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

Correct: In the Singapore insurance market, travel insurance policies typically exclude claims arising from ‘known events.’ An MFA travel advisory is considered a known event once it is published. For a trip cancellation claim to be valid, the policy must generally have been purchased, and the trip booked, before the MFA issued the advisory. Therefore, the intermediary must first evaluate the timeline to determine if the risk was already known at the time of contract inception.

Incorrect: Advising a client to travel despite an ‘Avoid all travel’ or ‘Avoid non-essential travel’ advisory from the MFA is professionally irresponsible and would likely result in the insurer voiding coverage for any subsequent losses. MFA advisories do not automatically trigger refunds; coverage depends on the specific policy wording and the timing of the advisory. Waiting until an advisory is lifted is incorrect as claims for cancellation must be filed promptly when the insured event (the issuance of the advisory preventing travel) occurs.

Takeaway: The validity of a travel insurance claim triggered by an MFA advisory depends primarily on whether the advisory was issued before or after the policy was purchased and the trip was booked.

Correct: In accordance with the Motor Vehicles (Third Party Risks and Compensation) Act in Singapore, insurance against third-party risks is compulsory. Specifically, the Act requires that the insurance policy must provide an unlimited amount of indemnity for any liability which may be incurred by the user of the vehicle in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle on a road in Singapore.

Incorrect: The suggestion of a S$1,000,000 or S$500,000 limit is incorrect because Singapore law does not permit a cap on indemnity for death or bodily injury to third parties in motor insurance. While third-party property damage (TPPD) often has a standard industry limit (such as S$5,000,000), the statutory requirement for death and bodily injury remains unlimited to ensure full protection for victims. An aggregate annual limit is also not compliant with the statutory requirement for per-occurrence unlimited coverage for personal injury.

Takeaway: Under Singapore’s Motor Vehicles (Third Party Risks and Compensation) Act, motor insurance must provide unlimited indemnity for third-party death or bodily injury.

Correct: In the Singapore context, the HDB Fire Insurance scheme is a basic requirement for flat owners with HDB loans, intended to cover the cost of reinstating the building’s structure and original fixtures provided by HDB. It does not cover personal property or renovations. Home Contents Insurance is a separate, optional policy that provides broader protection for the homeowner’s personal belongings, furniture, and any renovation works carried out, as well as personal liability coverage.

Incorrect: The suggestion that HDB Fire Insurance covers movable contents is incorrect as it is limited to the building structure and original fixtures. The claim that HDB Fire Insurance is sufficient for all risk needs is false because it lacks coverage for personal belongings and third-party liability. The assertion that Home Contents Insurance is a statutory requirement for all HDB dwellers is incorrect; it is a voluntary purchase intended to supplement the basic fire insurance.

Takeaway: HDB Fire Insurance covers only the structural integrity and original HDB fixtures, making optional Home Contents Insurance essential for protecting personal belongings and renovations.

Correct: In the Singapore insurance context, personal accident policies generally define an ‘accident’ as a sudden, unforeseen, and unexpected event. For a claim to be valid under ‘accidental means,’ the cause of the injury must be external and visible (like tripping over a floorboard), rather than an internal or gradual cause. This ensures that the policy covers genuine accidents rather than sickness or wear and tear.

Incorrect: Aggravation of pre-existing conditions is typically excluded as the injury is not caused solely and independently by an accident. Gradual physical consequences are classified as occupational diseases or wear and tear, which do not meet the ‘sudden’ requirement of an accident. Internal physical breakdowns or diseases (like a heart attack or stroke) are generally categorized as illnesses rather than bodily injuries caused by external accidental means.

Takeaway: A valid accidental bodily injury claim in Singapore requires a sudden, external, and unforeseen event to be the proximate cause of the injury.

Correct: In Singapore, the Work Injury Compensation Act (WICA) applies to all employees under a contract of service, which includes Migrant Domestic Workers (MDWs). Employers are legally obligated to maintain insurance that meets the requirements of the Ministry of Manpower (MOM) to cover potential work-related injury claims. This is a statutory requirement that cannot be waived or replaced by general home insurance or higher personal accident limits.

