The main statute governing the regulatory aspect and the conduct of (re)insurance business in Singapore is the Insurance Act 1966 (the “Insurance Act”). Provisions from the UK Life Assurance Act 1774 and the UK Fire Prevention Metropolis Act 1774 that deal with insurable interest and accidental fire, respectively, have been adopted (with some modification) in the Insurance Act.

There are also other pieces of legislation that govern specific types of insurance contracts or substantive points of insurance law. For example, the Third Parties (Rights against Insurers) Act 1930 gives third parties rights against insurers of third-party risks in the event of the insured becoming insolvent and in certain other events, and the Marine Insurance Act 1906 codifies principles of law applicable to marine insurance. Likewise, legislation like the Motor Vehicles (Third Party Risks & Compensation) Act 1960 and the Work Injury Compensation Act 2019 govern substantive aspects of insurance law in those areas.

As a common law jurisdiction, Singapore relies heavily on common law principles and case law authorities when it comes to disputes relating to contracts of insurance. Singapore’s highest court and court of final appeal is the Court of Appeal, whose decision is binding on the lower courts (for example, the High Court and the State Courts). In the absence of local case precedent, case authorities from Commonwealth jurisdictions (especially England and, to a larger extent in recent years, Australia) are likely to be of persuasive effect, although they are not binding on Singapore courts. Cases from the United States of America may also be of some persuasive authority before the Singapore courts, but typically less so than Commonwealth cases.

The insurance and reinsurance industry is regulated by the Monetary Authority of Singapore (MAS), and the Insurance Act contains provisions to regulate the conduct of insurance business in Singapore. The Insurance Act is supplemented by various pieces of subsidiary legislation, which consist of regulations setting out in greater detail the statutory requirements to which insurance companies and intermediaries must adhere. These regulations have the same legislative effect as if their provisions had been contained in the parent Act. The MAS may also issue various types of papers, which can be legally binding and have the force of law.

Generally speaking, entities that wish to underwrite insurance and reinsurance business in Singapore and/or solicit for insurance and reinsurance business from the public in Singapore must be licensed or authorised by the MAS. In a similar vein, the Insurance Act also strictly prohibits licensed insurers from co-branding with unlicensed carriers, so as to prevent any confusion for the public.

Direct Insurance Business

For the purposes of regulation under the Insurance Act, “insurance business” (which includes reinsurance of liabilities) is divided into two classes:

• life business, which includes all insurance business concerned with life policies, long-term accident and health policies, or both; and
• general business, which is essentially any insurance business that is not life insurance business.

Applicants for (re)insurance licences are expected to comply with the insurance regulatory requirement of obtaining the requisite licence to carry on the appropriate class of insurance business from the MAS.

As the MAS has been adopting a risk-focused approach to assessing the capital adequacy of insurance companies since 2004, insurers that underwrite different types of businesses will be subject to different licensing, capital adequacy and fund solvency requirements. The relevant financial, solvency and capital adequacy requirements are set out in the Insurance (Valuation and Capital) Regulations 2004 and MAS Notice 133 on Valuation and Capital Framework for Insurers.

For example, by virtue of the type of risks they underwrite, marine mutual insurers and captive insurers are typically subject to a “lighter” touch regulatory regime and less onerous licensing requirements. Similarly, the regulatory and compliance requirements that a life insurer will have to satisfy are relatively more onerous than those for a general insurer.

Apart from satisfying capital adequacy and fund solvency requirements, the following factors of an applicant are taken into account by the MAS when considering a new (re)insurance company application:

• domestic and international rankings by, inter alia, premiums and assets;
• past and present credit ratings by international rating agencies;
• track record, financial soundness and reputation;
• business strategy and feasibility plans;
• risk management systems; and
• fitness and propriety.

Reinsurance Business

Whether or not a licence is required in order to carry on reinsurance business in Singapore depends on the business model of the reinsurer. Broadly speaking, the Insurance Act provides for the following classifications of reinsurers:

• licensed reinsurers who have a physical business presence in Singapore;
• authorised reinsurers – who remain offshore but solicit business in the Singapore market; and
• unregulated/unlicensed reinsurers who are offshore reinsurers and do not solicit business in Singapore, but who are approached by local insurers or registered insurance broker to reinsure insurance policies.

An entity that wishes to apply to be a licensed or authorised reinsurer will have to meet certain licensing requirements set out in the Insurance Act and the Insurance (Authorised Reinsurers) Regulations (if applying to be an authorised reinsurer).

Apart from the licensing requirements imposed under the legislation and Notices issued by the MAS, the MAS may also impose specific licensing conditions on a case-by-case basis.

Singapore adopts a territorial basis of taxation, meaning that only income accruing in or derived from Singapore or income received in Singapore from outside Singapore will be subject to tax in Singapore. The corporate income tax rate generally applicable for the 2023 year of assessment is 17%.

Apart from partial tax exemptions and corporate income tax rebates that are given to companies generally, insurers and reinsurers underwriting approved insurance business may also enjoy a concessionary tax rate of 10% for qualifying income under the Insurance Business Development umbrella scheme.

As mentioned in 2.2 The Writing of Insurance and Reinsurance, insurers and reinsurers have to be licensed or authorised by the MAS in order to underwrite (re)insurance business in Singapore or solicit the same from the public in Singapore. Almost all licensed insurers and reinsurers must have a presence in Singapore, with the following exceptions:

• authorised foreign reinsurers pursuant to Section 42 of the Insurance Act;
• approved marine, aviation and transit insurers pursuant to Regulation 3 of the Insurance (Approved Marine, Aviation and Transit Insurers) Regulations;
• insurers carrying on business under a foreign insurer scheme (ie, Lloyd’s Scheme); and
• reinsurers who provide reinsurance pursuant to an arrangement not solicited by them.

