Contract certainty efforts in Singapore


The Contract Certainty Working Group (“CCWG”) is an advisory body comprising volunteer members from the General Insurance Association of Singapore, the Singapore Reinsurers’ Association, Lloyd’s Asia and the Reinsurance Brokers’ Association (Singapore). The CCWG was formed in April 2011 for the purpose of providing for and guiding the implementation of contract certainty in Singapore’s reinsurance market.

On 21 January 2013, the CCWG reported to the market the scope, definition and principles of contract certainty following its work on the project in 2011 and 2012, and the consultations with and feedback from associations’ members and non-members.

As explained by Nick Garrity, Chair of the CCWG, contract certainty, or rather, the lack of, has been a feature in the UK insurance and reinsurance market for centuries.  It finally came to a head as a result of the September 11 2001 tragedy when Swiss Re sought declaration from the US District Court that the horrific damage caused to the World Trade Centre was caused by a single event.  Related arguments to the intended definition of “occurrence” in the intended form of the binder also arose.

Singapore has recognised the importance of contract certainty since 2006.  The Monetary Authority of Singapore (“MAS”) documented this in its “Guidelines on Risk Management Practices for Insurance Business” published in 2007.

Definition, scope and principles

CCWG’s definition of “contract certainty” is:
“…the complete and final agreement of all terms and signed lines between the reinsured and reinsurer by the time that they enter into the contract.  Contract documentation shall be provided to all parties within 30 days of the cedant’s risk inception or the cedant’s order to bind whichever is later”,

By way of scope, the contract certainty principles formulated by the CCWG apply to all reinsurance contracts entered into by a (re) insurer regulated by MAS or through a MAS regulated intermediary.

The principles themselves call for:
when entering into a contract, the reinsurer and the broker (where applicable) to ensure that all terms are unambiguous by the time the offer is made to enter into the contract or the offer is accepted.  All terms must be clearly expressed, including any conditions or subjectivities; and all evidence of offer and acceptance, including file notes of conversations and meetings, written and electronic communications, maintained by the reinsurer and the broker (where applicable); or after entering into a contract, the complete and final agreement of all terms and signed lines between the cedant and reinsurer by the time that they enter into the contract; and contract documentation to be provided to all parties, including all signatures, within 30 days of the cedant’s risk inception or the cedant’s order to bind whichever is later; and, in both scenarios demonstration of performance; and certain and documented contract changes.

There are also principles that apply in scenarios where there is more than one participating reinsurer.

Where a contract does not meet the principles, it is required that:
the reinsurer and broker (where applicable) resolve exceptions to any of the principles as soon as practicable and without undue delay;
every effort is made, where terms have not been agreed by the time of entering into the contract, to do so as soon as practicable;
where accurate contract documentation has not been provided promptly, the reinsurer and broker (where applicable) use their best endeavours to ensure that it is as soon as practicable thereafter; and
the reinsured be kept informed of progress where a delay is likely to be significantly beyond the required time scales.


On 21 January 2013, Mr Garrity advised the market that the CCWG had provided a Guidance Document that captured the above definition, scope and principles, as well as a proposed checklist to document adherence.
Mr Garrity also revealed a secure online portal, to be active from April 2013, in which parties will enter their statistics relating to contracts that are contract certain, that are documented and sent to clients relative to inception or date when they are bound, as well as whether the placements are treaty or facultative, on a monthly basis.
Mr Garrity recommended that the parties record more detailed information for their own internal analysis and improvement purposes.
The success of the CCWG’s efforts in moving the Singapore reinsurance market towards contract certainty will start to become apparent from June 2013.

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