Incorrect: The suggestion that WICA only applies to manual labor involving machinery is incorrect as the Act covers all employees under a contract of service. Increasing Personal Accident Insurance limits does not exempt an employer from the statutory WICA requirements. Furthermore, domestic helpers are not excluded from WICA due to their place of residence; home insurance policies for fire and contents do not fulfill the legal requirement for work injury compensation coverage.

Takeaway: All employers of domestic helpers in Singapore must comply with WICA requirements as the Act covers all employees under a contract of service, regardless of the nature of their domestic duties.

Correct: In standard personal liability insurance in Singapore, such as those found in home or comprehensive personal liability policies, legal costs and expenses incurred in defending a claim are typically paid in addition to the limit of indemnity. However, a critical condition is that these costs must be incurred with the insurer’s prior written consent, as the insurer usually reserves the right to appoint solicitors and control the legal proceedings.

Incorrect: The suggestion that costs are always deducted from the limit is incorrect for most personal liability policies, where costs are ‘in addition’ to the limit (unlike some professional indemnity forms). The idea that an insured must settle fees independently ignores the insurer’s right to take over the defense and manage the litigation. The claim that costs are only covered if the defense is successful is false; the duty to defend and the coverage for costs apply regardless of the outcome, provided the claim itself falls within the policy scope.

Takeaway: In Singapore personal liability insurance, legal defense costs are usually covered in addition to the limit of indemnity, subject to the insurer’s prior consent and control of the proceedings.

Correct: In Singapore, the principle of indemnity is a fundamental concept in general insurance which dictates that the insured should be placed in the same financial position after a loss as they were immediately before the loss. For property and motor insurance, this typically means the settlement is based on the market value or the cost of repair/replacement minus depreciation. Providing the original purchase price for a 4-year-old car or used household items would result in ‘betterment,’ allowing the insured to profit from the loss, which violates the principle of indemnity.

Incorrect: The idea that the insurer must pay the full sum insured regardless of value describes a ‘Valued Policy,’ which is not the standard for most personal property or motor insurance in Singapore. Providing brand-new replacements for used items (unless a specific ‘New for Old’ or Reinstatement Value clause exists) would result in the insured being in a better position than before the loss. Adding a buffer for psychological distress is not part of the principle of indemnity, as indemnity focuses strictly on financial restoration for the actual loss sustained.

Takeaway: The principle of indemnity ensures the insured is restored to their pre-loss financial state without making a profit, typically by accounting for depreciation in the claim settlement.

Correct: Tenant’s liability insurance is specifically designed to cover the tenant’s legal liability to the landlord for damage to the premises. In Singapore, if a tenant’s negligence causes damage (such as a fire), the landlord’s insurer, after paying the landlord for the loss, may exercise subrogation rights to recover the payout from the tenant. This insurance protects the tenant’s financial interests by covering these legal claims and the costs of defense.

Incorrect: The suggestion that it replaces the landlord’s fire insurance is incorrect because the landlord still needs to insure the building asset itself; the tenant’s policy only covers the tenant’s liability. The claim that it is a statutory requirement under the Land Titles Act is false, as insurance requirements in Singapore residential leases are typically contractual rather than mandated by statute. Confusing liability insurance with contents insurance is a common error; contents insurance covers the tenant’s own property, whereas liability insurance covers the tenant’s legal obligations to others, and it does not automatically cover the landlord’s loss of rent unless specifically structured to do so.

Takeaway: Tenant’s liability insurance protects the tenant against legal claims and subrogation actions from the landlord or the landlord’s insurer for negligent damage to the leased property.

Correct: The Wages and Levy Reimbursement benefit is specifically designed to mitigate the financial loss of the employer. In Singapore, an employer remains legally obligated to pay the helper’s salary and the MOM levy even when the helper is hospitalized and unable to perform her duties. This insurance benefit provides a daily allowance to offset these fixed employment costs during the hospitalization period, provided the underlying cause of hospitalization is covered by the policy.

Incorrect: Covering medical and surgical fees refers to the Hospitalization and Surgical (H&S) benefit, which is a separate core component of the policy. Lump-sum disability payments are typically handled under the Personal Accident or Repatriation sections of the policy rather than wage reimbursement. Outpatient clinic visits and follow-up treatments are generally excluded from the Wages and Levy Reimbursement trigger, as this specific benefit requires the helper to be an inpatient in a hospital to qualify for the daily reimbursement.