With the exceptions of the above types of (re)insurers, the applicant must have a presence in Singapore in order to be licensed as a (re)insurer. Typically, offshore insurers would choose to either incorporate a subsidiary company in Singapore or establish a branch office. There are two main regulatory requirements and procedures when setting up a new insurance company in Singapore:

• first, an applicant would have to satisfy the relevant licensing requirements, depending on the type of insurance business it wishes to underwrite in Singapore (see 2.2 The Writing of Insurance and Reinsurance); and
• secondly, an applicant would have to comply with the corporate regulatory requirement of registering the business with the Accounting and Corporate Regulatory Authority as a branch of a foreign company or incorporating a Singapore company, under the Companies Act 1967.

Whilst there is no express legislation or regulation to recognise overseas insurance licences through “passporting”, given that the MAS takes into account the domestic and international rankings, credit ratings and track record of an applicant for a (re)insurance licence, amongst other factors, the insurance licence held by an applicant’s head office or parent company may be relevant in assessing an application for a (re)insurance licence.

There is no express legislation or regulation against fronting but, whilst not prohibited, the practice is typically frowned upon by the MAS.

M&A of insurance companies and the transfer of insurance portfolios are regulated in Singapore. The MAS’ prior approval is required before an entity can obtain effective control or become a substantial shareholder of a licensed insurer incorporated in Singapore. Likewise, the MAS’ approval is required for the transfer of the whole or part of the insurance business of a Singapore licensed insurer. The transfer (which is akin to a statutory novation) must further be confirmed by the High Court of Singapore.

The Singapore insurance industry has witnessed a spike in cross-border M&A activities in recent years, and the trend seems likely to persist as foreign insurers with strong appetites for growth continue to explore new business lines and distribution channels in the emerging markets in South-East Asia. The rapid development and growth of the South-East Asian markets is likely to be accompanied by an increasingly robust demand for insurance and reinsurance. Singapore is the insurance and reinsurance hub of Asia and has a relatively stable geopolitical and legal landscape, positioning it to be the next frontier of further growth as foreign insurers look to gain a foothold in Asia.

Apart from cross-border M&A deals, as the market becomes more saturated and the existing players explore ways to consolidate their presence in and grow their market share in Singapore, recent years have seen an increase in domestic M&A activity as well. For example, Singlife acquired Aviva in 2022 and HSBC completed its acquisition of AXA Insurance.

Besides direct marketing and sales of insurance products by the insurers (usually through the insurers’ websites), the dominant distribution channel for most insurance products in Singapore is sales through intermediaries such as insurance agents and brokers. Apart from these traditional methods of distribution, bancassurance (which involves collaboration between a bank and an insurance company for the insurer to sell its products to the bank’s client base) and, more recently, web-based insurance product comparison aggregators also provide other popular channels of distribution.

Insurance contracts are contracts uberrimae fidei – ie, they require the utmost good faith. This obligation to exercise the utmost good faith (imposed under common law and also codified in the Marine Insurance Act 1906) has arisen frequently in connection with the insured’s duty to make a full and frank disclosure of all material facts to the insurer prior to the acceptance of the risk by the insurer. This is based on the assumption that the insured alone possesses the facts that would influence the mind of a prudent insurer in their computation of the risk and there must be disclosure of such material facts in order to enable the insurer to assess the risk. The same legal principles with regards to disclosure apply to both consumer and commercial policies and reinsurance.

The insured must therefore disclose to the insurer all facts material to an insurer’s appraisal of the risk that are known or deemed to be known by the insured but neither known nor deemed to be known by the insurer. The onus is not on the insurer to proactively seek information. With regards to what constitutes “material information”, the test of materiality is that information must be considered material in the eyes of a prudent and reasonable insurer.

An insurance law reform sub-committee (the “Committee”) was formed by the Singapore Academy of Law’s Law Reform Committee in March 2017 to review the key areas of Singapore insurance contract law that are in likely need of reform. The main focus of the Committee’s work and review is on the duties of utmost good faith and disclosure, amongst other areas. The “Report on Reforming Insurance Law in Singapore” was published by Singapore Academy of Law’s Law Reform Committee in February 2020, with the proposed changes including different remedies for non-disclosure depending on whether non-disclosure was deliberate or reckless, and avoidance of policy only if the insurer would not have underwritten the risk if not for non-disclosure. In light of the Committee’s recommendations, there may be changes to the law on material non-disclosure in the near future.

If an insured fails to disclose material information that influences the insurer’s assessment of the risk, the insurer would be entitled to avoid the contract of insurance and repudiate liability for any claim that has arisen.

Typically, an insurance agent is deemed to be acting for and on behalf of the insurer, whereas an insurance broker is deemed to be acting for and on behalf of the insured.

The law of agency would apply to insurance intermediaries, such that an agent acting within the parameters of their actual authority, whether express or implied, will bind the principal (whether it is the insurer or the insured). An insurance intermediary must act in the best interests of their principal, exercise reasonable skill and care and act with reasonable speed.

Broadly speaking, there is no legal requirement for insurance contracts to be in a particular form, except for marine insurance (which must contain minimum particulars), life insurance and motor insurance, where it is necessary to have the policies in writing for enforcement purposes. Generally, the same legal principles apply to both consumer and commercial policies and reinsurance.

Like any other type of contract, an insurance contract is only formed when there is an agreement on the material terms and a meeting of minds (consensus ad idem) between the insurer and the insured. The basic contract rule of “offer” and “acceptance” also applies to insurance agreements. What constitutes material terms would depend on the type of insurance contract, but typically material terms would comprise:

• the subject matter of insurance;
• the nature of the risks being insured against;
• the period of insurance; and
• the rate of premium (although not necessarily the exact amount of premium to be charged).

Apart from the above, an essential ingredient of insurance contracts is the requirement of “insurable interest”. Section 146(1) of the Insurance Act provides that a life policy insuring the life of a person is void unless the person effecting the insurance has an insurable interest in the life that is insured at the time when the insurance is effected. Similarly, Section 151(1) of the Insurance Act – which was imported from the UK Life Assurance Act 1774 and applies to all insurance contracts with the exception of insurance cover on ships or goods or contracts of indemnity against loss by fire or loss by other events – provides that “No insurance shall be made by any person on any event wherein the person for whose use or benefit or on whose account the policy is made has no interest, or by way of gaming or wagering; and every assurance made contrary to this subsection shall be void”. Furthermore, Section 5(1) of the Civil Law Act 1909 dictates that all contracts or agreements by way of gaming or wagering shall be null and void. Whilst Section 151 of the Insurance Act does not apply to marine insurance policies, the requirement for insurable interest in marine insurance contracts is already provided for under the Marine Insurance Act 1906.

Another unique feature of insurance contracts is that they require utmost good faith. As mentioned in 6.1 Obligations of the Insured and Insurer, the principle of utmost good faith most frequently manifests itself in an insured’s duty to make full and frank disclosure of all material facts to the insurer. The general rule on material non-disclosure is that, with certain exceptions, an insured must disclose to the insurer all facts material to an insurer’s appraisal of the risk that are known or deemed to be known by the insured but neither known nor deemed to be known by the insurer. A fact is considered material if a prudent insurer would take it into account in fixing the premium or in determining whether they would accept the risk (at all or on certain terms). A breach of this duty of disclosure by the insured entitles the insurer to avoid the contract of insurance; to do so, the insurer must show that the non-disclosure induced the making of the contract on the relevant terms or at all.

The common law doctrine of privity of contract applies to contracts of insurance. However, legislation has intervened and this position is modified by the Contracts (Rights of Third Parties) Act 2001, by virtue of which a third party to an insurance policy may be able to enforce the terms of the policy if it is found that:

• the policy expressly provides that they may do so; or
• the terms of the policy purport to confer a benefit on them.

It is therefore not surprising that most insurance policies contain express wording that excludes the applicability of the Contracts (Rights of Third Parties) Act 2001.

There are also other statutory exceptions to the doctrine of privity of contract for insurance contracts, including:

• certain provisions under the Conveyancing and Law of Property Act 1886;
• the Third Parties (Rights Against Insurers) Act 1930; and
• the Motor Vehicles (Third Party Risks and Compensation Act 1960.

The position does not differ with regard to consumer contracts or reinsurance contracts.

Whether ART transactions, such as industry loss warranty contracts and insurance-linked securities (ILS), are considered to be insurance products depends on how the underlying risks are structured for effective risk transfer. As mentioned in 2.2 The Writing of Insurance and Reinsurance, the Insurance Act currently only recognises two traditional types of insurance business: general and life business. The Insurance Act also does not contain any express definition of what constitutes a (re)insurance contract.

However, the MAS has indicated that it will have regard to the following element, which must be present, when deciding whether a contract is considered an insurance contract:

• the insured becomes entitled to something upon the occurrence of an event for which the insurer is liable;
• the event must involve some element of uncertainty;
• the assured must have an insurable interest in the subject matter of the contract; and
• the risk must be a pure risk – ie, involving the possibility of loss only or at best a “no gain situation”.

The determination of whether an industry loss warranty contract is considered an insurance contract may therefore be assessed by having regard to the above requirements.

The MAS views ILS such as catastrophe bonds as a distinct and unique asset class, that is subject to a separate regulatory framework. Since 2018, the regulator has sought to build a tailored regulatory, tax and listing ecosystem that caters to ILS issuances. Under the current regulatory framework, the ILS will be issued via a Special Purpose Reinsurance Vehicle (SPRV), to allow sponsors to readily securitise reinsurance risks in Singapore. As at 1 December 2023, Singapore has issued 24 catastrophe bonds, with three listed on the Singapore Exchange.

As mentioned in 7.1 ART Transactions, the Insurance Act does not contain any express definition of what constitutes a (re)insurance contract. However, the MAS has indicated that it will have regard to certain elements when considering whether a contract is considered an insurance contract. Therefore, whether particular ART transactions written in other jurisdictions are to be treated as (re)insurance contracts by the MAS will depend on the specific terms and structure of each ART transaction.

The general rules relating to the construction of contracts apply to insurance policies. The Singapore courts will generally adopt a “contextual approach” towards the interpretation of (insurance) contracts. The courts place great emphasis on giving due weight and consideration to the parties’ intention as ascertained from objective evidence when interpreting contracts. Extrinsic material (before and after the making of the contract) is admissible if it:

• is relevant;
• is reasonably available to all contracting parties; and
• relates to a clear and obvious context.

Crucially, ambiguity is not a prerequisite for the admissibility of extrinsic evidence.

In addition to ascertaining the parties’ intentions and to supplement the contextual approach, the Singapore courts have found it appropriate to also examine the commercial purpose of an agreement to determine how certain clauses within such ought to be interpreted, thereby adopting a holistic approach when construing contractual provisions.

Other canons of contractual interpretation would similarly apply to all insurance contracts – eg, the presumption against redundancy and superfluity, and the contra proferentem rule (which is to adopt an interpretation in a manner that is least favourable to the person who drafted or prepared that wording or phrase).

Certain contractual terms have acquired different meaning in the context of insurance law. For example, the terms “warranty” and “conditions” have different meaning/effect in insurance law, compared to general contract law. A warranty in the context of insurance law is a written term of the insurance contract whereby the insured warrants (through express wording or by operation of law) that certain statements of fact are and/or will be accurate. In the case of express warranties, the scope and extent of warranty provided depends on the wording used. The mere labelling of a statement as a warranty may not, without more, necessarily confer upon the statement the status of a “warranty”. In order to give a statement or promise the force of a warranty, it must be shown that it was the intention of the parties that this should be so.

