New rules may prompt move to capital-light products

Singapore

THE race is on for insurers to shift from traditional participating products (par products) to capital-light ones as regulators move to finalise the risk-based capital (RBC) 2 framework. This is because RBC 2 significantly raises the required capital buffer of insurers that rely heavily on participating business, compared to existing guidelines.

So, industry players said that insurers would inevitably have to move away from par products such as long-term savings plans including endowment and whole life, universal life products, pre-funded long-term care and medical insurance plans.