Takeaway: The Wages and Levy Reimbursement benefit compensates the employer for fixed employment costs like salary and the MOM levy while a helper is hospitalized and unable to work.

Correct: In the Singapore insurance market, the underwriter’s primary role is to assess the risk profile of a proposer by examining physical hazards (related to the property) and moral hazards (related to the individual’s conduct or claim history). This ensures that the insurer maintains a balanced portfolio where premiums are set at a level that reflects the actual risk being transferred, which is a core component of sound risk management as expected by the Monetary Authority of Singapore (MAS).

Incorrect: Accepting all risks regardless of history to gain market share is a violation of sound underwriting principles and can lead to adverse selection and financial instability. Automatically declining applicants based on a rigid claim count without individual assessment fails to provide a fair evaluation of risk and may not align with fair dealing outcomes. Delegating the final risk assessment to an intermediary is inappropriate because the underwriter, acting on behalf of the insurer, bears the ultimate responsibility for risk acceptance and the financial consequences of the policy terms.

Takeaway: The underwriter’s core function is to achieve an equitable balance between risk and premium through the careful assessment of hazards and the application of appropriate policy terms.

Correct: In accordance with MAS AML/CFT requirements (such as MAS Notice 314 for general insurers), financial institutions must adopt a Risk-Based Approach (RBA). This involves identifying and assessing risks and applying commensurate CDD measures. Enhanced Due Diligence (EDD) is mandatory for high-risk categories, including Politically Exposed Persons (PEPs), their family members, and close associates, to mitigate the higher risk of money laundering or terrorism financing.

Incorrect: The suggestion that uniform screening is required to avoid discrimination is incorrect; MAS specifically mandates a risk-based differentiation. Relying on a uniform checklist for the sake of STRO data consistency is not a regulatory requirement and ignores the necessity of focusing resources on high-risk areas. While insurers can sometimes rely on third parties for CDD, they cannot ‘completely waive’ requirements, and the ultimate responsibility for compliance remains with the insurer.

Takeaway: Singapore’s AML/CFT framework requires insurers to apply a risk-based approach, performing enhanced due diligence on high-risk customers like PEPs while maintaining standard procedures for others.

Correct: In Singapore, the mandatory HDB Fire Insurance policy is specifically designed to cover the cost of reinstating the HDB building structure and original fixtures or fittings provided by HDB at the time of the first sale. It does not cover improvements or additions made by the flat owner, such as flooring, built-in cabinets, or false ceilings (collectively known as renovations), nor does it cover personal belongings (contents). Therefore, a separate comprehensive Home Insurance policy is necessary to protect these specific assets.

Incorrect: The suggestion that HDB Fire Insurance includes a sub-limit for owner-made renovations is incorrect because it strictly excludes any improvements made by the owner. The claim that a private Home Insurance policy can replace the mandatory HDB Fire Insurance is false; HDB flat owners with an outstanding HDB loan are legally required to maintain the specific HDB Fire Insurance policy regardless of any additional private coverage they purchase. The assertion that building coverage only applies to common property is inaccurate, as building coverage in a home policy typically refers to the internal structure and original fixtures of the specific unit being insured.

Takeaway: Mandatory HDB Fire Insurance covers only the basic building structure, necessitating a separate Home Insurance policy for renovations and personal contents.

Correct: Under standard travel insurance policies in Singapore, a claim for missed connections or overbooking requires formal evidence from the transport provider. The insurer needs written confirmation from the airline (the carrier) or their authorized agents to verify the cause of the delay (e.g., technical fault or late arrival of the previous flight) and the exact length of the delay to determine if it meets the policy’s time-based trigger (commonly 6 or 12 hours).

Incorrect: Providing a police report is incorrect because airline operational issues like missed connections are administrative matters handled by carriers, not criminal matters requiring police intervention. Requiring the purchase of a ticket from a competing airline within three hours is not a standard procedural requirement for a missed connection claim, as the original carrier typically manages rebooking. A statutory declaration is an excessive legal requirement for a standard travel claim and is not the primary document used to verify airline delays in the Singapore insurance market.

