New rules for intermediaries were introduced in Singapore last week by a government agency.
Brokers wanting to conduct insurance business in Singapore must register with the Monetary Authority of Singapore, the nation's quasi-central bank. The Insurance Intermediaries Act formalizes the current requirement that anyone wanting to act as an agent for a registered insurer needs a written agency contract with that insurer. Under the new regulations, the minimum paid-up capital for direct general brokers and general and life reinsurance brokers is 300,000 Singapore dollars (US$187,500). Direct life brokers must have initial paid-up capital of $60,000, which will be increased over five years to $187,000.
All brokers must maintain a net asset value of at least 50 percent of minimum paid-up capital.
''This is to establish brokers' commitment to operate in Singapore and to ensure that they have a certain level of financial assets to support their operations,'' an MAS spokesman said.
All registered brokers must also maintain professional indemnity cover, with any deductible limited to 20 percent of the company's net asset value. For direct general, general and life reinsurance brokers, the minimum cover is $600,000 while that for direct life brokers is $300,000.
Registered brokers must also submit audited annual returns to the MAS within six months after closing their books. This will enable the MAS to monitor performance and assess financial condition as well as ensure that they comply with the laws.
Annual fees have been introduced. For registered direct general insurance brokers, it is $4,200. For general reinsurance and direct life insurance brokers, $3,000, and for life reinsurance brokers, $1,500. An agent or broker registered to place business with Lloyd's in London is required to pay an annual fee of $3,000.
With introduction of the new Intermediaries regulations, the MAS also makes two amendments to existing regulations. The changes repeal exemption for overseas placement of direct insurance risks with protection and indemnity clubs and payment of annual fees to act as an agent or broker for Lloyd's. They are now covered in the revamped law.
Copies of the Insurance Intermediaries Act, Insurance Intermediaries Regulations 1999 and Insurance (Amendment) Regulations 1999 can be found on the Internet at www.egazette.com.sg or downloaded from www.mas.gov.sg.