MAS Sets Out Supervisory Expectations on Advisory and Sales Processes for Long-Term Accident and Health Policies

On 1 April 2025, the Monetary Authority of Singapore (“MAS“) issued an Information Paper on Strengthening Advisory and Sales Processes for Long-Term Accident and Health Policies (“Information Paper“) based on its thematic review of five financial institutions (“FIs“) acting as accident and health insurance intermediaries. The Information Paper sets out its supervisory expectations, observed good practices, and areas for enhancement in the areas of:

1. oversight of accident and health (“A&H“) insurance representatives;
2. provision of advice and sale of integrated shield plans; and
3. post-sales checks and reviews of long-term accident and health (“LT A&H“) policies,

based on the requirements set out in MAS Notice 120 Disclosure and Advisory Process Requirements for Accident and Health Insurance Products (“Notice 120“) under the Insurance Act 1966.

It is to be noted that the MAS supervisory expectations incorporate the relevant Fair Dealing Outcomes contained in the updated Guidelines on Fair Dealing – Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers [FSG-G04] (“Fair Dealing Guidelines“) issued in May 2024. For a discussion on the principles set out in the Fair Dealing Guidelines, please refer to our June 2024 Legal Update titled “MAS Requires All Financial Institutions to Apply Fair Dealing Guidelines to All Products & Services“.

MAS observed that FIs advisory and sales practices for LT A&H policies were largely similar to those for investment products regulated under the Financial Advisers Act 2001 (“FAA“).

FIs are expected to benchmark their current processes and practices against the supervisory expectations and good practices in the Information Paper, so that they can properly guide their customers in their purchase of LT A&H policies.  Should there be gaps in their existing processes and practices, FIs should take steps to address them.

We outline the key supervisory expectations in each of the three main areas below.

Oversight of A&H Insurance Representatives

Fitness and propriety of A&H insurance representatives

FIs appoint A&H insurance representatives to advise and sell LT A&H policies, including:

1. corporate entities;
2. employees of the corporate entities; and
3. notified representatives under the FAA and/or Securities and Futures Act 2001.

At the point of onboarding and on an ongoing basis, FIs should put in place policies and controls to apply the fit and proper criteria in MAS’ Guidelines on Fit and Proper Criteria to all A&H insurance representatives. Appointing fit and proper A&H insurance representatives is also expected under outcome 3 of the Fair Dealing Guidelines (i.e. customers being served by competent representatives).

Training of A&H insurance representatives

Before allowing A&H insurance representatives to advise and sell LT A&H policies, FIs should ensure that they are adequately trained on the advisory and sale processes, product features and the relevant requirements under Notice 120 (e.g. disclosures required under Divisions 1A and 2, having a reasonable basis for recommendation under paragraph 30). In line with outcome 3 of the Fair Dealing Guidelines, FIs should train and equip their A&H insurance representatives with the necessary knowledge and skills to explain the features of the product and provide appropriate advice to customers.

Provision of Advice and Sale of IPs

Paragraph 34 of Notice 120 requires FIs to comply with the requirements set out in Division 4 of the notice in relation to “Know-Your-Client”, needs analysis, and documentation and record keeping when providing advice.

In line with outcome 3 of the Fair Dealing Guidelines, FIs should ensure that their fact-find forms adequately and accurately capture all relevant customer information. Moreover, the basis of recommendation must be fully documented. FIs should also extend appropriate safeguards to vulnerable customers. In addition, FIs must provide in a clear manner all relevant information on the policies offered to allow customers to make informed decisions. This is consistent with outcome 4 of the Fair Dealing Guidelines (i.e. customers receiving clear, relevant, and timely information that accurately represent products and services offered and delivered).

Post-Sales Checks and Reviews for LT A&H Policies

FIs should perform regular and independent reviews to identify and rectify shortcomings in the advisory services provided by their A&H insurance representatives. This is also to assess whether the A&H representatives comply with the processes and controls in the provision of advisory services that the FIs put in place. Post-sales checks may include reviewing fact-find forms and sales documents, and conducting mystery shopping.

Click on the following link for more information:

• MAS Information Paper on Strengthening Advisory and Sales Processes for Long-Term Accident and Health Policies (available on the MAS website at mas.gov.sg)