Insurance law changes tabled urgently as Allianz deal is “under active consideration” by Income shareholders: Chee

SINGAPORE’s urgency to change its insurance laws is due to the fact that German insurer Allianz’s bid for a majority stake in Income Insurance is under “active consideration” by the latter’s shareholders, said the deputy chairman of the Monetary Authority of Singapore ( BUT), Chee Hong Tat, on Wednesday (October 16). .

The Insurance (Amendment) Bill was introduced on Monday on an urgent basis – with the debate taking place just two days later, rather than in the next session of Parliament – ​​as the government tried to block the deal between Allianz and Income.

Chee stressed that the changes are necessary because insurance cooperatives are “a special category of insurers with a social mission”.

On Monday, Culture, Community and Youth Minister Edwin Tong said the government considered it was “not in the public interest” for the transaction to proceed in its current form. His ministry had learned new details that raised concerns about Income’s ability to continue to fulfill its social mission if the deal went through.

Opening the debate on the bill on Wednesday, Chee – who is also Minister for Transport and Second Minister for Finance – reiterated that the government has no concerns about the position or suitability of Allianz to acquire a majority stake in Income.

Instead, the concern lies with the terms and structure of the transaction, especially in the context of Income’s corporatization.

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Chee recapped the proposed legal changes. Currently, any person seeking to gain effective control or become a substantial shareholder of a licensed insurer incorporated in Singapore requires prior written approval from the MAS.

When evaluating such applications, MAS considers criteria such as the financial strength and track record of the applicant and whether they are fit and proper. But there is no provision to consider the views of the Ministry of Culture, Community and Youth (MCCY).

The government is therefore proposing to change this. The changes will allow the Minister responsible for MAS to consider the views of the minister responsible for administering the Co-operative Societies Act (CSA), for applications relating to an insurer that is a co-operative or is linked to a co-operative. -operative.

This is the case with Income Insurance, which was originally a cooperative but became an unlisted corporate entity two years ago.

At the time, Income requested a ministerial exemption from Section 88 of the CSA, which states that liquidated co-operatives must transfer any surplus funds to the Co-operative Societies Settlement Account, after reimbursing members for their original share capital and unpaid dividends. The income assured MCCY that its social mission would remain unchanged.

The Insurance (Amendment) Bill will allow the minister responsible for the MAS to refuse to approve applications – if this is considered to be in the public interest – after consulting the minister responsible for administering the CSA.

If MAS rejects the application due to such refusal, its decision cannot be appealed.

Furthermore, even when granting approval, the minister responsible for MAS may impose the necessary conditions. Violation of these conditions will be considered an infraction.