MAS Consults on Proposed Recovery and Resolution Planning Guidelines for Notified Insurers and DFHCs (w.e.f. 1 January 2025)

From 25 September 2024 to 25 October 2024, the Monetary Authority of Singapore (“MAS“) is consulting on proposed guidelines (“Proposed Guidelines“) to accompany MAS Notice 134 (“MAS Notice 134“). The Proposed Guidelines will provide further guidance and elaboration on the requirements set out in MAS Notice 134 for recovery and resolution planning (“RRP“) applicable to: (i) notified insurers; and (ii) notified designated financial holding companies that have a subsidiary that is a licensed insurer incorporated, formed or established in Singapore (“DFHCs“). Both MAS Notice 134 and the Proposed Guidelines will take effect on 1 January 2025.

The key guidance under the Proposed Guidelines is summarised below: 

1. Overview. By way of overview, recovery plans outline actions that a notified insurer or DFHC can take to stabilise and restore financial strength and viability under severe stress. Resolution plans are developed by MAS to ensure the resolution of the notified insurer or DFHC (e.g. restructuring or exit from the market) without severe systemic disruption while ensuring the continuity of critical functions and critical shared services carried out by the notified insurer or DFHC.

2. Recovery planning. MAS has proposed guidance on:

• • governance expectations for notified insurers and DFHCs relating to the recovery planning process;
  • relevant factors that should be reflected in the drafting of recovery plans;
  • recovery triggers that should be identified, developed and monitored;
  • recovery options that should be established, assessed and detailed; and
  • communications plans that should be prepared for various stakeholders for different stress scenarios and recovery options, etc.

3. Resolution planning. MAS has proposed guidance on:

• • the notifications that should be provided to MAS in the event of a material change to the notified insurer’s or DFHC’s business or structure;
  • the essential information required to be maintained by notified insurers and DFHCs for the purposes of resolution planning; and
  • the establishment by notified insurers or DFHCs of communications facilities and procedures for providing relevant stakeholders with access to information during resolution.

4. Management information systems. MAS has proposed guidance on the maintenance of management information systems capable of producing necessary information in a timely manner upon request to facilitate RRP, resolvability assessments and the conduct of the resolution.  

5. Operational continuity. MAS has proposed guidance on ensuring operational continuity while resolution or recovery is being implemented, to ensure that critical functions and critical shared services can continue to operate in this time. These include:

• • ensuring appropriate contingency arrangements (e.g. to enable the functioning of Information Technology (IT) systems and continued rights of use and access to operational assets);
  • ensuring that outsourcing and third-party arrangements which support critical functions and critical shared functions can be maintained in crisis situations and resolution; and
  • ensuring proper procedures, terms and conditions, contingency plans, etc, where financial market infrastructures and their intermediaries are used.

The Consultation follows:

1. an earlier September 2023 Consultation Paper (“September 2023 Consultation“) on RRP (among other things), which you may read more about in our RTA Viewpoints article dated 8 October 2023 titled “MAS Consults on Proposals to Augment Resolution Regime for Insurance Sector”; and
2. MAS’ December 2023 Responseto feedback received on the September 2023 Consultation and MAS Notice 134 entitled “Recovery and Resolution Planning”, which you may read more about in our RTA Viewpoints article dated 2 January 2024 titled “Requirements for Recovery and Resolution Planning for Insurers to Take Effect on 1 January 2025”.

For more information on the Consultation, please see MAS’ “Consultation Paper on Guidelines to MAS Notice 134 on Recovery and Resolution Planning” and the accompanying Annex A titled “Draft Guidelines to MAS Notice 134 on Recovery and Resolution Planning”.