RES 12B – Rules, Ethics and Skills for Securities and Derivatives Dealers of Non-Exchange Members Set Two

Correct: In Singapore, the Motor Insurers’ Bureau (MIB) provides a safety net for victims of hit-and-run accidents where the driver is untraceable. To be eligible for an ex-gratia payment under the Untraced Drivers Agreement, the victim must comply with strict procedural requirements, which include reporting the matter to the police promptly (generally within 24 hours) and making a formal application to the MIB within six months of the accident date.

Incorrect: The MIB’s Untraced Drivers Agreement specifically excludes compensation for property damage; it only covers death or bodily injury. If the registration number of the vehicle is confirmed and the driver is identified, the case would fall under the Uninsured Drivers Agreement or standard motor insurance claims rather than the ‘untraceable’ category. Filing a lawsuit against the MIB as a primary defendant is not the correct initial procedure for an untraceable driver claim, as the MIB acts as a payer of last resort under specific administrative agreements.

Takeaway: Eligibility for MIB compensation in Singapore hit-and-run cases depends on strict adherence to police reporting timelines and the six-month application window for bodily injury or death claims.

Correct: In the Singapore insurance market, travel insurance is intended to cover unforeseen risks. Once the Ministry of Foreign Affairs (MFA) issues a travel advisory, the situation becomes a ‘known event.’ If a policy is purchased after such an advisory has been issued for a specific destination and cause, any claims arising from that cause (e.g., cancellation due to the unrest) are typically excluded because the risk was no longer fortuitous at the time of inception.

Incorrect: Accepting a claim based on when flights were paid for is incorrect because the insurance contract itself must be entered into before the event becomes known. There is no MAS regulation that mandates coverage for known events or pre-existing advisories; in fact, the principle of fortuity is central to insurance. Reclassifying a cancellation claim as a Personal Accident claim is improper and constitutes a breach of policy terms and claims handling ethics, as Personal Accident sections require bodily injury, not financial loss from cancellation.

Takeaway: Travel insurance coverage for MFA advisories is generally only applicable if the policy was purchased before the advisory was issued and the event was not yet public knowledge.

Correct: In the Singapore insurance context, the most effective control is the combination of precise policy drafting and the intermediary’s duty of disclosure. Under the Financial Advisers Act (FAA) and MAS guidelines, intermediaries must ensure that the client understands the product, including its exclusions. Clear definitions of ‘self-inflicted injury’ or ‘professional sports’ ensure that the contract’s boundaries are legally enforceable and that the policyholder’s expectations are aligned with the coverage provided, thereby reducing the risk of moral hazard and legal disputes.

Incorrect: Relying on a separate waiver for every activity is administratively impractical and does not replace the need for clear primary policy wording. Expecting policyholders to self-censor claims based on a general duty of good faith is ineffective as it lacks the legal certainty provided by explicit exclusions. Retrospective premium adjustment after a claim is filed is not a standard practice for managing exclusions and would likely lead to regulatory scrutiny from MAS and disputes through FIDReC.

Takeaway: Effective risk management in personal general insurance relies on the precise definition of exclusions in the policy document and their clear communication to the client at the point of sale.

Correct: Under the Singapore Insurance Act, every insurer is required to keep a register of policies for each insurance fund it establishes. This register must include essential details such as the policy number, the owner’s name, and the dates of commencement and cessation. This ensures that there is a definitive record of the insurer’s liabilities and the policyholders’ rights, which is crucial for regulatory oversight by the Monetary Authority of Singapore (MAS).

Incorrect: The approach suggesting a threshold-based exemption is incorrect because the Insurance Act does not allow for such exclusions; all policies within the fund must be registered regardless of value. The approach involving delegation to intermediaries is incorrect because the statutory duty to maintain the register lies strictly with the insurer. The approach suggesting an exemption for general insurance is incorrect because the requirement applies to both life and general insurance funds established under the Singapore Insurance Act.

Takeaway: Insurers in Singapore are legally mandated by the Insurance Act to maintain a comprehensive and accurate Register of Policies for every insurance fund they establish.

