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The impact of Covid-19 on the global insurance industry – Singapore

Wednesday 13 July 2022

Simon Goh
Rajah & Tann Singapore, Singapore
simon.goh@rajahtann.com

Benjamin Teo
Rajah & Tann Singapore, Singapore
benjamin.teo@rajahtann.com

Singapore

General questions

Yes/

No/

N/A

Additional comments, if any.

1

Does the country that you are reporting on follow common law jurisprudence?

Yes

Singapore inherited the English common law system and its broad principles of judicial precedent (or stare decisis).

The application of the English Law Act effectively codifies this position and states that the common law of England (including the principles and rules of equity), so far as it was part of the law of Singapore before 12 November 1993, shall continue to be part of the law of Singapore. Section 3 of the Act provides that the common law, however, shall continue to be in force in Singapore as long as it is applicable to the circumstances of Singapore and subject to such modifications as those circumstances may require.

2

If the answer to the above question is no, does the country you are reporting on follow a civil code? Please describe the judicial system in short.

N/A

3

Please provide a brief description of the legal framework applicable to insurance coverage disputes in the country you are reporting on. In so doing, please consider the following questions:

Insurance coverage disputes are commenced in either the State Courts or the General Division of the High Court of Singapore. The District Courts and the Magistrates’ Courts (which fall under the ambit of the State Courts) share the same powers over specific matters such as contractual or tortious claims for a debt, demand or damage and in actions for the recovery of monies. The jurisdictional monetary limits in civil matters for the Magistrates’ Courts and District Courts are SGD60,000 (approximately US$46,650) and SGD250,000 respectively. Claims in excess of SGD250,000 are filed in the General Division of the High Court.

The Singapore courts strongly encourage parties to explore alternative dispute resolution methods. In the State Courts, this occurs through Court Dispute Resolution schemes where a District Judge effectively sits as a mediator – cases are routed to this scheme early in the court process, usually after pleadings have closed. In the General Division of the High Court, parties are similarly encouraged to do so, and commonly opt for mediation under the Singapore Mediation Centre. Parties who unreasonably refuse to consider alternative dispute resolution may be penalised with adverse costs orders at the conclusion of the trial.

4

Does the insured bear the burden of establishing coverage of a claim, or does the insurer bear the burden of establishing no coverage? Please give a short description of the legal basis in your country.

Generally, where the insured commences a claim (via a writ of summons) in the Singapore courts against an insurer and alleges that an insurer’s position (presumably on no coverage) is incorrect, then the insured as the plaintiff will bear the initial burden to prove its case on a balance of probabilities. For example, an insured has the burden of proving that a loss was caused by an insured peril. The legal basis for this approach is set out under the Evidence Act, Cap 97 (EA) in Singapore.

Among other things, the Evidence Act provides that ‘the burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side’, and ‘whoever desires any court to give judgment as to any legal right or liability, dependent on the existence of facts which he asserts, must prove that those facts exist […]’.

5

Are coverage provisions in policies interpreted broadly or is there a presumption in favour of coverage? Please give a short description of the legal basis in your country.

There is no operative or legal ‘presumption’ in favour of coverage under Singapore law as each case turns on its own facts and evidence. It is therefore not entirely possible to generalise as to whether or not the Singapore courts would interpret a particular case broadly or not on coverage issues.

That said, it may be useful to note that under Singapore law, there is a contextual approach to interpretation of contracts where certain types of extrinsic evidence can be considered (even in absence of ambiguity in a term). The practical effect of the contextual approach to interpretation is that it is possible for a scenario where the literal (and perhaps more limited scope) meaning of certain provisions in a contract is widened upon consideration of the extrinsic evidence available (eg, that parties may have had a wider understanding of the scope of a certain term or definition than the literal meaning).

6

Are exclusions interpreted narrowly or is there a presumption against finding that an exclusion to coverage applies? Please give a short description of the legal basis in your country.

Consistent with the comments above on interpretation relating to coverage provisions, interpretation of an exclusion clause will, to a certain extent, be influenced by the available extrinsic evidence when the Singapore courts apply the contextual approach to interpretation. There is no over-arching ‘presumption’ against finding that an exclusion to coverage applies.

7

Are there universally accepted definitions for:

  • event
  • occurrence
  • damage
  • cause
  • originating cause
  • natural peril
  • force majeure
  • loss
  • consequential loss

If the answer is yes, please give a short description of each definition and the legal basis for that definition (ie, a rule of law, case law etc).

No

There are no ‘universally accepted’ definitions for these terms, as much ultimately depends on parties’ own agreed definitions for such terms in their individual agreements. A well-drafted agreement would therefore set out specific definitions for such terms as ultimately, even if the same words are used, it is entirely possible that the drafter of each agreement may have slightly different intentions behind each term.

In cases where parties have omitted to specifically define such terms, some weight will then be given to the generally accepted meaning of such terms in case law (including Commonwealth jurisdictions), subject as always to the contextual approach to interpretation highlighted earlier.

That said, it bears mentioning that regarding force majeure, common boilerplate clauses used in force majeure clauses would define the term to mean circumstances which occur and which are beyond the reasonable control of a party and directly prevent that party from performing its obligation under this agreement. Common circumstances specifically included in the definition would be war, civil commotion, armed conflict, riot, act of terrorism, fire, flood or other acts of God. Prior to the onset of Covid-19, it was not common to find parties including pandemics as express circumstances constituting force majeure, although some business interruption policies would contain exclusions relating to Severe Acute Respiratory Syndrome.

