The Monetary Authority of Singapore (MAS) issued a notice on an enhanced framework relating to the governance and disclosure of participating (par) life insurance business on June 29 2007.
The new framework aims to strengthen insurers' internal governance practices on the management of the par fund, and enhance disclosure standards to par policyholders. It incorporates recommendations of the Par Fund Review Workgroup, comprising representatives from the insurance industry and MAS, and takes into consideration feedback from the public.
Under the new framework, life insurers are required to put in place board-approved internal governance policies on par-fund management by December 31 2007 and ensure annual review of such policies.
Life insurers are also required to provide more comprehensive product summaries at the point of sale with effect from March 1 2008. The new framework further requires life insurers to provide an annual summary reports to existing par policyholders, for bonus declarations taking place from 2008 onwards.
The annual reports should show the par-fund performance, the projected outlook and how the past experience and future outlook will impact bonuses to be declared in the future. The reports should also provide key figures, such as revised maturity value and maturity yield, whenever there are changes to the bonus rates being declared, or whenever it revises its estimates of future bonus rates. And fully updated benefit illustrations should be provided to par policyholders on request.
The public consultation paper, responses to feedback received and the Notice are available on the MAS website.