Correct: Under the Insurance Act 1966 and the regulatory expectations set by the Monetary Authority of Singapore (MAS), insurers are responsible for the acts and omissions of their agents. This principle ensures that the insurer, as the principal, maintains high standards of conduct and disclosure among its representatives to protect consumers from misrepresentation.

Incorrect: The suggestion that liability depends on employment status is incorrect because the principal-agent relationship under the Insurance Act applies to both tied and independent agents. The claim that the Act only covers solvency is false, as it contains significant provisions for the regulation of intermediaries and business conduct. The idea that MAS assumes liability for agent misconduct is incorrect; MAS is the regulator that enforces compliance, but the legal and civil responsibility remains with the insurer.

Takeaway: The Insurance Act 1966 mandates that insurers are accountable for the professional conduct and disclosures of their intermediaries to ensure consumer protection in the Singapore insurance market.

Correct: In Singapore, the Ministry of Manpower (MOM) requires all employers of Migrant Domestic Workers (MDWs) to purchase medical insurance with a minimum coverage of S$60,000 per year. This requirement was enhanced from the previous limit of S$15,000 to better protect employers from large medical bills and ensure adequate care for the workers.

Incorrect: The amount of S$15,000 was the previous minimum requirement before the regulatory update in July 2023. The amounts of S$30,000 and S$10,000 are incorrect as they do not meet the current mandatory minimum threshold established by the Ministry of Manpower for MDW medical insurance.

Takeaway: Employers in Singapore must ensure their Migrant Domestic Workers are covered by medical insurance with a minimum annual limit of S$60,000 to comply with MOM regulations.

Correct: In Singapore, the Motor Vehicles (Third Party Risks and Compensation) Act makes it mandatory for all motor vehicles to have insurance against third-party risks. The Certificate of Insurance (COI) is the specific legal document that provides evidence that a policy is in force for the vehicle and the period specified. The Land Transport Authority (LTA) requires this specific document (or electronic notification of it) to ensure the vehicle owner has met their statutory obligations before road tax can be renewed.

Incorrect: The policy schedule and premium breakdowns are internal or accounting documents and do not fulfill the specific legal requirement for proof of insurance under the Motor Vehicles (Third Party Risks and Compensation) Act. The No Claims Discount (NCD) affects the insurance premium paid to the insurer, but it has no bearing on the calculation of road tax, which is based on vehicle parameters like engine capacity. A cover note is indeed a temporary document, but the COI is the formal, long-term evidence of the insurance contract for the duration of the policy.

Takeaway: The Certificate of Insurance is the essential legal document required by the LTA to verify compliance with the Motor Vehicles (Third Party Risks and Compensation) Act for road tax renewal.

Correct: The most effective control in the Singapore regulatory framework is the mandatory disclosure of the disadvantages of replacing an existing policy. By using a Replacement of Policy (ROP) form, the intermediary is forced to document and explain to the client any loss of benefits, new waiting periods, or increased costs. This ensures the client makes an informed decision, which is a core requirement under the Financial Advisers Act and MAS fair dealing guidelines to prevent unethical twisting and churning.

Incorrect: While a cooling-off period provides a safety net for consumers to cancel a policy, it does not specifically address the intermediary’s duty to provide a comparative analysis of the risks involved in switching. Spreading commission payments is a commercial arrangement that may exist in some firms but is not a primary regulatory control for disclosure. Restricting a client’s ability to switch providers is an arbitrary limitation on consumer choice and does not address the ethical conduct or the quality of advice provided by the intermediary.

Takeaway: The primary defense against twisting and churning in Singapore is the mandatory disclosure of comparative disadvantages through the Replacement of Policy (ROP) process to ensure informed client consent.

Correct: The Singapore Deposit Insurance Corporation (SDIC) administers the Policy Owners’ Protection (PPF) Scheme. Its primary function when a member insurer fails is to protect policy owners by either paying out claims and refunds from the PPF General Fund or by facilitating the transfer of the failed insurer’s business to another insurer. For general insurance, the scheme covers all compulsory insurance under the Motor Vehicles (Third Party Risks and Compensation) Act and Work Injury Compensation Act, as well as specific personal lines like home, travel, and personal accident insurance, subject to defined caps.

