Compare insurance plans on Web aggregator soon
THE much-anticipated move to allow consumers to compare life insurance products, avoid agents and buy basic policies directly is expected to begin next month, according to a top regulatory official yesterday.
Ong Chong Tee, deputy managing director for financial supervision at the Monetary Authority of Singapore (MAS), told a Life Insurance Association (LIA) lunch that the target launch date will be "early April".
The direct purchase channel and Web aggregator were key initiatives suggested by the Financial Advisory Industry Review (Fair) panel that was set up in 2012 to raise industry standards and improve product distribution.
MAS indicated in October that a Web aggregator to allow consumers to compare the premiums and features of life insurance products would be ready in the first quarter of this year.
The direct purchase channel, which will let people buy products without going through an agent, was initially slated to be launched in the middle of last year, but was shifted to early this year.
LIA noted yesterday that MAS and the industry did not want to rush through the process. The extra time was taken to ensure that the end products launched were of high quality.
"Both parties have put in a lot of work to make sure that it can be rolled out smoothly," said LIA president Khoo Kah Siang yesterday.
"I think the rolling-out is happening at quite a fast pace, because don't forget you are getting information from a lot of companies."
In addition to the Fair reforms, the life insurance industry has to prepare for proposed changes aimed at improving a risk-based capital framework, known as RBC 2.
RBC 2 is designed to ensure insurance companies have adequate capital, taking into account the types of risks they bear.
Preliminary tests conducted by MAS showed that most companies can meet the capital adequacy ratio (CAR) requirements under the proposals in RBC 2, said Mr Ong.
The current regime has a CAR of 120 per cent, though insurers typically have higher buffers of as much as 200 per cent.
Mr Ong said RBC 2 will see greater differentiation in the CAR for insurance firms with different risk profiles. Riskier firms will need higher buffers.
He told the lunch at the Grand Copthorne Waterfront Hotel, which attracted around 220 people from across the industry: "Some industry players are naturally anxious if they will still have to maintain the same high buffers of way above 100 per cent CAR or FSR (fund solvency ratio) under RBC 2, as they do currently for RBC.
"This is not our expectation, given that the risk requirements under RBC 2 are designed to be more risk sensitive, comprehensive and calibrated to a higher target confidence level."
More consultations will be held, with another round of tests - known as the quantitative impact study - expected to be held in the second quarter of this year.
A target implementation date of 2017 has been set.