PGI Insurance Ethics and Consumer Protection 2 — Questions and Answers
Question 1: What anti-money laundering (AML) checks apply to general insurance in Singapore?
- No AML checks apply to general insurance
- Insurers must conduct customer due diligence, monitor for suspicious transactions, and file suspicious transaction reports as required by MAS regulations (Correct answer)
- AML only applies to banks
- Only life insurers need AML checks
Correct answer: Insurers must conduct customer due diligence, monitor for suspicious transactions, and file suspicious transaction reports as required by MAS regulations
Under MAS regulations, general insurers must implement AML/CFT measures including Know Your Customer (KYC) procedures, transaction monitoring, and reporting suspicious activities to STRO.
Question 2: What is the insurance intermediary's duty to clients in Singapore?
- To sell the most expensive policy
- To provide honest advice, recommend suitable products based on client needs, disclose all material information, and act in the client's best interest (Correct answer)
- To maximise their own commission
- To sell only their company's products regardless of suitability
Correct answer: To provide honest advice, recommend suitable products based on client needs, disclose all material information, and act in the client's best interest
Insurance intermediaries in Singapore must follow MAS fair dealing guidelines: understand client needs, recommend suitable products, disclose fees and commissions, and prioritise client interests.
Question 3: What is 'warranty' in general insurance contracts in Singapore?
- A guarantee of claim payment
- A strict condition in the policy that the insured must comply with; breach may void the policy regardless of whether it contributed to the loss (Correct answer)
- A product warranty from the manufacturer
- An extension of the policy period
Correct answer: A strict condition in the policy that the insured must comply with; breach may void the policy regardless of whether it contributed to the loss
Insurance warranties are strict conditions. For example, a burglar alarm warranty requires the alarm to be operational. Breach of warranty can void the policy even if the breach did not cause the loss.
Question 4: What does 'utmost good faith' (uberrima fides) mean in Singapore general insurance?
- Only the insurer must act in good faith
- Both the insurer and the insured must deal with each other honestly, disclosing all relevant information and not misrepresenting facts (Correct answer)
- Good faith is optional in commercial insurance
- It only applies to life insurance
Correct answer: Both the insurer and the insured must deal with each other honestly, disclosing all relevant information and not misrepresenting facts
Utmost good faith is a fundamental principle requiring both parties to be completely honest. The insured must disclose all material facts; the insurer must be transparent about policy terms and conditions.
Question 5: What is the MAS Fair Dealing initiative and how does it affect general insurance in Singapore?
- It is a voluntary code with no enforcement
- A mandatory framework requiring financial institutions including insurers to treat customers fairly in all business dealings, from product design to claims handling (Correct answer)
- It only applies to banks
- It was discontinued in 2020
Correct answer: A mandatory framework requiring financial institutions including insurers to treat customers fairly in all business dealings, from product design to claims handling
Fair Dealing is a core MAS expectation requiring insurers to offer products suited to client needs, provide clear information, handle complaints fairly, and ensure staff competency and ethical conduct.
Question 6: What recourse does a consumer have if their general insurance policy is unfairly cancelled by the insurer in Singapore?
- No recourse exists
- File a complaint with the insurer's internal complaints unit, escalate to the GIA, seek mediation through FIDReC, or pursue legal action through the courts (Correct answer)
- Only accept the cancellation
- Only complain to friends
Correct answer: File a complaint with the insurer's internal complaints unit, escalate to the GIA, seek mediation through FIDReC, or pursue legal action through the courts
Consumers have multiple avenues: internal complaint to the insurer, escalation to the GIA, independent mediation and adjudication through FIDReC (free), and ultimately, legal action through Singapore courts.
PGI Insurance Ethics and Consumer Protection 2
What anti-money laundering (AML) checks apply to general insurance in Singapore?