The Monetary Authority of Singapore has published its inaugural list of domestic systemically important insurers (D-SIIs) in Singapore on Sept 21.

They are: 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 will come into effect on Jan 1, 2024.

D-SIIs are insurers whose failures are deemed to have a significant impact on the financial system and the broader economy in Singapore. These D-SIIs will also be subject to additional supervisory measures.

The criteria for assessing the systemic impact of insurers, as well as the policy measures for D-SIIs are aligned with the International Association of Insurance Supervisors’ holistic framework for systemic risk in the insurance sector. They are also pegged to the expectations under the Financial Stability Board’s key attributes of effective resolution regimes for financial institutions.

The measures largely mirror those applicable to domestic systemically important banks (D-SIBs) and include higher capital requirements and “recovery and resolution preparedness”. The D-SIIs identified will require a 25% capital add-on, which increases a D-SII’s higher and lower supervisory intervention levels, as well as Common Equity Tier 1 (CET1) and Tier 1 capital requirements.

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They will also require recovery planning, which will “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,” says the MAS in its Sept 21 statement.

Given their current capital positions, the four D-SIIs are expected to continue meeting the capital requirements under the D-SII framework with adequate buffers. MAS has also been engaging the four D-SIIs on recovery planning.

“Enhancing the D-SII framework is part of MAS’s 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,” says Ho Hern Shin, deputy managing director (financial supervision) at MAS.

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