It is also not uncommon for proposal forms to contain a declaration to the effect that the matters stated in the proposal form are to form “the basis of the contract”. This phrase is typically repeated in the policy documents that are eventually issued. Such a “basis of the contract” clause can have the effect of making the statements or answers provided in the proposal forms warranties, the breach of which would release the insurer from liability as of the date of such breach. This is the case even if the contents of the warranty may not have been material to the risk and/or if the breach of warranty may not have caused nor be connected to a loss in respect of which a claim is brought.

There is no legal requirement for conditions precedent to an insurer’s liability to be expressly described as such for the term to be construed as a condition precedent to the insurer’s liability. Whether a term is construed as a “condition precedent” may depend on whether – taking the contract as a whole – the term in question was fundamental to the whole contract, but the same result can be achieved if the parties have agreed that a term, otherwise less than a fundamental term, is to be deemed a condition precedent to the contract. Whilst the labelling of a term as a “condition” or “condition precedent” is a relevant factor, it is not decisive of the contractual term’s legal effect. This is particularly so if the label is attached generally to a number of terms of a different nature.

If a term is found to be a “condition”, the breach of such a term entitles the insurer to claim for damages but not to deny coverage under a policy. If, however, a term is construed as a “condition precedent”, the breach of such a term entitles the insurer to repudiate liability under the policy. This is the case even if the insurer does not or is unable to prove that it has suffered prejudice as a result of the breach.

Forums for Resolving Insurance Disputes

There is no specific statutory or procedural framework that governs insurance coverage disputes. As most (if not all) coverage disputes are contractual in nature, parties will be able to avail themselves of the usual dispute resolution mechanisms and forums – ie, by commencing court proceedings or arbitration (if there is an arbitration clause in the insurance policy or if parties otherwise agree to refer the matter to arbitration). There are also other platforms where specific types of insurance disputes may be heard and resolved.

In 2005, the Financial Industry Disputes Resolution Centre Ltd (FIDReC) was launched as an independent and impartial alternative dispute resolution institution that offers services to resolve disputes between insureds and insurers in an amicable, expeditious and affordable manner. FIDReC offers two schemes, both of which consist of a mediation and adjudication stage:

• the FIDReC Non-Injury Motor Accident Scheme (“FIDReC NIMA Scheme”), which applies to third-party motor accident claims (ie, where the insured is making a claim against an insurer that is not his/her own insurer) where no bodily injury is suffered and the claim amount is below SGD3,000; and
• the FIDReC Dispute Resolution Scheme.

It is mandatory for matters that fall within the FIDReC NIMA Scheme to first be heard by FIDReC before court proceedings may be commenced.

FIDReC has a track record of handling claims made against insurers, pertaining to the following:

• market conduct issues such as mis-selling or misrepresentation of the product sold to the consumer in life insurance, accident and health insurance and investment linked products; and
• disputes on liability relating to general insurers, involving policies such as travel insurance, motor insurance, and accident and health insurance.

Furthermore, with regards to claim disputes arising out of Integrated Shield Plans (IP), which is an optional health insurance coverage provided by private insurance companies, typically as an add-on or supplement to the basic and compulsory health insurance scheme for Singapore citizens and Permanent Residents, insureds can also make use of the Clinical Claims Resolution Process (CCRP). The CCRP is an initiative proposed by the Multilateral Healthcare Insurance Committee commissioned by the Ministry of Health on 27 April 2021 to provide a platform to address issues related to health insurance. The CCRP accepts requests from parties who agree to seek a final and binding determination of their dispute of a clinical nature related to a claim under an IP. The CCRP Panel only hears cases from IP policyholders (ie, patients), medical practitioners and institutions and IP insurers.

Rules on Limitation

Section 6 of the Limitation Act 1959 provides that the limitation period for the following action is six years from the date on which the cause of action accrued:

• actions founded on a contract or on tort;
• actions to enforce a recognisance;
• actions to enforce an award; and
• actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or sum by way of penalty or forfeiture.

Given that policy coverage disputes are largely contractual disputes, the limitation period of six years will start to run from the time when the insured’s cause of action arises under the policy. That said, as it is not unusual for insurance policies to provide for a separate contractual limitation period, it would be prudent to ensure that the terms of the policy do not provide for any time period for commencing action.

Third Party Enforcing Insurance Contract

As mentioned in 6.5 Multiple Insured or Potential Beneficiaries, the doctrine of privity of contract applies to contracts of insurance as well. Therefore, a third party who is not privy to the contract cannot enforce an insurance contract nor sue an insurer in connection with an insurance contract. However, there are some exceptions where legislation has intervened to provide for certain remedies, as follows.

• Under the Contracts (Rights of Third Parties) Act 1999, a third party may enforce an insurance contract if the contract of insurance either expressly provides that the third party may enforce their rights, or if the terms of the contract purport to confer a benefit on the third party. It is common for insurance policies to exclude the application of this statute.
• Under the Third Parties (Rights Against Insurers) Act 1930, where an insured takes out a policy against liability to third parties and the insured becomes bankrupt, the third party would be entitled to step into the shoes of the insured and make a claim against the insurers directly.
• Under the Motor Vehicles (Third Party Risks and Compensation) Act 1960, an insurer must comply with judgments made in favour of a third party following a motor vehicle accident. Where the insured has become bankrupt or has been wound up, a victim of an accident or an involuntary creditor may be entitled to recover its judgment debt directly from the bankrupt-tortfeasor's insurer under this Act.

Where there is a dispute over jurisdiction, it would first be necessary to determine whether the parties’ agreement contains a jurisdiction clause, and if said jurisdiction clause is an exclusive jurisdiction clause or a non-exclusive jurisdiction clause.