Incorrect: The role of setting capital requirements and conducting stress tests belongs to the Monetary Authority of Singapore (MAS), not the SDIC. The PPF Scheme does not provide unlimited coverage; it has specific limits and caps, and it primarily focuses on personal lines and compulsory insurance rather than all commercial or corporate contracts. In the event of an insurer’s failure, the PPF Scheme is designed to prioritize the protection of policy owners, not to ensure the reimbursement of shareholders or unsecured creditors first.

Takeaway: The SDIC manages the PPF Scheme to protect policy owners of member insurers by providing compensation or business transfers up to statutory limits during an insurer’s insolvency.

Correct: In Singapore, the Ministry of Manpower (MOM) stipulates that the maximum age a Migrant Domestic Worker (MDW) can be employed is 60 years old. Consequently, insurers align their policy offerings with these labor regulations. If an MDW is 58 or 59, a standard 26-month policy would extend beyond the worker’s 60th birthday, which is the legal limit for their Work Permit. Therefore, insurers will often restrict the policy duration to ensure it does not exceed the worker’s eligibility to work in Singapore.

Incorrect: The PDPA governs data privacy and does not dictate the duration of insurance contracts based on age. The MAS does not manage a high-risk pool for MDW insurance or fix premiums; these are determined by the commercial underwriting standards of individual general insurers. WICA applies to MDWs, but it does not prohibit private insurance for older workers nor does it shift liability to the CPF Board, as MDWs are not covered by the CPF scheme.

Takeaway: MDW insurance coverage and policy duration are strictly constrained by the Ministry of Manpower’s (MOM) maximum employment age limit of 60.

Correct: Under standard Singapore motor insurance practice, the ‘Geographical Area’ is defined to include the Republic of Singapore, West Malaysia, and that part of Thailand within 80 kilometers (approximately 50 miles) of the border between Thailand and West Malaysia. East Malaysia (Sabah and Sarawak) is excluded from this standard definition and requires a separate extension or endorsement to the policy.

Incorrect: The suggestion that the policy covers all of Malaysia and Thailand is incorrect because East Malaysia and northern parts of Thailand (beyond the 80km zone) are excluded. The claim that Thailand is strictly excluded is false as the 80km buffer zone is a standard inclusion. The requirement for a Thai tour guide is not a standard geographical limit condition in Singapore motor policies, and East Malaysia is not automatically included.

Takeaway: Standard Singapore motor policies cover West Malaysia and a specific 80km zone into Thailand, but exclude East Malaysia unless specifically extended.

Correct: Under the Contracts (Rights of Third Parties) Act (Chapter 53B) of Singapore, a person who is not a party to a contract can enforce its terms if the contract expressly provides for it, or if a term purports to confer a benefit on that person. However, the latter does not apply if, on a proper construction of the contract, it appears that the parties did not intend the term to be enforceable by the third party. This allows beneficiaries in personal insurance to claim directly if the policy is structured to allow it.

Incorrect: The idea that family relationship alone grants enforcement rights is incorrect because the right is derived from the contract terms and the Act, not just biological or marital status. The requirement for the third party to provide consideration is incorrect as the Act specifically allows enforcement without the third party providing consideration. A deed of assignment is a separate legal mechanism for transferring rights and is not a requirement for the application of the Contracts (Rights of Third Parties) Act, nor does MAS stamp or approve individual assignments in this manner.

Takeaway: In Singapore, the Contracts (Rights of Third Parties) Act allows non-contracting beneficiaries to enforce policy terms only if the contract expressly permits it or clearly intends to confer an enforceable benefit upon them.

Correct: In the Singapore insurance market, an ‘excess’ (or deductible) is the amount the insured must contribute toward a claim. By opting for a higher voluntary excess in addition to any compulsory excess, the insured assumes more financial risk for smaller losses. This reduces the insurer’s potential payout and the costs associated with processing minor claims, which the insurer rewards by offering a lower premium.

Incorrect: The statement regarding MAS fixing excess amounts is incorrect because excess levels are commercial decisions made by insurers, though they must be clearly disclosed. The idea that a deductible only applies after a total loss is incorrect; it applies to the first part of a claim. Suggesting that zero-excess options lead to the lowest premiums is a fundamental misunderstanding, as zero-excess policies require the insurer to cover all losses from the first dollar, resulting in significantly higher premiums.

