The Monetary Authority of Singapore (“MAS“) issued Notice 134 Recovery and Resolution Planning for Insurers (“Notice“) which will take effect on 1 January 2025. The Notice applies to insurers notified by MAS (“notified insurers“), which will initially comprise domestic systematically important insurers (D-SIIs). However, MAS expects all insurers to have a recovery plan (“RCP“) in place to identify actions that can be taken to restore its financial position and viability under situations of severe stress. Key requirements in the Notice include:
(a) In relation to a RCP:
- prepare a RCP with specified mandatory components, such as a framework of recovery triggers identifying the points at which appropriate recovery options may be taken;
- review the RCP annually and upon the occurrence of an event that could materially impact the RCP. The reviewed RCP must be approved or endorsed by the board of directors for a locally incorporated notified insurer, or the chief executive in Singapore for a non-locally incorporated notified insurer;
- test the RCP for feasibility and effectiveness at a frequency where the notified insurer’s board and senior management can attain assurance that the RCP is implementable as envisaged; and
- inform MAS immediately if it assesses that its viability is threatened or potentially threatened, or upon the occurrence of any event that may necessitate the implementation of its RCP.
(b) Maintain and submit data and information to MAS for resolution planning, resolvability assessment and conduct of resolution.
(c) Ensure the maintenance, in crisis situations and in resolution, of outsourcing arrangements which support critical functions and critical shared services. “Critical functions” refers to activities performed by a licensed insurer for third parties where failure would lead to the disruption of services that are vital for the functioning of Singapore’s economy and for financial stability due to the licensed insurer’s size or market share, external and internal interconnectedness, complexity and cross-border activities. “Critical shared services” refers to activities performed within the group or outsourced to third parties, where failure of such service would lead to the inability of the licensed insurer to perform critical functions.
(d) Maintain robust management information systems to produce information required for the purposes of resolution planning, resolvability assessment and the conduct of resolution.
(e) Appoint an executive officer as the key person to oversee the recovery planning process and the maintenance and submission of information to MAS for resolution planning.
The issuance of this Notice follows an earlier Consultation Paper which you may read more about in our September 2023 Newsbytes (page 13). MAS has also issued its Response to feedback received on the Consultation Paper.
