Singapore opens up insurance sector

Asian Economic News, March 20, 2000

SINGAPORE, March 17 Kyodo

Singapore announced sweeping measures Friday to liberalize the country's insurance industry in a bid to become a regional insurance hub.

The Monetary Authority of Singapore (MAS) said in a statement it will open entry to the direct life insurance and general insurance industry and lift the current 49% cap on foreign ownership of local insurance companies, effective immediately.

The aim of the measures is to "promote modernization and efficiency in the industry, provide Singaporeans with wider choice and better value in insurance products and services and enhance Singapore's position as a sound and progressive international financial center," the MAS said.

The MAS said it will not impose any fixed limit on the number of newcomers, but admission will be paced due to concern the sudden flood of new entrants will lead to unhealthy market practices.

They also have to meet certain criteria, such as having a good track record and reputation and a commitment to contribute to Singapore's development as a regional insurance hub and international financial center. Those with strong product innovation will have a better chance of being admitted.

Currently, there are eight local life insurers and seven foreign life insurers, none of them Japanese. There are also seven local general insurers and 33 foreign, including five Japanese companies.

Lifting the cap on foreign ownership of local insurance companies is expected to encourage local players to form alliances with foreign partners to gain technical knowledge and boost their financial prowess to become credible regional players, the MAS said.

Singapore will also adopt an open admission policy for insurance brokers.

In addition, measures will be introduced to raise the standards of corporate governance and market conduct and strengthen the protection of policyholders by insurers.