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Singapore MAS plans to implement risk-based capital 2 framework from 2017

The Monetary Authority of Singapore (MAS) is planning to complete the calibration factors and features of the (RBC 2) framework by 2014 and formally implement the regulation from 1 January 2017.


The proposal is subject to further consultation with the industry and the MAS has requested industry participants to give their written feedback on the consultation until June 30 2014.

"The consultation paper also contains the detailed technical specifications which will allow insurers to conduct a full scope Quantitative Impact Study ("QIS") to fully understand the impact of RBC 2," the Monetary Authority of Singapore (MAS) said in a statement.

Initially launched in 2004, the risk-based capital framework for insurers has been under review for the last few years, while the first consultation of ‘RBC 2’ was unveiled in June 2012.

The MAS’ move follows the European insurers’ preparedness for more stringent capital regulations with the impending Sovency II regulation, which will be effective from 1 January 2016.

RBC framework adopts a risk-focused approach to assessing capital adequacy and seeks to reflect the relevant risks that insurance companies face.

In order to accommodate evolving market practices in the insurance industry and in international accounting and regulatory standards, MAS is analyzing the framework with aims to boost the comprehensiveness of the risk coverage and risk sensitivity of the framework.

The MAS has also warned insurers that it will take its strongest enforcement actions, including stopping new business, withdrawal of license, or directing a transfer of portfolio to another insurer, if the MCR is breached.

For ease of computation and future monitoring, the MCR will be calibrated as a fixed percentage of the PCR, the agency further added.
Image: Singapore MAS plans to implement RBC 2 from 2017.Photo courtesy of: