Singapore insurance segment to see boost from “systemically important” framework

Singapore insurance segment to see boost from “systemically important” framework | Insurance Business Asia

Insurance News

Singapore insurance segment to see boost from “systemically important” framework

Effects are positive overall despite raised costs for four named insurers

Insurance News

By
Kenneth Araullo

&P has lauded Singapore’s recent adoption of a framework for domestically systemically important insurers (D-SIIs) as a favourable step for the nation’s insurance sector.

The measure is anticipated to elevate the industry’s ability to withstand challenges and boost market confidence, according to an SBR report.

These four entities collectively manage approximately 70% of the assets within Singapore’s life insurance funds. With the D-SII designation, they are also expected to handle heightened capital requirements, including a 25% capital add-on, although this adjustment does not immediately impact the financial situation or ratings of these insurers, as it replaces the previous 25% “high impact surcharge” within MAS’ existing framework.

Broadly, the D-SII requirements enhance MAS’ prevailing framework for evaluating the impact and risks associated with financial institutions, providing increased transparency, including previously undisclosed details like the capital surcharge for the major insurers.

“While the strengthened regulatory oversight will raise operational costs for D-SIIs, we think the overall benefits to the insurance sector outweigh the costs,” S&P credit analyst Eileen Tay said. “Given an increasingly complex risk landscape, a higher bar on supervision encourages D-SIIs to maintain high standards of governance and risk management.”

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