Takeaway: To claim for flight disruptions in Singapore, travelers must secure official written documentation from the airline specifying the cause and duration of the delay or overbooking.

Correct: In Singapore, standard motor insurance policies contain an exclusion for accidents occurring while the driver is under the influence of alcohol or drugs. While the insurer can legally deny ‘Own Damage’ and ‘Personal Accident’ claims based on this exclusion, the Road Traffic Act mandates that insurers must satisfy third-party claims (for death or bodily injury). After paying the third party, the insurer has the legal right to recover the amount paid from the insured driver due to the breach of policy conditions.

Incorrect: The suggestion that the policy is voided entirely is incorrect because statutory obligations under the Road Traffic Act protect third-party victims regardless of the driver’s intoxication. There is no provision in Singapore motor insurance for a ‘first offense’ grace period or ‘aggravated risk’ excess that would allow an own-damage claim to be paid when the legal alcohol limit is exceeded. The Motor Insurers’ Bureau of Singapore typically handles claims involving untraced or uninsured drivers, not cases where a valid policy exists but an exclusion clause (like drink-driving) is triggered.

Takeaway: Under Singapore law, drink-driving excludes own-damage coverage, but insurers must fulfill third-party obligations before seeking recovery from the offending driver.

Correct: According to Section 2 of the Singapore Insurance Act, ‘general business’ is defined as all insurance business which is not life business. This ‘definition by exclusion’ ensures that any insurance activity regulated under the Act that does not meet the specific criteria of life business (which involves life policies) falls into the general insurance category.

Incorrect: The suggestion that general business is defined by a fixed duration of less than five years is incorrect as the Act does not use a specific year-based timeframe as the primary definition for general business. The description of benefits payable upon death or survival refers to the definition of life business, not general business. The claim that general business excludes accident and health risks is false, as general insurers in Singapore are permitted to write accident and health business under the Insurance Act.

Takeaway: Under the Singapore Insurance Act, general business is legally defined as any insurance business that does not fall under the classification of life business.

Correct: The correct approach involves adhering to the Notification, Consent, and Protection Obligations. Under the PDPA, organizations must inform individuals of the purposes for which they collect, use, or disclose personal data, obtain consent for such activities, and make reasonable security arrangements to protect the personal data in its possession.

Incorrect: Retaining data indefinitely violates the Retention Limitation Obligation, which requires data to be destroyed when it is no longer necessary for legal or business purposes. Sharing data for unrelated marketing without specific consent violates the Purpose Limitation Obligation. Restricting the right to correct data violates the Access and Correction Obligation, which generally requires organizations to correct inaccurate data upon request as soon as practicable.

Takeaway: The PDPA requires insurance professionals to balance business needs with the individual’s right to protect their personal data through transparency, security, and purpose-specific usage.

Correct: In Singapore, the principle of subrogation is a corollary of the principle of indemnity. Once an insurer has fully indemnified the insured for a loss, they are subrogated to the rights of the insured against any negligent third party. If the insured recovers money from the third party after being paid by the insurer, they are considered to be holding those funds in trust for the insurer. This ensures the insured does not profit from the loss, which would violate the fundamental principle of indemnity.

Incorrect: The suggestion that subrogation rights are terminated by a private settlement is incorrect; in fact, an insured who prejudices the insurer’s recovery rights by signing such an agreement may be liable for damages to the insurer. The claim that a fresh Power of Attorney is required for every case is a misconception; while often used for convenience in litigation, the right of subrogation arises automatically at law upon payment of the indemnity. The idea that subrogation only applies to commercial lines is false, as it applies to all contracts of indemnity, including personal motor and fire insurance.

Takeaway: Subrogation ensures that the principle of indemnity is maintained by allowing insurers to recover claim costs from negligent third parties and preventing the insured from receiving double compensation.

Correct: In the Singapore insurance market, the ‘Domestic Explosion’ peril specifically covers explosions of gas used for domestic purposes or domestic boilers. This is a standard inclusion in personal fire insurance policies to protect against common household hazards like cooking gas or water heaters.

