BCP Insurance Principles

Question 1

Under Singapore's insurance regulations, what is the principle of 'utmost good faith' (uberrima fides)?

Accepted Answer

Both insurer and insured must disclose all material facts honestly

Answer

Utmost good faith requires both parties in an insurance contract to disclose all material facts honestly. In Singapore, failure to do so can void the policy under MAS guidelines.

Question 2

What does the principle of indemnity mean in a basic insurance policy sold in Singapore?

Accepted Answer

The insured is restored to the same financial position as before the loss

Answer

The principle of indemnity ensures that the insured is compensated to the exact extent of the loss, restoring them to the same financial position as before, not to profit from the claim.

Question 3

Which Singapore authority regulates the insurance industry?

Accepted Answer

Monetary Authority of Singapore (MAS)

Answer

The Monetary Authority of Singapore (MAS) is the central regulatory authority overseeing all financial institutions in Singapore, including insurance companies.

Question 4

What is 'insurable interest' as required in Singapore insurance law?

Accepted Answer

Having a financial interest in the subject matter of insurance

Answer

Insurable interest means the policyholder must have a legitimate financial stake in the subject matter insured. Without it, the insurance contract is not legally enforceable in Singapore.

Question 5

Under the Insurance Act (Cap. 142) of Singapore, which type of insurer must be registered to operate?

Accepted Answer

All insurers carrying on insurance business in Singapore

Answer

The Insurance Act requires all insurers — life, general, and composite — carrying on insurance business in Singapore to be registered with MAS.

BCP Insurance Practice Test

BCP Insurance Practice Test

BCP Insurance Principles