Takeaway: In Singapore, consumers can effectively lower their general insurance premiums by opting for a higher voluntary excess, thereby sharing more of the risk with the insurer.

Correct: In the Singapore insurance market, a standard Personal Accident policy defines an ‘accident’ as a sudden, unforeseen, and unexpected event caused by external, violent, and visible means. For a claim to be successful, the ‘bodily injury’ must result solely and directly from the accident, independent of any other cause such as illness, disease, or gradual physical/mental wear and tear. Therefore, the insurer must ensure the event meets these specific criteria and is not a result of a pre-existing condition.

Incorrect: Approving a claim based solely on a medical certificate is incorrect because the certificate proves disability but does not establish that the cause meets the policy’s definition of an accident. Classifying a degenerative condition as a bodily injury is wrong because PA policies specifically exclude gradual deterioration and sickness. Requiring a criminal act or third-party involvement to satisfy the ‘violent’ requirement is a common misconception; in insurance law, ‘violent’ simply refers to the physical force involved in the accident, such as the impact of a fall or the strain of an external event.

Takeaway: To qualify for a Personal Accident claim in Singapore, the injury must be caused by a sudden, external, and visible event, independent of pre-existing medical conditions or natural physical decay.

Correct: In Singapore, the principle of subrogation allows an insurer to ‘step into the shoes’ of the insured to recover the claim amount from a responsible third party. However, this right is only effective if the insured has not already waived their rights or settled with the third party. Therefore, the most effective control is a policy condition that prevents the insured from taking any action that prejudices the insurer’s recovery rights, such as signing a private discharge or settlement without the insurer’s consent.

Incorrect: Requiring the insured to conclude legal actions before filing a claim is incorrect because the insurer’s duty is to indemnify the insured promptly, after which subrogation rights are exercised. Automatically transferring legal title refers to the principle of abandonment or salvage, which is distinct from the right to sue a third party for negligence. Applying a deductible based on estimated recovery is not a standard practice and contradicts the principle of indemnity, as it forces the insured to bear the cost of the third party’s negligence upfront.

Takeaway: The right of subrogation is protected by policy conditions that prevent the insured from compromising the insurer’s ability to recover losses from negligent third parties through unauthorized settlements.

Correct: In the Singapore general insurance market, policy conditions typically require the insured to give ‘immediate’ notice or notice ‘as soon as reasonably possible’ of any occurrence that may give rise to a claim. This is a condition precedent to liability, allowing the insurer to investigate the cause and extent of loss promptly. Subsequently, the insured is required to provide ‘proof of loss’ by submitting a completed claim form and relevant supporting documents (like photos or repair quotes) within a set period, commonly 14 to 30 days, as specified in the policy terms.

Incorrect: Waiting until repairs are finished before notification is incorrect because it prevents the insurer from exercising its right to inspect the damage and suggest mitigation measures. Limiting notification only to losses significantly exceeding the deductible is wrong because insurers require notification of all potential claims to assess risk and maintain accurate reserves. Requiring an independent public adjuster’s report before notification is not a standard requirement; the insurer usually appoints their own loss adjuster after being notified of the claim.

Takeaway: Prompt notification and adherence to the policy’s specified timeframe for submitting proof of loss are critical for a valid claim under Singapore general insurance practices.

Correct: The Singapore College of Insurance (SCI) is the industry-led training and education body appointed to manage the CMFAS insurance exams. It ensures that the content and administration of exams like the PGI (Personal General Insurance) align with the competency standards mandated by the Monetary Authority of Singapore (MAS) for those wishing to provide advice on or sell insurance products.

Incorrect: The Monetary Authority of Singapore (MAS), not the SCI, is the regulatory authority responsible for the licensing and registration of financial representatives. The Securities and Futures Act (SFA) and Financial Advisers Act (FAA) are legislative frameworks administered by MAS, not drafted by the SCI. The Financial Industry Disputes Resolution Centre (FIDReC) is the body responsible for handling disputes between consumers and financial institutions, a role distinct from the SCI’s educational and examination mandate.

Takeaway: The SCI is the designated administrator for insurance-related CMFAS exams, ensuring practitioners meet the competency standards required by MAS.

