The Monetary Authority of Singapore (MAS) has made amendments to rules on Product Development and Pricing (MAS Notice 302) and Direct Purchase Insurance Products (MAS Notice 321) that ease the product approval process.
A circular announcing the changes was released to direct life insurers and composite insurers.
MAS has amended MAS Notice 302 such that a direct insurer with life business:
a) must seek approval from MAS only when it is offering a product with any product feature that is entirely new to the life insurance industry in Singapore. The request must be made no later than one month before the proposed official launch date of the product;
b) otherwise, the insurer should notify MAS within the following timeframe:
i) for a product with any product feature that is new only to the insurer (and not new to the life insurance industry in Singapore), no later than one month before the proposed official launch date of the product; and
ii) for a product with any product feature that is not new to the insurer, within seven working days after the official launch date of the product (i.e. no change from the existing requirements in MAS Notice 302 for such products).
Rationale
The central bank says that seeking prior approval will allow it to assess the adequacy of the pricing, capital and valuation treatments as well as disclosure materials before the product that is entirely new to the life insurance industry is sold. This is because given the long-term nature of life business, insurers would not be able to amend or opt out of the contract that has been issued to policyholders.
Before the amendment, MAS required a direct insurer with life business to obtain written approval from it before offering any product with any feature that is new the insurer (i.e. not in the insurer’s then-existing business portfolio).
As for a product feature that is new only to the insurer, the amendment enables the insurer to provide ex-ante notification instead of seeking prior approval from MAS. This is on account that the prevailing requirements should have adequately provided for such a product feature and the onus is on the insurer to comply with the relevant regulations and guidelines. The ex-ante notification allows MAS lead time to review the product materials and engage the insurer in further discussion (if necessary) before the product is officially launched.
MAS has similarly amended MAS Notice 321 such that a direct insurer with life business:
a) must notify MAS for a new direct purchase insurance product (DPI) or re-priced DPI with any product feature that is new to the insurer, no later than one month before the proposed official launch date of the DPI;
b) otherwise, the insurer must notify MAS within seven working days after the official launch date of the DPI.
The revised MAS Notice 302 and MAS Notice 321 took effect yesterday.