Introduction – Structured Investment-Linked Insurance Business

As announced in the National Budget 2020-2021, the Financial Services Commission Mauritius (FSC) will introduce a regulatory framework for Insurance Wrappers, which will henceforth be referred to as Structured Investment-Linked Insurance Business (SILIB) in order to enhance the competitiveness of the financial services sector. 

The FSC is proposing to introduce the SILIB within the Insurance Act as a fifth class of long-term insurance business. 

What is Structured Investment-Linked Insurance Business in Mauritius (SILIB) 

In short, SILIB is a life insurance policy ‘wrapped’ around the policyholder’s own investments and assets portfolio which may include cash, investment funds, securities, property, listed and non-listed investments. 

SILIB will be issued by insurance companies, normally held by a custodian, managed by a fund manager, often purchased through independent financial advisors with the involvement of a bank and/or asset managers. 

Regulatory Framework & Purpose of this Consultation Paper 

A benchmarking exercise of the regulatory frameworks and the best practices on SILIB in other jurisdictions was conducted by the FSC. As a result, it has been observed that SILIB is provided under the life insurance framework.  

The FSC is thus proposing to adopt the same approach and amend the Insurance Act and existing regulatory framework to allow the long-term insurers to offer SILIB in Mauritius. A fifth class of long term insurance business in Part I of the First Schedule to the Insurance Act will be added. Moreover, unless otherwise specified, the requirements and provisions under the Insurance Act will also apply to SILIB. 

The FSC also proposes to amend the Insurance Act and the associated Rules and Regulations to provide the prevailing legal framework appropriate to offer SILIB.   

The FSC is thus inviting stakeholders and the public to share their views on the essential amendments to be brought to the existing insurance regulatory framework in relation to SILIB. 

You can read the full Consultation Paper here. 

Questions related to the amendment of the Insurance Act to cater for the Structured Investment-Linked Insurance Business in Mauritius (SILIB) 

Question 1:

The FSC is seeking views on the suitability of the approach in paragraph 2.5 of the Consultation Paper and whether any other alternative approaches should be considered. In a case where any other alternative approach should be considered, please provide details of such approach. 

Insurance Act 2005 

Question 2:

The FSC is seeking views on the definition given in paragraph 4.2 of the Consultation Paper and the possibilities to add further details to distinguish the class of SILIB from the other four existing classes. 

Question 3:

(i) What could be a more suitable alternative minimum amount? Please provide the rationale for the proposed alternative amount.  

(ii) What other conditions could be implemented to protect the local market and avoid any potential misspelling? 

Question 4:

Should SILIB be allowed to invest in derivatives as an asset? 

Question 5:

What other conditions could be imposed to separate the assets of SILIB completely from the assets of the other four existing classes? 

Question 6:

The FSC is seeking views on the custody of assets of Structured Investment-Linked Insurance Business and the possible requirements regarding custodian in the FSC Rules. 

Question 7:

The FSC is seeking views as to whether custodians should be limited to only banks holding a Custodian services (non-CIS) licence. 

Question 8:

What are likely the implications and difficulties if both domestic and global business long term insurers are allowed to offer SILIB? 

Question 9:

The FSC is seeking views on the suitability of the sections of the Insurance Act listed in paragraph 4.9 of the Consultation Paper for SILIB and whether these sections could be further enhanced to increase protection for SILIB policyholders. 

Insurance Regulations 2007 

Question 10:

The FSC is seeking views on the suitability of the sections of the Insurance Act listed in paragraph 4.9 of the Consultation Paper for Structured Investment-Linked Insurance Business and whether these sections could be further enhanced to increase protection for SILIB policyholders. 

Question 11:

Should the 5% minimum requirement be completely removed for SILIB? 

Insurance (Long-term insurance business solvency) rules 2007 

Question 12:

What are likely the consequences and inconsistencies that may arise when amending rule 12 (10) for SILIB? 

Question 13:

What are likely the consequences and inconsistencies that may arise when excluding, from rule 12, investment held with a custodian in respect of structured investment-linked policies? 

Guidelines on stress test requirements for long-term insurers 

Question 14:

What is likely the impact of adding Operational risk capital charge to the capital adequacy requirement of long-term insurers? 

Question 15:

The FSC is seeking views on the proposed formula and comments on the parameters used. 

Code civil Mauricien and tax Treatment 

Question 16:

What are the incentives that may be implemented for the successful introduction and operation of SILIB in Mauritius? 

Intermediaries for Structured Investment-Linked Insurance Business 

Question 17:

(i) The FSC is strongly encouraging stakeholders to provide their feedback on the two options proposed at paragraph 9.1 of the Consultation Paper, including any comments on the scope of activities covered by IFA that might have an impact on existing licensed intermediaries, their competency standards requirements and any other factors.  

(ii) Should foreign intermediaries be allowed to advise clients on SILIB being offered in Mauritius? 

Anti-money laundering and combating the financing of terrorism 

Question 18:

What additional level of security and measures could be required to further counter money laundering and financing of terrorism risks that may be associated with SILIB? 

Rules and/or guidelines on SILIB 

Question 19:

The FSC is seeking views on the requirements, provisions, conditions, obligations, sanctions, and other contents of the prospective Rules and/or Guidelines on SILIB. 

Submission of comments, feedback and suggestions in relation to the regulatory framework for structured investment-linked insurance business in Mauritius. 

Interested parties are hereby invited to send their comments, feedback and suggestions related to the regulatory framework proposed in the Consultation Paper at the latest on September 16th, 2021 via email on silib@fscmauritius.org 

Please note that all submissions received will be kept confidential. 

How Valsen Can Help   

The experienced staff of Valsen Fiduciaries Group our global network allow us to provide high-quality services in several jurisdictions. We are at your disposal to help you understand the purpose of this Consultation Paper and how if successful, SILIB will be a good investment plan for you. Please contact us through info@valsenfiduciaries.com or +248 2 525 217.