Exclusive Jurisdiction Clause

Where there is an exclusive jurisdiction clause, parties typically agree to refer all disputes arising from such contracts to a particular jurisdiction in a bid to avoid disputes over the proper forum; the selected forum would have exclusive jurisdiction (Vinmar Overseas (Singapore) Pte Ltd v PTT International Trading Pte Ltd [2018] 2 SLR 1271). An applicant seeking to enforce an exclusive jurisdiction clause bears the burden of showing a “good arguable case” that an exclusive jurisdiction agreement exists and governs the dispute in question. A party who commences proceedings in a court not named in the exclusive jurisdiction clause would be in breach of the exclusive jurisdiction clause. The non-breaching party can then apply to stay proceedings commenced in breach of the exclusive jurisdiction clause, and the breaching party would have to satisfy the “strong cause” test, which sets a high threshold for a court to refuse a stay of proceedings commenced in breach of an exclusive jurisdiction agreement.

Non-exclusive Jurisdiction Clause

Where there is a non-exclusive jurisdiction clause, it indicates that the parties thought that the forum named in the clause was an appropriate forum, and that an agreement to submit to the non-exclusive jurisdiction of one forum does not entail an obligation to sue in that forum (Shanghai Turbo Enterprises Ltd v Liu Ming [2019] SGCA 11). Where Singapore is the forum named in the non-exclusive jurisdiction clause, the defendant must show strong cause why they should not be bound to their contractual agreement to submit. If Singapore is not the named forum in the non-exclusive jurisdiction clause, then the defendant may apply for a stay or to set aside service on the basis that Singapore is forum non conveniens.

Hague Convention on Choice of Court Agreements

The common law position on the exclusive jurisdiction clause has now been slightly altered with the promulgation of the Hague Convention on Choice of Court Agreements (the “Hague Convention”) on 1 October 2005, and its ratification by Singapore on 2 June 2016 by way of the Choice of Court Agreements Act 2016 (CCCA). Under common law, the courts retain discretion to refuse a stay despite the existence of an exclusive jurisdiction clause; under the Hague Convention, however, the court is required to grant the stay if certain conditions are fulfilled. This will have an impact on court proceedings involving exclusive jurisdiction clauses in favour of Hague Convention Contracting States (for example, the United States of America and some jurisdictions in the European Union).

In the case of 6DM (S) Pte Ltd v AE Brands Korea Ltd and others and another matter [2021] SGHC 257, the High Court held that the question on whether the court is mandated to grant a stay under the CCCA involves a two-stage test:

• first, the court must consider whether there is an exclusive jurisdiction clause that does not designate Singapore as a chosen court, and that applies to the proceedings at hand; and
• second, if the exclusive jurisdiction clause is found to be applicable, the court must then consider whether any of the five exceptions provided in the CCCA (which the court found to be a closed category of exceptions) apply to justify the court’s refusal to order a stay or dismissal of proceedings.

Dispute Over Choice of Law

Where there is a dispute over choice of law, the approach to determining the governing law of the agreement is a three-stage test laid out in Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal [2008] SGCA 1.

• Firstly, the court would determine if there was an express choice of governing law.
• The second stage is to determine whether an intention of the parties to choose a governing law could be inferred.
• However, if the court was faced with a multiplicity of factors, each pointing to a different governing law, then the proper approach would be to move on to the third stage, which is to determine the law with the closest and most real connection with the contract. This is not an exercise to divine any “intent” of the parties, but to consider, on balance, which law had the most connection with the contract in question and the circumstances surrounding the inception of that contract.

The litigation process for insurance coverage disputes depends on the dispute resolution clause provided in the insurance contract and the nature of the dispute – eg, whether the insurance contract contains an arbitration clause (which is not uncommon).

For disputes referred to the Singapore court, civil proceedings are instituted in either the State Courts (which consist of the Magistrates’ Court and the District Court) or the General Division of the High Court, depending on the nature and quantum of the claim. If the claim is of an international and commercial nature, and subject to the parties’ agreement, the dispute may be referred to the Singapore International Commercial Court, a dedicated division of the Singapore High Court.

The jurisdictional limits of the different courts are as follows:

• if the value of the claim is lower than SGD60,000, the case should be filed in the Magistrate’s Court;
• if the value of the claim is between SGD60,000 and SGD250,000, the case should be filed in the District Court; and
• if the value of the claim is more than SGD250,000, the case should be filed in the General Division of the High Court.

In addition, the following applies specifically with regards to road traffic accident claims or claims for personal injuries arising out of industrial accidents:

• if the value of the claim is SGD500,000 or less, the case should be filed in the District Court; and
• if the value of the claim is more than SGD500,000, the case should be filed in the General Division of the High Court.

Civil claims are typically first heard in the General Division of the High Court or the State Court, depending on the quantum of the claim and the nature of the relief sought as the High Court only hear claims that exceed SGD250,000). Appeals from the State Courts are heard in the General Division of the High Court, and appeals from the High Court are heard in the Appellate Division of the High Court or Court of Appeal.

The litigation process typically commences with the claimant, known as the plaintiff, filing a writ of summons and a statement of claim, which is served on the defendant, who then files a defence. A litigant can commence an action by filing either an originating claim (OC) or an originating application (OA). An OA is appropriate for a civil claim if it is required by law, or if it concerns some question of law and the material facts are not in dispute; otherwise, an OC would be appropriate. Parties then move on to the exchange of affidavits of evidence-in-chief (ie, witness statements) before the discovery stage (which involves the disclosure of documents). Singapore does not have jury trials and all trials are before a judge (or a magistrate in the lower courts).