Correct: The CPF Board administers MediShield Life premiums primarily through the member’s MediSave Account. If a member has insufficient funds, the Board facilitates the use of MediSave funds from immediate family members (spouses, children, parents, or siblings). For individuals who still face financial difficulties after subsidies and the use of family MediSave, the Government provides Additional Premium Support (APS) to ensure that no Singaporean loses MediShield Life coverage due to an inability to pay.

Incorrect: The suggestion that funds are automatically transferred from the Ordinary Account or Special Account is incorrect, as MediShield Life premiums are specifically restricted to the MediSave Account. The claim that premiums cannot be paid by third parties is false, as the ‘MediSave-for-Family’ scheme is a standard administrative feature. The idea that coverage is suspended for insufficient funds is incorrect because MediShield Life is a universal, lifelong scheme designed to provide continuous protection, supported by government safety nets like Additional Premium Support.

Takeaway: The CPF Board ensures MediShield Life coverage remains continuous by allowing premium payments from family MediSave accounts and providing Additional Premium Support for those in financial need.

Correct: Under the Motor Vehicles (Third-Party Risks and Compensation) Act in Singapore, it is a statutory requirement that all motor insurance policies provide unlimited indemnity for liability arising from the death of or bodily injury to third parties. This ensures that victims of road accidents can be fully compensated for personal injuries regardless of the total cost of the claim.

Incorrect: The suggestion that indemnity can be limited to S$5,000,000 or S$1,000,000 is incorrect because Singapore law does not allow for a financial cap on third-party death or bodily injury claims in motor insurance. While the Motor Insurers’ Bureau (MIB) provides a framework for compensation in cases involving uninsured or untraced drivers, it does not set indemnity limits for standard policies issued by licensed insurers.

Takeaway: In Singapore, motor insurance must provide unlimited coverage for third-party death or bodily injury to comply with the Motor Vehicles (Third-Party Risks and Compensation) Act.

Correct: In Singapore, the Ministry of Manpower (MOM) requires employers of non-Malaysian migrant domestic workers to furnish a $5,000 security bond. This bond is a guarantee that the employer will comply with the conditions of the Work Permit. If a breach occurs, the bond may be forfeited. Most insurers in the Personal General Insurance market provide this bond and offer an optional ‘Waiver of Counter-Indemnity,’ which limits the employer’s liability to a small excess (usually $250) if the bond is forfeited due to circumstances beyond the employer’s control.

Incorrect: Medical insurance is a separate mandatory requirement for domestic workers in Singapore, covering hospitalisation, and is not the same as the security bond. Personal accident insurance is also a separate mandatory requirement with different minimum sum assured levels (currently $60,000) and serves to protect the worker, not to guarantee the employer’s compliance with MOM. The security bond is not a deposit held by the Singapore Exchange (SGX) nor is it an interest-bearing savings instrument; it is a regulatory guarantee required by MOM.

Takeaway: The MOM security bond is a $5,000 compliance guarantee for non-Malaysian domestic workers, where employers can purchase insurance to mitigate the risk of full forfeiture through a waiver of counter-indemnity.

Correct: In the Singapore insurance market, the Public Liability section of a home insurance policy is designed to protect the insured against legal liability to third parties for accidental bodily injury or property damage occurring at the premises. It specifically excludes the insured’s family members and domestic servants. Domestic servants in Singapore must be covered by a separate insurance policy that meets the Ministry of Manpower’s (MOM) requirements under the Work Injury Compensation Act (WICA).

Incorrect: The suggestion that home insurance replaces the need for a separate WICA policy is incorrect as WICA is a mandatory regulatory requirement for employers of domestic helpers in Singapore. The claim that insurers pay all medical bills regardless of negligence is false; Public Liability is generally based on the insured’s legal liability, which typically requires a finding of negligence. The reference to the PDPA is irrelevant as that act governs data protection, not physical liability for accidents on premises.

Takeaway: Public Liability in Singapore home insurance covers legal liability to third parties, excluding household members and domestic servants who are covered under separate mandatory frameworks.

Correct: Under the Motor Vehicles (Third Party Risks and Compensation) Act in Singapore, it is a mandatory requirement for all motor vehicles used on public roads to be covered by insurance against legal liability for death or bodily injury to third parties. Furthermore, for the policy to comply with the Act, the amount of coverage for such third-party death or bodily injury must be unlimited. While many policies also include third-party property damage (typically capped at S$500,000 or more), this is not the primary statutory requirement defined by the Act for the vehicle to be legally used on the road.

