Mixed Deck — All PGI Topics Flashcards

Does home insurance cover water damage from a burst pipe in Singapore?

Answer: Typically covered under accidental damage or water damage peril in most comprehensive home insurance policies

Water damage from burst pipes, overflowing tanks, or leaking appliances is typically covered under home contents insurance. However, gradual water damage from poor maintenance may be excluded.

What is a 'voyage policy' in marine insurance?

Answer: A policy covering a specific voyage from one place to another

A voyage policy covers the subject matter for a specific voyage, attaching at the commencement of the voyage and ceasing when the destination is reached.

In marine insurance, what is an 'insurable interest'?

Answer: A legal or equitable relationship between the insured and the subject matter at risk

Insurable interest means the insured must have a legal or equitable relationship with the subject matter such that they benefit from its safety or suffer from its loss.

What is 'finite reinsurance' and why has it attracted regulatory scrutiny?

Answer: A form of reinsurance with limited risk transfer, often used for financial engineering purposes, which regulators scrutinize to ensure genuine risk is transferred

Finite reinsurance involves limited risk transfer and often has significant financial engineering components. Regulators have scrutinized it to ensure genuine insurance risk is transferred, rather than being used purely to smooth accounting results.

What is the 'renovation insurance' or 'home renovation protection plan' in Singapore?

Answer: Insurance covering renovation work against damage, third-party liability during renovation, and protecting the homeowner's newly installed fixtures

Renovation insurance covers new renovations against damage from perils like fire, water leakage, and accidental damage. It also provides liability coverage during the renovation period.

What is 'cyber liability' insurance and why is it growing in Singapore?

Answer: Insurance covering data breaches, cyberattacks, ransomware, and associated costs including legal liability, notification costs, and business interruption

With Singapore's digital economy growth and strict PDPA requirements, cyber liability insurance covers costs from data breaches, including notification expenses, legal defence, regulatory fines, and business disruption.

How does the claims process work for home insurance in Singapore?

Answer: Notify the insurer as soon as possible, document the damage with photos, complete a claim form, provide supporting documents (receipts, police report if theft), and await assessment

The claims process involves prompt notification to the insurer, documentation of damage (photos, videos), police report (for theft), completion of claim forms, and provision of purchase receipts or proof of ownership.

What recourse does a consumer have if their general insurance policy is unfairly cancelled by the insurer in Singapore?

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.

What is 'incurred but not reported' (IBNR) reserves and why are they important?

Answer: Reserves set aside for losses that have already occurred but not yet been reported to the insurer — essential for accurate financial reporting

IBNR reserves account for losses that have already happened but have not yet been reported to the insurer. Without adequate IBNR reserves, an insurer's financial statements will understate liabilities, potentially threatening solvency.

Under the Institute Hull Clauses, what is the meaning of 'Total Loss Only' (TLO) cover?

Answer: The policy pays only in the event of actual or constructive total loss of the vessel

TLO cover responds only when there is an actual total loss (vessel physically destroyed) or a constructive total loss (cost of repair exceeds the insured value), excluding partial losses.

What is the 'Financial Action Task Force' (FATF) recommendation's significance for Singapore insurers?

Answer: FATF standards form the basis of Singapore's AML/CFT framework that insurers must comply with

FATF recommendations form the international standard for anti-money laundering and counter-terrorism financing. Singapore's MAS framework for insurers is largely based on FATF standards, applied domestically through MAS Notices and guidelines.

What is 'large loss management' in commercial insurance claims?

Answer: A structured approach to handling significant claims involving early notification, dedicated claims handlers, expert appointments, and proactive communication

Large loss management involves a structured protocol for significant claims: immediate notification up the chain, appointment of dedicated claims professionals, early engagement of forensic accountants or adjusters, proactive communication, and coordination with reinsurers.

What activities are typically excluded from Singapore personal accident insurance?

Answer: Professional sports, hazardous activities (skydiving, motor racing), war/terrorism, self-inflicted injuries, and injuries while committing a crime

Standard PA policies exclude professional sports, extreme activities, war and terrorism, self-inflicted injuries, injuries from criminal activity, and injuries while under the influence of drugs or alcohol.

What is the difference between 'paid losses' and 'incurred losses' in claims reserving?

Answer: Paid losses are amounts actually disbursed; incurred losses include paid amounts plus outstanding reserves for reported but unsettled claims (IBNER) and IBNR — the true total exposure

Paid losses represent actual cash payments made to date. Incurred losses include both paid amounts and reserves set aside for claims still being settled (IBNER) and claims not yet reported (IBNR), representing the insurer's best estimate of ultimate total losses.

What is the Singapore Financial Disputes Resolution process hierarchy for large commercial insurance claims?

Answer: Internal dispute resolution first, then Singapore International Arbitration Centre (SIAC) or Singapore Mediation Centre (SMC) for commercial disputes, and ultimately the courts

For larger commercial insurance disputes, the hierarchy typically involves internal dispute resolution, followed by formal ADR mechanisms such as SIAC arbitration or SMC mediation (more appropriate than FIDReC for commercial-scale claims), and ultimately litigation if unresolved.

What is 'estimated maximum loss' (EML) and how does it differ from MPL?

Answer: EML assumes total failure of all protective systems; MPL assumes partial failure — EML is the more pessimistic estimate

Estimated Maximum Loss (EML) assumes total failure of all protective measures (e.g., sprinklers fail completely, fire brigade does not arrive), making it more pessimistic than MPL. EML represents the worst credible loss scenario.

What is 'ring-fencing' of insurance funds under Singapore law?

Answer: The legal requirement that insurance fund assets be kept separate from shareholders' assets and used only for policyholder obligations

Ring-fencing requires each insurance fund's assets to be legally separated from the insurer's shareholders' funds. These ring-fenced assets can only be used to meet obligations to policyholders of that specific fund.

What are the three types of motor insurance coverage available in Singapore?

Answer: Third-Party Only, Third-Party Fire and Theft, and Comprehensive

Singapore motor insurance comes in three tiers: Third-Party Only (minimum legal requirement), Third-Party Fire and Theft (adds fire and theft coverage), and Comprehensive (covers own damage as well).

What is 'construction all risks' (CAR) insurance and who typically purchases it?

Answer: CAR covers accidental physical damage to construction works; typically purchased by contractors or project owners for building projects

Construction All Risks (CAR) insurance covers accidental physical damage to the contract works, temporary works, and third-party liability during construction. It is typically arranged by the main contractor, project owner, or both under a joint names policy.

What is FIDReC and how does it help insurance consumers in Singapore?

Answer: The Financial Industry Disputes Resolution Centre — an independent body that resolves disputes between consumers and financial institutions including insurers through mediation and adjudication

FIDReC provides consumers with a free, independent avenue to resolve disputes with insurance companies. Claims up to SGD 100,000 can be adjudicated, and the process is designed to be accessible and fair.