MAS seeks to reduce client information collected by financial institutions for some insurance products

THE Monetary Authority of Singapore (MAS) is seeking feedback on proposals to cut down on the amount of information that financial institutions need to collect from their clients for certain insurance policies.

In a consultation paper released on Friday (Feb 2), MAS said that the proposals will affect term life insurance and standard critical illness policies that are recommended based on the Basic Financial Planning Guide.

The guide, launched in October 2023, is an attempt to help Singaporeans take steps to enhance their financial well-being, and outlines a few rules of thumb for individuals to start taking proactive steps to address their savings, insurance and investment needs.

For example, the guide encourages Singaporeans to allocate up to 15 per cent of their take-home pay on insurance protection. Consumers are also advised to obtain insurance coverage of nine times their annual income for death and total permanent disability, and four times their annual income for critical illness.

The proposals are expected to simplify the process for consumers, and encourage the offer of simple and cost-effective products to help consumers meet their protection needs, MAS noted.

Lim Tuang Lee, assistant managing director for capital markets at MAS, added that the upper limits in the guide on insurance coverage and spending also serve as safeguards to protect consumers’ interests.

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Colin Chan, managing director of group marketing at Great Eastern, noted that the proposals will significantly reduce the amount of personal information that financial representatives will need to collect from their clients.

But he pointed out that some customers may be looking for a broader menu of insurance options when it comes to closing their protection gap. “On behalf of these clients, insurers have to work with MAS during the consultation process to deliberate on how they can facilitate these purchases while being compliant with the new proposed rules,” he said.