Reciprocal Enforcement of Foreign Judgments Act

Previously, a foreign judgment from a foreign jurisdiction specified in the Reciprocal Enforcement of Commonwealth Judgments Act (Cap 264) (RECJA) or the Reciprocal Enforcement of Foreign Judgments Act (Cap 265) (REFJA could only be enforced against an insurer if it was registered in the General Division of the High Court. However, the RECJA has been repealed with effect from 1 March 2023, serving to streamline and consolidated Singapore’s legal framework for the statutory recognition and enforcement of foreign judgments in civil proceedings under the REFJA. Final money judgments from the superior courts of Brunei, Australia, India, Malaysia, New Zealand, Pakistan, Papua New Guinea, Sri Lanka, the United Kingdom and Hong Kong SAR are now registrable under the REFJA.

CCCA

In addition, Section 18 of the CCCA specifically provides that the High Court may not limit or refuse the recognition or enforcement of a foreign judgment of liability under the terms of a contract of insurance or reinsurance on the ground that the liability under the contract includes liability to indemnify the insured or reinsured in respect of a matter to which the CCCA does not apply, or an award of damages that will not be recognised or enforced under Section 16 of the CCCA. Judgments from contracting states of the Hague Convention will therefore be recognised and enforced in Singapore Courts.

Common Law

If the foreign judgment is not from a foreign jurisdiction specified in the REFJA or CCCA, the position in common law would have to be relied on to enforce said foreign judgment. Under the common law, a foreign judgment in personam given by a foreign court of competent jurisdiction may be enforced by an action for the amount due under it so long as the foreign judgment is final and conclusive between the same parties (Hong Pian Tee v Les Placements Germain Gauthier Inc [2002] 1 SLR(R) 515). In addition, a foreign judgment may be enforced by an action for the amount due under it only if it is a judgment for a definite sum of money (Poh Soon Kiat v Desert Palace Inc (trading as Caesars Palace) [2010] 1 SLR 1129).

Process

To enforce a foreign judgment under the REFJA, the applicant must first register the foreign judgment in the General Division of the High Court. The application for registration is made by way of an OA, supported by an affidavit.

For enforcement of a foreign judgment pursuant to the CCCA, an application would have to be made to the General Division of the High Court for the foreign judgment to be recognised or to be recognised and enforced.

To enforce a judgment under common law, the applicant will have to commence a fresh civil claim in court for the judgment debt.

Courts generally enforce arbitration provisions in commercial contracts of insurance and reinsurance. Courts have taken a generous approach to construing arbitration clauses, and the rule of construction is that all disputes between parties are assumed to fall within the scope of the arbitration clause unless shown otherwise (Silverlink Resorts Limited v MS First Capital Insurance Limited [2020] SGHC 251).

Singapore is subject to the New York Convention as a result of its accession thereto in 1986. The Convention is encapsulated in Part III of the International Arbitration Act 1994 (IAA).

Arbitral awards handed down in other jurisdictions can be enforced pursuant to Section 29 of the IAA if they are made pursuant to an arbitration agreement in the territory of a Contracting State within the meaning of the Convention. Section 30 of the IAA elaborates on the evidence that a person seeking to enforce a foreign award by virtue of Part III of the IAA has to produce to the court. This includes, for example, the duly authenticated original award.

Finally, the grounds upon which the Singapore court might refuse enforcement are provided for in Section 31 of the IAA. They include, for example, if a party to the arbitration agreement pursuant to which the award was made was under some incapacity at the time when the agreement was made, or if a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings.

ADR is prevalent and strongly encouraged in Singapore. In fact, before the commencement of any civil court proceedings, and during the course of any action, parties have the duty to consider an amicable resolution of their dispute. The Rules of Court 2021 require a party to make an offer of amicable resolution before commencing the action, unless the party has reasonable grounds not to do so. Failure to do so might lead to adverse cost orders against the successful party. In addition, efforts and attempts to try to reach an amicable resolution to a matter are factors the courts will consider in making the appropriate costs awards for court proceedings.

Apart from the avenues for ADR through FIDReC and the CCRP (see 9.1 Insurance Disputes Over Coverage), the following other forms of ADR are available in Singapore:

• mediation, where a neutral third party (the mediator) guides parties to find an amicable resolution; this is usually administered by the Singapore Mediation Centre or the Singapore International Mediation Centre;
• conciliation, where a neutral third party with expertise in the subject matter suggests possible solutions and the parties involved can try to come to an agreement based on these suggestions;
• neutral evaluation, where a neutral third party with expertise in the subject matter provides an early assessment of the case and estimates the likelihood of success at trial; this is currently only available for matters heard in the State courts;
• arbitration; and
• expert determination, where an independent expert will give an opinion and the parties involved can decide whether they agree to a settlement based on the expert’s opinion; this is currently only for cases heard in the Supreme Court involving an expert’s opinion.

Mediation at FIDReC (which is only available to insureds who are individuals or sole proprietors) and the CCRP are not available to disputes under reinsurance contracts, but all other mediation avenues would be available to both consumer insurance contracts and reinsurance contracts.

There are no statutory penalties for the late payment of claims by insurers, nor is any penalty imposed by common law for the late payment of claims. There is therefore no penalty in late claims payment, unless the policy provides for it. Insurance policies sometimes (but seldom) provide for such penalties.

An insurer’s right of subrogation is implied by law into an indemnity insurance contract (Sompo Insurance Singapore Pte Ltd v Royal & Sun Alliance Insurance plc [2021] SGHC 152). Based on this implied term, the insured promises to take specific steps or actions so that they will not be overcompensated, and the insurer’s interest in paying only for the insured’s actual loss is protected.

Common law also implies a duty of utmost good faith (uberrima fides) in all insurance and reinsurance contracts. For marine insurance contracts, this duty is codified in the Marine Insurance Act 1906. The duty requires both parties to act in good faith and with regard to the interests of the other party. It is particularly relevant where the policy requires the insured to provide information and assistance to the insurer in certain circumstances (in particular, at the pre-contractual stage and before the placement of the policy).

