The Monetary Authority of Singapore (MAS) has unveiled its inaugural list of D-SIIs – or Domestically Systemically Important Insurers – in the city-state, with the four insurers to be subject to additional supervisory measures as part of a new regulatory framework.

As the country’s four “systemically important” insurers, each will be subject to higher regulatory standards and closer supervision, with the MAS acknowledging their collapse would significantly affect Singapore’s economy.

The four D-SIIs, unsurprisingly, include the biggest insurers in the country:

• AIA Singapore Private Limited
• Income Insurance Limited
• Prudential Assurance Company Singapore (Pte) Limited; and
• The Great Eastern Life Assurance Company Limited.

The D-SII framework, which comes into effect on 1 January 2024, in large part matches regulations that are currently applicable to the country’s systemically important banks – DBS, OCBC, UOB, Citibank, Standard Chartered, Maybank and HSBC.

The regulations demand higher capital requirements for each business to buffer losses, including a 25 per cent capital add-on made up of CET1 capital – or the “highest quality capital” – maintained by a business.

This capital add-on replaces a 25 per cent high-impact surcharge that is applicable under the existing framework.

The big four insurers (which cover life, health and general insurance) must also have in place adequate recovery planning. This, the MAS said, would “bolster an insurer’s ability to restore its financial strength and viability in a period of distress”.

“Resolution planning will enhance MAS’ ability to ensure the timely and orderly restructuring or exit of an insurer if it fails, so as to minimise impact to the financial system and economy.”

The four insurers were identified as systemically important based on four criteria: their size; their interconnectedness with other parts of the financial system and the economy; their substitutability, or ability to be replaced; and their business, structural and operational complexities.

In response to the release of the list, MAS’s deputy managing director Ho Hern Shin said: “Enhancing the D-SII framework is part of MAS’ continuous efforts to strengthen the resilience of Singapore’s financial sector.

“It ensures that domestic systemically important insurers are subject to higher regulatory standards and closer supervision.”

The new framework, which MAS notes “formalises and updates an existing framework [see Section 4]”, will take into account two years of data before an insurer is designated or removed as a D-SII.