Insurers' par fund management - case for more clarity and certainty

THE case for more clarity and certainty in how life insurers in Singapore manage their participating (par) funds is straightforward, particularly as local regulator Monetary Authority of Singapore (MAS) has for a while now been exploring ways to narrow the knowledge gap between life insurance players and consumers.

Better management and greater disclosures provide more transparency in an opaque sector, which in turn better manage policyholders' expectations and, more importantly, safeguard consumers' interests - something MAS has often highlighted, most recently at the annual Life Insurance Association luncheon in early March.

The problem is that full disclosure will not sit well with profit-conscious insurers who may find it in their interests to be somewhat less forthcoming with all details, particularly when some are commercially sensitive. It is therefore incumbent on the regulator to balance the two possibly conflicting positions when formulating disclosure policy. When deciding which way to lean, it will be worthwhile studying the example of Malaysia, where the Malaysian central bank, Bank Negara Malaysia (BNM), has recently set in motion the path to greater transparenc…