Correct: In Singapore, Personal Accident insurance is classified as general insurance and is usually issued on a yearly renewable basis. Unlike certain types of health insurance (like Integrated Shield Plans) or life insurance, PA policies are generally not ‘guaranteed renewable.’ The insurer maintains the contractual right to review the risk at each anniversary and may choose not to invite renewal, provided they adhere to the notice period specified in the policy’s cancellation or renewal clause.

Incorrect: The statement regarding the Insurance Act requiring automatic renewal is incorrect as general insurance contracts are typically annual and subject to re-underwriting. There is no regulatory requirement or industry standard that links the right to decline renewal specifically to a claim-to-premium ratio threshold. While MAS Fair Dealing Guidelines encourage transparency and reasonable notice, they do not mandate a six-month notice period or a requirement to provide a list of competitors when an insurer chooses not to renew a standard PA policy.

Takeaway: Personal Accident policies in Singapore are generally non-guaranteed yearly renewable contracts, allowing insurers the discretion to decline renewal at the end of the policy term.

Correct: Under the Travel Agents Regulations and STB licensing conditions in Singapore, travel agents are required to inform their customers about the availability of travel insurance that covers the insolvency of the travel agent. If the customer chooses not to purchase such insurance, the agent must obtain a written acknowledgment from the customer stating that they were informed but declined the coverage.

Incorrect: While some agents might include insurance in packages, it is not a regulatory mandate to bundle it automatically for all bookings over a specific price. Corporate guarantees are part of the licensing financial requirements for the agent’s business operations but do not replace the consumer disclosure requirement for insolvency insurance. The requirement to inform customers about insolvency insurance is a proactive duty of the agent and does not depend on the customer first asking about refund policies.

Takeaway: Singapore travel agents are legally required to disclose the availability of insolvency insurance to customers and must document a customer’s decision to decline such coverage in writing.

Correct: In Singapore, property insurance for the building structure is typically based on the Reinstatement Value. This ensures that the policyholder can rebuild the property (new for old) without a deduction for depreciation. The sum insured must reflect the cost of construction, which includes not just materials and labor, but also professional fees (architects and engineers) and the cost of clearing debris. Land value is excluded because land is not destroyed by fire or other insured perils.

Incorrect: Insuring based on Market Value is generally inappropriate for building insurance because market prices include the value of the land, which is not at risk of destruction, leading to over-insurance. Using the original purchase price is incorrect as it does not account for inflation in construction costs or changes in building regulations. Applying a depreciation discount to a Market Value premium is not a standard industry practice for reinstatement-based policies and fails to address the core need of covering reconstruction costs.

Takeaway: For Singapore properties, the sum insured should be based on the cost of reinstating the building structure to its original condition, excluding land value but including ancillary reconstruction costs.

Correct: In the Singapore motor insurance market, Comprehensive cover is the most extensive, covering third-party liabilities as well as accidental damage to the insured’s own vehicle. Third Party Fire and Theft (TPFT) is a mid-tier product that covers the mandatory third-party liabilities plus the specific risks of fire and theft to the insured’s own vehicle, but excludes other types of accidental damage.

Incorrect: Third Party Only (TPO) cover never provides indemnity for the insured’s own vehicle repairs, regardless of who is at fault; the insured would have to claim against the third party’s insurer directly. TPO, not TPFT, is the minimum legal requirement under the Motor Vehicles (Third-Party Risks and Compensation) Act in Singapore. All three levels of cover (TPO, TPFT, and Comprehensive) include indemnity for third-party property damage as well as third-party death or bodily injury.

Takeaway: While Third Party Only meets Singapore’s legal minimum, Third Party Fire and Theft adds specific own-vehicle perils, and Comprehensive cover provides the broadest protection including accidental damage to the insured’s own car.

Correct: According to Section 6 of the Limitation Act (Cap. 163) of Singapore, actions founded on a contract (which includes most insurance policy disputes) shall not be brought after the expiration of 6 years from the date on which the cause of action accrued. In the context of an insurance claim denial, the cause of action typically accrues when the breach occurs or when the right to claim under the policy is established and subsequently denied.