With strong government and regulatory support for the development of fintech, including insurtech, Singapore continues to be a hotbed of insurtech activities, with increasing collaboration between insurers and tech companies, and even between insurers, to develop innovative solutions and products.

In 2019, Income Insurance announced its strategic partnership with ZA Tech (the technological export arm of Chinese internet insurer ZhongAn Online). The partnership will leverage ZhongAn’s technological expertise in digital insurance, while Income will contribute its leading position as a composite insurer in Singapore and present a testbed for local and regional innovations. Tapping into ZhongAn’s technology, in 2020 Income Insurance launched its first micro-insurance scheme, SNACK, which is a mobile application that embeds the purchase of micro-insurance into a customer’s lifestyle. Using the SNACK app, a user can link daily activities in their life to the purchase of micro-insurance products, including life, personal accident and critical illness insurance, while having the flexibility to manage their own protection portfolio.

In 2023, general insurer Zurich Insurance tied up with travel platform Klook to introduce Traveljoy, a revamped travel insurance offering that includes all-encompassing coverage for Klook’s customers. In addition to providing the traditional travel insurance cover for trip cancellations, medical emergencies and lost or stolen belongings, Traveljoy also offers telehealth services, enabling policyholders to consult medical professionals through virtual appointments, regardless of where they are located.

Singapore-based insurtech Surer partnered with Etiqa to work on an integration that gives insurance intermediaries a fully digital process to obtain quotes instantly, and to present them to clients along with a straight-through payment process for motor insurance. This new collaboration seeks to solve the two top pain points of intermediaries – difficulty in obtaining quotes due to slow or non-replies, and difficulty in getting multiple quotes for clients due to the involvement of multiple systems.

Allianz Partners and insurtech firm bolttech will be entering into a strategic partnership to provide embedded device and appliance insurance across Asia-Pacific and the United States of America. The collaboration aims to deliver embedded solutions for business partners such as retailers and e-tailers for electronic products and household devices, telecommunication providers, banks, insurers and original equipment manufacturers. The objective is to make it easier and more convenient for customers to purchase protection at the point of need for a range of household products, including mobile and digital devices, and household appliances.

Compared to North America and Europe, the fintech ecosystem in Asia (including insurtech) is relatively small, but such activities in the region are predominantly centred on Singapore, which is the region’s largest insurtech hub.

Against the backdrop of a rapidly evolving fintech landscape, the MAS has sought to provide a nurturing environment to help cultivate and encourage fintech experimentation, so that promising innovations can be tested in the market and have a chance for wider adoption, both in Singapore and abroad.

A regulatory sandbox has been set up by the MAS to enable financial institutions as well as fintech players to experiment with innovative financial products or services in the production environment but within a well-defined space and duration. It also includes appropriate safeguards to contain the consequences of failure and maintain the overall safety and soundness of the financial system.

The Regulatory Sandbox, which is fully bespoke, was enhanced with Sandbox Express in 2019 to provide firms with a faster option for market testing of certain low-risk activities in pre-defined environments. In January 2022, the MAS introduced the enhanced Sandbox Plus, which aims to further catalyse financial innovation and fintech adoption by providing more effective one-stop assistance in terms of regulatory support and financial grants. Eligible applicants can obtain funding of up to SGD400,000 at a 50% funding level.

In August 2023, the MAS announced that it will commit up to SGD150 million over three years under the renewed Financial Sector Technology and Innovation Scheme (FSTI). FSTI seeks to accelerate and strengthen innovation by supporting projects that involve the use of cutting-edge technologies or have a regional nexus, while doubling down on the MAS’ commitment to promote a vibrant technology ecosystem for the financial sector. As part of the FSTI scheme and in line with the MAS’ growing emphasis on the importance of creating awareness of environmental, social and governance (ESG) issues, the ESG fintech grant was launched to spur the financial sector's adoption of ESG technology solutions. These solutions should empower financial institutions in addressing their key ESG data and infrastructure challenges, supporting their mobilising of capital towards sustainable activities and the tracking of their net zero transition plans and programmes.

The Singapore Cyber-Risk Pool

The Asean region’s growing strategic relevance and expanding digitalisation make it a prime target for cyber-attacks. Furthermore, cyber-resilience is generally low in some countries in the region, which have varying levels of cyber-readiness. Cyber-attacks can result in sometimes substantial financial and reputational damage, and could also derail the region’s digital innovation agenda.

To address the growing concerns around cyber-risks, Singapore announced the launch of the world’s first commercial cyber-risk pool, a facility for providing cyber-insurance to corporate buyers, as cyber-attacks become more pervasive. The pool will allow companies in Asean countries and Asia to be protected against cyber-related losses, and was developed and set up in collaboration with the Singapore Reinsurers’ Association.

The Singapore cyber-risk pool committed up to USD1 billion of capacity to the cyber-insurance problem, bringing together both traditional insurance and insurance-linked securities markets to provide bespoke cybersecurity coverage. The cyber-risk pool reflects Singapore’s standing as a specialty insurance hub and the commitment to creating forward-looking insurance solutions to tackle new and emerging risks.

ILS

In an attempt to address risks brought on by the COVID-19 pandemic and climate change (an issue that has plagued the industry for some time), and in line with the regulator’s determination to make Singapore an ILS domicile for Asia, Singapore has taken progressive strides towards developing the ILS market in the country.

