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Singapore: Reinsurers make strides in contract certainty

Source: Asia Insurance Review | May 2017

Reinsurance contract certainty. What does that mean? Is it being achieved in Singapore? These are the questions that the Contract Certainty Working Group (CCWG) have been addressing over the past five years.
The CCWG was formed for the purpose of developing a market-led framework for enhancing reinsurance contract certainty for reinsurance buyers, reinsurers and reinsurance brokers that are regulated by the Monetary Authority of Singapore (MAS).
The CCWG started in April 2011 by representatives of the Reinsurance Brokers Association (Singapore) (RBAS), Singapore Reinsurer’ Association (SRA), General Insurance Association of Singapore (GIA) and Lloyd’s Asia (Lloyd’s) at the initiation and support of MAS. Representatives from the Life Insurance Association of Singapore (LIA) joined in March 2013. 
   Contract Certainty is achieved by the complete and final agreement of all terms and signed lines between the reinsured and the reinsurer by the time they enter the contract. Contract documentation shall be provided to all parties within 30 days of the inception of the reinsurance contract or the reinsured’s order to bind, whichever is later. 
   The industry has taken a light touch approach, and the CCWG consists of volunteers, who at inception envisioned this to be a short term project. This has not proven to be the case, and as such, the CCWG has now formalised a set of rules to be governed by, which has been ratified by the parent associations (RBAS, SRA, GIA, Lloyd’s, and LIA). The rules set out the objectives and responsibilities of the CCWG, who the members are (a minimum of one volunteer from each association) and how the CCWG will be funded (for the running of the portal and secretarial services).
The CCWG has achieved a great deal over the past five years. The most visible contribution has been the development of the portal (, through which the all in-scope MAS-registered financial institutions must submit their monthly contract certainty returns. There is also useful information posted on the portal such as the principles of contract certainty, a sample check list, and the regular market briefings. Volunteers from the CCWG also conduct regular industry dialogue sessions to help raise awareness and share practical tips on contract certainty. 
   The CCWG regularly reports to its parent associations, as well as meets with the MAS, which had set a target for the industry to achieve 85% contract certainty on all reinsurance contracts. This target has however not been consistently achieved, with seasonal variations being seen. 
   Market reporting of contract certainty is now consistently around 95%. In-scope institutions that fail to report two months in a row will receive a friendly reminder from the CCWG.
   As shown above, the target of 85% contract certainty has been exceeded for Singapore reinsurance contracts. However, when Offshore reinsurance contracts are included, the contract certainty on a 12-month moving average is 82.1%, still short of the target.
   The last market briefing was in September. (
As mentioned earlier, the CCWG has been conducting regular dialogue sessions to raise industry awareness on contract certainty since monthly reporting was mandated from 2013. In 2016, nine such sessions were conducted for 188 participants from 66 in-scope institutions. 
   To ensure greater consistency in contract certainty reporting, the Committee has also developed checklists and guidance notes. More recently, it has developed a video tutorial ( that companies may use for their own internal training.
2017 and beyond
In 2017, the CCWG will continue to work with the industry to improve contract certainty performance. Great strides have been made so far, but the next incremental steps will become tougher, said Mr Nick Garrity, Chair of the CCWG. 
   “We encourage all in-scope institutions, especially those 80-plus companies that have not yet enrolled any of their staff, to sign up for one of the dialogue sessions (via the portal: ( to gain a better understanding of contract certainty principles and its practical applications. 
   “Reinsurance contract certainty is an essential component of risk management. It is important for the seller, the buyer and the intermediary, to have an unambiguous understanding of the reinsurance contract with the terms and conditions completed in a timely manner,” he said. A 
Contract certainty compliance rate – Singapore aggregate
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