Incorrect: The 3-year period is generally applicable to actions for damages for negligence, nuisance, or breach of duty where the damages consist of or include damages in respect of personal injuries, as per Section 24A of the Limitation Act. The 1-year period is often an internal requirement or a specific policy condition for notification, but it does not override the statutory limitation period for filing a lawsuit. The 12-year period applies to actions upon a deed or certain specialty debts, which is not the standard classification for a general insurance contract dispute.

Takeaway: In Singapore, the Limitation Act establishes a 6-year statutory limit for commencing legal action in contract-based insurance disputes, such as property damage claims.

Correct: In Singapore’s general insurance market, the principle of contribution is a corollary of indemnity. To prevent an insured from profiting by claiming the full loss from multiple insurers, most policies include a contribution clause. This clause legally limits an insurer’s liability to its rateable proportion (its share) of the loss. This ensures the insured is indemnified for the actual loss but not more, adhering to the principle of indemnity.

Incorrect: Subrogation is incorrect because it refers to an insurer’s right to step into the shoes of the insured to recover costs from a liable third party, not the sharing of loss between insurers. The Monetary Authority of Singapore (MAS) does not automatically cancel private contracts due to double insurance; it is a matter of claims settlement between the parties. A strict primary-excess hierarchy is not the default legal position for contribution; instead, insurers usually share the loss proportionately unless specific ‘non-contribution’ or ‘excess’ clauses dictate otherwise.

Takeaway: The principle of contribution ensures that when multiple policies cover the same risk, the insurers share the loss proportionately so the insured does not receive more than the actual financial loss.

Correct: As the integrated regulator of Singapore’s financial sector, MAS oversees banking, insurance, and securities. This integrated model is designed to provide a holistic view of financial institutions, especially those operating across multiple sectors. It enables MAS to manage systemic risks more effectively and ensures that conduct of business standards, such as the Fair Dealing Guidelines, are implemented uniformly to protect consumers regardless of the financial product they purchase.

Incorrect: Approach 1 is incorrect because siloed supervision would prevent MAS from seeing the ‘big picture’ of a financial group’s health and risks. The idea that MAS is legally required to keep supervision independent is false; the MAS Act empowers it as an integrated supervisor. Option C is incorrect because MAS’s developmental role does not supersede its prudential and supervisory responsibilities. Option D is incorrect as it describes a fundamental misunderstanding of MAS’s role; MAS does not move private funds between entities to cover losses, but rather sets capital adequacy standards to prevent such losses.

Takeaway: MAS acts as an integrated supervisor to ensure financial stability and consistent market conduct across the banking, insurance, and securities industries in Singapore.

Correct: In Singapore, a cover note is a temporary document issued by an insurer or its authorized agent to provide immediate evidence of insurance. It is a legally binding contract of insurance that protects the insured while the formal policy is being prepared. It is issued on the basis that the terms, conditions, and exceptions of the insurer’s standard policy for that specific class of insurance apply during the interim period.

Incorrect: The suggestion that it is non-binding is incorrect because a cover note creates an immediate legal obligation for the insurer to cover losses. The claim that it only provides statutory third-party coverage is false; a cover note typically reflects the specific level of coverage (such as Comprehensive) applied for by the client. Finally, a cover note is by definition temporary and does not become a permanent contract; it is superseded once the actual policy document is issued or it expires after its stated duration.

Takeaway: A cover note provides immediate and binding temporary insurance coverage in Singapore, governed by the insurer’s standard policy terms, until the formal policy is finalized.

Correct: In the Singapore insurance market, travel insurance policies specify that medical evacuation and repatriation services must be coordinated through the insurer’s 24-hour emergency assistance partner. This is a critical requirement because the assistance provider must assess the medical necessity, determine the most appropriate mode of transport, and ensure the receiving facility can provide the required care. Unauthorized arrangements made by the insured are generally not covered or are subject to significant payment limits.

Incorrect: The suggestion that an insured can independently arrange private transport and seek reimbursement is incorrect because insurers must manage the high costs and medical risks through their own assistance networks. The claim that facilities must be non-existent is a misconception; evacuation is typically triggered when local care is inadequate for the specific medical emergency, even if some facilities exist. The idea that any hospitalization over twenty-four hours triggers an unconditional return to Singapore is false, as evacuation is based on medical necessity and the inability to receive proper treatment locally, not a fixed time-based rule.