Incorrect: Approach Y is incorrect because the statutory requirement under the Act focuses on death and bodily injury, not property damage; property damage coverage is a market standard but not the core legal requirement of the Act. Option C is incorrect because the Work Injury Compensation Act (WICA) is a separate regulatory framework and is not a requirement for a motor policy to satisfy the Motor Vehicles (Third Party Risks and Compensation) Act. Option D is incorrect because the Act does not allow for the capping of bodily injury liability for any vehicle type used on public roads; the requirement for unlimited indemnity for death or bodily injury remains absolute.

Takeaway: The Motor Vehicles (Third Party Risks and Compensation) Act requires all motor vehicles in Singapore to have insurance providing unlimited coverage for third-party death or bodily injury.

Correct: In accordance with the Personal Data Protection Act (PDPA) of Singapore, organizations must inform individuals of the purposes for which their personal data will be collected, used, or disclosed. If an organization intends to use or disclose personal data for a purpose for which consent was not previously obtained (such as sharing with a third party for marketing profiling), it must notify the individual and obtain fresh informed consent before the disclosure occurs.

Incorrect: Relying on a non-disclosure agreement with a third party does not negate the requirement to obtain informed consent from the individual under the PDPA. Deemed consent does not apply here because the client provided data specifically for a travel insurance transaction, not for third-party profiling. Notifying the client after the data has already been shared is a violation of the PDPA, as consent must be obtained prior to the use or disclosure for the new purpose.

Takeaway: Under the PDPA, any disclosure of personal data for a new purpose requires prior notification and the acquisition of fresh informed consent from the individual.

Correct: Under the Financial Advisers Act (FAA) of Singapore, the definition of ‘investment product’ generally excludes contracts of insurance that are not life policies. Since most personal general insurance (PGI) products like travel, motor, or home insurance do not have an investment or life element, they do not fall under the FAA’s definition of investment products. Consequently, the specific conduct of business requirements mandated by the FAA—such as Section 27 (Reasonable Basis for Recommendation) and the requirement for a formal Fact Find/Needs Analysis—do not apply to the sale of these pure general insurance products. They are instead primarily governed by the Insurance Act and the General Insurance Association (GIA) Code of Practice.

Incorrect: Option B is incorrect because the FAA’s requirement for a formal needs analysis is specific to ‘investment products,’ which excludes pure general insurance. Option C is incorrect because general insurance products are not classified as Specified Investment Products (SIPs); SIPs are typically complex products like derivatives or certain unlisted schemes that require additional safeguards like the CKA. Option D is incorrect because the application of the FAA is determined by the nature of the product being sold (whether it is an investment product) rather than the other licenses held by the representative.

Takeaway: Pure general insurance products are generally excluded from the FAA’s definition of investment products, so FAA-specific conduct rules like formal needs analysis do not apply to their sale.

Correct: In Singapore, the standard definition of a pre-existing condition is broad. It encompasses not only conditions that were professionally diagnosed or treated but also those where symptoms were present such that a reasonable or ‘ordinary prudent person’ would have sought medical attention. This definition supports the principle of utmost good faith, requiring the proposer to disclose all material facts that they know or ought to know.

Incorrect: The definition focusing only on formal diagnosis or NEHR records is too narrow and fails to account for undiagnosed symptoms that indicate an underlying risk. Definitions relying solely on the insured’s choice to disclose or those limited to conditions requiring hospitalization do not meet the legal standard of material disclosure in Singapore. Furthermore, pre-existing conditions are not limited to a specific ‘exclusion schedule’ of chronic illnesses but are based on the individual’s medical history and symptoms prior to inception.

Takeaway: A pre-existing condition in Singapore insurance includes both diagnosed ailments and symptomatic conditions that would lead a reasonable person to seek medical advice before the policy begins.

Correct: In the Singapore insurance market, the ‘Average Clause’ (or Condition of Average) is a standard provision in property insurance. It stipulates that if a property is under-insured at the time of a loss, the policyholder is deemed to be their own insurer for the difference and must bear a pro-rata share of the loss. For HDB owners, the mandatory HDB Fire Insurance Scheme only covers the internal building structures and original fixtures provided by HDB. To effectively manage the risk of the Average Clause, owners must accurately estimate and insure the full reinstatement cost of their own renovations and home contents.