The MAS hopes that a vibrant ILS market will help to provide additional insurance capacity through financing from the capital markets that can be catered towards all forms of risks (natural catastrophes, longevity, mortality, operational risks, cyber-risks, etc) and therefore narrow the protection gap in Asia. The MAS has adopted a three-pronged approach to grow the ILS market and ecosystem in Singapore:

• improving data quality and the standardisation in the region to develop industry-loss based indices upon which ILS can be structured;
• establishing and enhancing Singapore’s regulatory, tax and legal infrastructure to support various ILS instruments; and
• developing a Singapore ILS ecosystem through incentivising ILS issuers to domicile their ILS in Singapore through the ILS grant scheme, encouraging ILS service providers to anchor their operations here.

As mentioned in 7.1 ART Transactions, a dedicated set of regulations apply to SPRVs that issue ILS. The regulators are considering extending corporate structures like the Variable Capital Company (VCC) structure (introduced in 2018) to the insurance industry to provide more structuring options to potential ILS issuers. It is hoped that the VCC or a similar structure would facilitate multiple issuances in one vehicle with its ability to segregate assets and liabilities.

To incentivise ILS issuers to domicile their ILS in Singapore, the MAS has extended the current ILS grant scheme until the end of 2025. To provide tax neutrality for ILS vehicles and for the notes issued, Singapore has extended the tax incentive schemes for Approved Special Purpose Vehicles engaged in insurance securitisation and for Qualified Debt Securities, until 31 December 2028,.

The ILS grant and tax incentive scheme led to 24 catastrophe bonds being issued in Singapore between December 2018 and December 2023, with a total issuance amount exceeding USD4 billion. In addition to these 24 catastrophe bonds, the first sovereign catastrophe bond in Asia issued under a World Bank programme covering the Philippines’ earthquake and tropical cyclone risks was listed on the Singapore Exchange in late 2019.

Southeast Asia Disaster Risk Insurance Facility (SEADRIF)

With the increasing frequency and severity of natural catastrophes in South-East Asia, the need to strengthen the resilience of vulnerable communities in the region has become more urgent. In May 2018, the ASEAN+3 Finance Ministers endorsed SEADRIF, in what was conceived as a risk pooling arrangement. SEADRIF is supported by the World Bank in partnership with Japan, and was established in 2019 in Singapore. As a first project, SEADRIF issued a flood risk insurance programme involving Laos and Myanmar in January 2021, which provides ex-ante climate and disaster risk and insurance financing solutions for these two countries. The aim is for such disaster risk insurance to reduce disruptions to national budgets and to provide immediate liquidity financing so that countries affected by a natural disaster can receive help promptly, with less reliance on humanitarian assistance, which can be uncertain and take time.

Longevity Arrangement

Many Asian markets are witnessing a rapidly ageing society. Longer lives, fluctuating interest rates and the increased need to plan for one's retirement are leading consumers to seek better financial security in their golden years. The insurance sector is well placed to help empower customers to achieve better financial wellbeing by providing relevant savings and retirement solutions.

In 2022, Swiss Re partnered with Income Insurance on the first collateralised longevity reinsurance arrangement of its kind in Singapore, which helps de-risk Income Insurance's legacy annuity book. This partnership will help shield Income Insurance from future variations in its annuity book, by sharing with Swiss Re any future payments to annuitants who live beyond their age expectancy.

See 11.1 Emerging Risks Affecting the Insurance Market.

After extensive rounds of public and industry consultations, as well as quantitative testing, the regulators implemented changes to the previous risk-based capital (RBC) framework for assessing the financial and capital adequacy of insurers in 2020. In the light of evolving market practices and global regulatory developments, changes were introduced to the previous RBC framework to ensure that it remains relevant to the industry’s needs while enhancing protection for policyholders and maintaining prudent capital requirements that are commensurate with insurers' risk profiles and business activities and in line with international standards and best practices. The main changes relate to the introduction of two solvency intervention levels and the associated supervisory actions for not meeting these levels, in addition to the requirement to meet the fund solvency requirement at a broader adjusted fund level, instead of the insurance fund level.

On 21 September 2023, the MAS announced that it will be implementing a Domestic Systemically Important Insurers (D-SIIs) framework on 1 January 2024, under which it will formally designate insurers whose failures are assessed to have a significant impact on the financial system and broader economy in Singapore as D-SIIs. Four insurers are included in the inaugural list of D-SIIs:

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

D-SIIs will be subject to additional supervisory measures, including higher capital requirements, recovery and resolution preparedness, robust management information systems that will allow information to be readily available for the orderly resolution of a D-SII, and enhanced corporate governance requirements.

As mentioned in 6.1 Obligations of the Insured and Insurer, the insurance law reform sub-committee formed by Singapore Academy of Law’s Law Reform Committee published its report on reforming insurance law in Singapore on 28 February 2020. The report reviewed areas of Singapore's insurance laws that might be potentially outdated and assessed whether reform was needed to the duty of utmost good faith, the duty of disclosure and misrepresentation, warranties, remedies for fraudulent claims, insurable interest, late payment of claims and select aspects of an intermediary’s role. Apart from changes to the duty of utmost good faith and the duty of disclosure, significant changes to other areas of insurance contract law (for example, on insurable interest) in Singapore can be expected. The proposed reforms will likely focus on rebalancing the rights between insureds and insurers to ensure that insured's rights are appropriately protected, whilst ensuring that insurers can continue to appropriately consider, manage and price risk.

On 14 December 2022, the MAS issued a Consultation Paper on proposed revisions to “Guidelines on Fair Dealing – Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers” (“Fair Dealing Guidelines”). The key revisions to the Fair Dealing Guidelines include making them applicable to life insurers (the Fair Dealing Guidelines apply on a proportionate basis that is relevant to the nature of the products and services offered) and ensuring fair treatment of customers at various stages of the product life-cycle of the provision of services by the FIs by incorporating principles and guidance in the Fair Dealing Guidelines. The consultation closed in February 2023 and, if implemented, the guidelines may affect life insurers’ dealings with their customers.