not solicit business in Singa- pore, but who are approached by local insurers or registered insurance brokers to reinsure insurance policies.
An entity that wishes to apply to be a licensed or authorised reinsurer will have to meet certain licens- ing requirements set out in the Insurance Act and the Insurance (Authorised Reinsurers) Regulations (if applying to be an authorised reinsurer). Apart from the licensing requirements imposed under the legislation and Notices issued by the MAS, the MAS may also impose specific licensing conditions on a case-by-case basis. 2.3 Taxation of Premium Singapore adopts a territorial basis of taxation, mean- ing that only income accruing in or derived from Sin- gapore or income received in Singapore from outside Singapore will be subject to tax in Singapore. The cor- porate income tax rate generally applicable for the 2025 year of assessment is 17%. Apart from partial tax exemptions and corporate income tax rebates that are given to companies gen- erally, insurers and reinsurers underwriting approved insurance business may also enjoy a concessionary tax rate of 10% or 15% for qualifying income under the Insurance Business Development umbrella scheme. 3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers As mentioned in 2.2 Writing of Insurance and Rein- surance , insurers and reinsurers have to be licensed or authorised by the MAS in order to underwrite (re) insurance business in Singapore or solicit the same from the public in Singapore. Almost all licensed insur- ers and reinsurers must have a presence in Singapore, with the following exceptions: • authorised foreign reinsurers, pursuant to Section 42 of the Insurance Act; • approved marine, aviation and transit insurers, pur- suant to Regulation 3 of the Insurance (Approved Marine, Aviation and Transit Insurers) Regulations; • insurers carrying on business under a foreign insurer scheme (ie, Lloyd’s Scheme); and • reinsurers who provide reinsurance pursuant to an arrangement not solicited by them.
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