Incorrect: Relying solely on the HDB Fire Insurance Scheme is a common misconception; it does not cover personal contents or owner-added renovations, leading to significant under-insurance. Waiving the Average Clause is not a mandatory regulatory requirement under the Singapore Insurance Act, and most standard policies include it to ensure equitable premium contribution. Basing the sum insured on the mortgage loan amount is a credit-protection strategy that often fails to reflect the actual reinstatement value of the property and its contents, which is the basis for applying the Average Clause.

Takeaway: To avoid pro-rata claim reductions under the Average Clause, HDB owners must ensure their sum insured represents the full reinstatement value of their renovations and contents, beyond the basic HDB Fire Insurance coverage.

Correct: In Singapore’s personal general insurance market, travel insurance policies typically include a condition that medical evacuation and repatriation must be arranged and pre-approved by the insurer’s designated emergency assistance provider. This allows the insurer to manage costs and ensure that the evacuation is medically necessary and that the destination facility is appropriate. Failure to comply with this condition often leads to claim denial, which is supported by contract law and industry practice, provided the terms were clearly disclosed in the policy document.

Incorrect: Reimbursing full costs without authorization ignores the contractual requirement for coordination, which is a standard safeguard against excessive costs and unnecessary procedures. There is no MAS guideline that mandates a waiver of authorization based on a specific distance like 500km. While an attending physician’s opinion is important, the policy contract usually stipulates that the insurer’s medical team or designated assistance provider must concur that the evacuation is medically necessary for the benefit to be triggered.

Takeaway: For medical evacuation benefits to apply, insured persons must typically contact the insurer’s 24-hour emergency assistance provider for prior authorization and coordination as per policy conditions.

Correct: As Singapore’s integrated financial regulator, the Monetary Authority of Singapore (MAS) oversees banking, insurance, and securities. This integrated structure allows MAS to supervise financial institutions holistically. For products that cross traditional sector boundaries, such as insurance policies with investment elements, MAS ensures that all relevant regulatory frameworks (like the Insurance Act for insurance risks and the SFA for investment conduct) are applied to protect consumers and maintain market integrity.

Incorrect: The suggestion that products are only registered under a single statute to avoid overlap is incorrect because MAS’s integrated approach specifically aims to close regulatory gaps in multi-functional products. MAS does not delegate its primary conduct supervision to the GIA; while the GIA sets industry codes, MAS remains the statutory regulator. Furthermore, MAS’s role is not limited to institutional solvency; it also encompasses market conduct and product-level supervision, and the SGX is a front-line regulator for listed entities, not the primary supervisor for all hybrid insurance products.

Takeaway: MAS operates as an integrated supervisor, ensuring that financial products and institutions in Singapore comply with all relevant sectoral laws to provide comprehensive oversight and consumer protection.

Correct: In the Singapore insurance market, underwriting is based on risk assessment. Actuarial data indicates that younger drivers (typically those under 25 or 27) and inexperienced drivers (those with less than 2 years of driving experience) are statistically more likely to be involved in accidents. Therefore, insurers charge higher premiums and often impose a ‘Young and/or Inexperienced Driver’ excess. Vehicle factors such as engine capacity (CC), make, model, and performance (e.g., turbo-charged engines) are also critical as they influence both the likelihood of an accident and the cost of repairs.

Incorrect: The suggestion that the Motor Claims Framework (MCF) or MAS mandates premiums based on OMV is incorrect; the MCF is a protocol for accident reporting, and MAS does not set premium rates in Singapore’s liberalized market. The claim that insurers are prohibited from charging higher premiums for converted licenses is false, as insurers have the discretion to assess the risk of drivers with limited local road experience. Finally, while occupation can be a factor, vehicle specifications are a primary technical rating factor, not a secondary one, and there is no regulation requiring occupation to take priority over vehicle type.

Takeaway: Motor insurance premiums in Singapore are determined by risk-based underwriting where age, driving experience, and vehicle performance are primary factors used to predict claim frequency and severity.