Brunei's Local News - Brudirect.com

Insurance Order 2006 Regulates Insurance Businesses In Brunei
By Azlan Othman

Bandar Seri Begawan - The Ministry of Finance yesterday stated that the Insurance Order 2006 provides for the regulation of insurance businesses in Brunei Darussalam and for other purposes relating or connected with insurance.

In response to an opinion letter entitled "Are Local Policyholders Protected", which was published in the Borneo Bulletin on September 24, 2008, the ministry said that under the Insurance Order, all insurers are required to establish a separate insurance fund for each class of business.

The assets in each fund can only be used to meet the fund's expenses and liabilities, and each fund's assets must, at all times, exceed its liabilities. In addition, the authority also imposes a solvency margin that all insurers must observe at all times. All life insurance companies in Brunei currently meet these regulatory requirements.

The ministry said that the related company has

constantly emphasized its commitment to the obligations of policyholders at all times.

The Insurance Order also provides for the setting up of a Policy Owner's Protection Fund to compensate policyholders, in the unlikely event that an insurer is unable to meet its obligations to policyholders.

For more information regarding this matter, members of the public can contact the Insurance/Takaful Unit, Financial Institutions Division, Level 7, Ministry of Finance, Commonwealth Drive, Bandar Seri Begawan at 2383956, 2380522, 2380978 or 2380517.

Amid the AIG saga and the operation of AIA in Brunei, the public expressed their views in the Bulletin's opinion column inquiring whether MA maintains separate fund with the Brunei authority like all insurance companies in Singapore in case of insolvency and to ascertain that the clients do not lose their investments.

Following the credit crisis in the United States after the fall of Lehman Brothers and the US$85 billion Fed bail-out of American International Group (AIG) two weeks ago, several policyholders have approached AIA's office in the capital to seek more information.

Some of them wanted to surrender their policies despite facing losses for premature termination.

ALA Brunei responded by saying that they were not impacted by the financial issues in the US and said they have more than sufficient capital and reserves above the regulatory minimum requirements to meet the obligations of policyholders.

"The insurance policies written by AIA Brunei are direct obligations of our regulated business, which is subject to local regulatory and capital requirements. Although AIG faces a short-term liquidity pressure, we have a strong well-positioned business in Brunei," they added. -- Courtesy of Borneo Bulletin