Takeaway: Medical evacuation and repatriation coverage is contingent upon the insurer’s designated assistance provider assessing the medical necessity and managing the logistical arrangements.

Correct: Under the Motor Vehicles (Third-Party Risks and Compensation) Act in Singapore, it is a legal requirement for every person who uses a motor vehicle on the road to be insured against liability for the death of or bodily injury to any person. This statutory requirement for third-party bodily injury and death is unique because it requires unlimited indemnity, meaning there is no dollar cap on the insurer’s liability for these specific risks.

Incorrect: While most motor insurance policies in Singapore (such as Third Party, Fire and Theft or Comprehensive) include coverage for third-party property damage, this is not a mandatory requirement under the Motor Vehicles (Third-Party Risks and Compensation) Act. Personal accident benefits for the driver and medical expenses are optional covers typically found in Comprehensive policies but are not part of the minimum legal requirement. There is no statutory cap or aggregate limit of S$2,000,000 for death or bodily injury; the law mandates that such coverage must be unlimited.

Takeaway: In Singapore, the Motor Vehicles (Third-Party Risks and Compensation) Act mandates that all motor insurance policies provide unlimited coverage for third-party death or bodily injury.

Correct: In Singapore property insurance, the ‘Average’ clause is applied when a property is under-insured. It is based on the principle of indemnity, ensuring that the insurer only pays for the proportion of the risk they have accepted premiums for. If the sum insured is only 50% of the actual value, the insurer will only pay 50% of any loss, and the policyholder is considered their own insurer for the remaining 50%.

Incorrect: The ‘Average’ clause is a contractual principle of insurance, not a statutory penalty or fine issued by the Monetary Authority of Singapore (MAS). Insurers do not have the right to unilaterally back-date premiums and increase coverage after a loss has occurred to pay a full claim. Furthermore, the clause does not establish a minimum loss threshold; rather, it determines the proportion of the loss the insurer is responsible for based on the level of under-insurance.

Takeaway: The ‘Average’ clause ensures that if a property is under-insured, the policyholder must bear a proportional share of any loss, effectively acting as a co-insurer for the difference between the sum insured and the actual value.

Correct: Reinsurance increases an insurer’s capacity by spreading the risk. When a direct insurer cedes a part of the risk to a reinsurer, its net retention (the amount of risk it keeps on its own books) decreases. This reduction in net liability per risk means the insurer can accept larger risks or a higher volume of risks without breaching its internal risk limits or the capital adequacy ratios mandated by the Monetary Authority of Singapore (MAS).

Incorrect: The option suggesting reinsurance acts as a regulatory waiver is incorrect because all licensed insurers in Singapore must adhere to MAS capital adequacy and solvency requirements regardless of their reinsurance arrangements. The option regarding the transfer of entire legal responsibility is incorrect because the direct insurer remains legally liable to the policyholder; the reinsurance contract is a separate agreement between the insurer and reinsurer. The option regarding a direct capital injection into Tier 1 capital is incorrect because reinsurance is a risk transfer mechanism, not a method for increasing paid-up capital or changing the corporate share structure registered with ACRA.

Takeaway: Reinsurance expands an insurer’s underwriting capacity by reducing its net exposure on individual or aggregate risks, allowing it to accept larger risks while maintaining regulatory capital compliance.

Correct: In Singapore, under the Work Injury Compensation Act (WICA), employers are legally mandated to report work-related accidents to the Ministry of Manpower (MOM) via iReport within 10 days of the accident if the injury results in more than 3 days of medical leave (whether consecutive or not) or at least 24 hours of hospitalization.

Incorrect: Waiting for the employee to return from leave or for an insurer to accept liability would likely cause the employer to miss the statutory 10-day reporting deadline, leading to potential legal penalties. The requirement to report via iReport is triggered by the duration of medical leave or hospitalization, regardless of whether the employee has initiated a formal claim for permanent incapacity or whether the insurer has completed its assessment.

Takeaway: Employers in Singapore must report work-related accidents resulting in more than 3 days of medical leave via iReport within 10 days to ensure compliance with WICA regulations.