Also, in relation to ‘event’ and ‘occurrence’, the application of common law jurisprudence to these two terms means that they are commonly construed to refer to something specific that has happened at a particular time, place, and in a specific way. This is usually distinguished from an ‘originating cause’, which is more commonly construed to refer to the underlying factual reason behind an event, and typically has a much wider connotation than ‘event’ or ‘occurrence’.

Loss causation

Yes/

No/

N/A

Additional comments, if any.

8

Did the country that you are reporting about issue lockdown, stay-at-home or no-travel restrictions in response to Covid-19?

Yes

9

If the answer to the question above is yes, were such orders issued nationally, by state/region or by local city/town. Please give a short description of the issuing authority and the orders issued.

The Singapore Parliament passed the Covid-19 (Temporary Measures) Act 2020 on 7 April 2020 which, among other things, allowed the government to make subsidiary legislation (in the form of regulations) to impose varying degrees of ‘lockdown’ or restrictions on social gathering numbers. The specific Part 7 of the Covid-19 (Temporary Measures) Act 2020 which deals with control orders to control/limit the spread of Covid-19 specifically refers to the Minister for Health as having the authority to make such regulations. The types of orders issued have differed through the course of the pandemic depending on the extent of Covid-19 spread in Singapore, but have included the ‘circuit breaker’ measure in 2020 where all non-essential businesses were required to close and working-from-home was default.

10

If the answer to the above question is yes, were the lockdown, stay-at-home or no-travel restrictions mandatory or recommended?

There has not been a ‘mandatory’ no travel restriction – however, persons who contract Covid-19 while travelling abroad will not receive free Covid-19 treatment from the government and will have to rely on their own travel insurance or national medical savings.

11

If the country that you are reporting about did issue lockdown, stay-at-home or no-travel restrictions, were those orders suspended or revoked at any point in time? If the answer is yes, please give a short description of the timeline.

Yes

The ‘circuit breaker’ period was from 7 April to 1 June 2020. Such restrictions were subsequently relaxed but have been varied depending on the course of the pandemic progress and daily case numbers.

12

If the answer to the above question is yes, were subsequent lockdown, stay-at-home or no-travel restrictions issued at any point in time? Please give a short description of the timeline.

Yes

For example, from 16 May to 13 June 2021, and again on 22 July to 18 August 2021, Singapore entered a ‘Phase 2 Heightened Alert’ period where permissible group sizes were limited to two persons, and working from home as default. Also, a ‘Stabilisation Phase’ was entered from 27 September to 22 November 2021 in response to increasing hospitalisation and death rates from Covid-19, where permissible group sizes were again limited to two persons, with additional restrictions on group events such as conferences, weddings and funerals.

13

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss?

No

14

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss? If the answer is yes, please give a short description of the conclusions in the judicial opinions or guidance.

No

15

If the answer to the question above is yes, did the highest court in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by the virus? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

16

If the answer to the above question is no, did the highest court in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by government lockdown or stay-at-home orders? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

17

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss? If the answer is yes, please give a short description of the conclusions in the judicial opinions or guidance.

No

18

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is a ‘cause’ of insured loss, have other courts in the country issued such opinions?

No

19

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether Covid-19 is a ‘cause’ of insured loss? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

20

If the answer to the above question is yes, do courts in the country you are reporting about hold that losses related to Covid-19 were ‘caused’ by the virus? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

21

If the answer to the above question is no, do courts in the country you are reporting about determine that losses related to Covid-19 were ‘caused’ by government lockdown or stay-at-home orders? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

There is no specific Singapore case law on this issue from our research to date.

22

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss?

No

23

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is an ‘originating cause’ of insured loss, have other courts in the country issued such opinions? If yes, please give a short description of the conclusions in such judicial opinions or guidance.

No

24

Has the country that you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’?

No

25

Has the highest court in the country you are reporting about issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’? Please give a short description of the conclusions in the judicial opinions or guidance.

No

26

If the answer to the question above is yes, did the highest court in the country you are reporting about determine that losses related to Covid-19 were covered ‘events’? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

27

If the highest court in the country you are reporting about has not issued judicial opinions or guidance analysing whether Covid-19 is a covered ‘event’, have other courts in the country issued such opinions?

No

28

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether Covid-19 is a covered ‘event’? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

There is no specific Singapore case law on this issue from our research to date.

29

If the answer to the above question is yes, do courts in the country you are reporting about hold that losses related to Covid-19 are covered ‘events’? Please give a short description of the conclusions in the judicial opinions or guidance.

N/A

30

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 in the context of loss causation.

No

There have not been any such official comments or contributions by Singapore government or regulatory authorities in relation to loss causation resulting from Covid-19. While there have been some industry comments about the likely and/or anticipated direction that the Singapore courts may or should take, these ultimately remain opinions of their respective authors given the relative dearth of specific Singapore court case law on loss/damage alleged to result from Covid-19 and/or its control measures.

Aggregation of claims

Yes/

No/

N/A

Additional comments, if any.

31

Does the country you are reporting on permit aggregation of claims arising out of a single originating cause? Please give a short description of the legal basis.

Yes

Broadly speaking, aggregation of claims is policy-specific and it depends on the type of wording used. There can be a variety of such wordings, usually specifying a certain maximum sum that will be paid, ranging from in respect of ‘any one accident’, ‘any one occurrence’, ‘claims arising from one originating cause’, ‘each loss arising out of one event’.

32

Does the country you are reporting on permit aggregation of claims arising out of a single cause? Please give a short description of the legal basis.

Yes

See comments in relation to Question 31.

33

Does the country you are reporting on permit aggregation of claims arising out of a single event? Please give a short description of the legal basis.

Yes

See comments in relation to Question 31.

34

Does the country you are reporting on use an accepted test for determining whether claims can be aggregated? For example, does the country you are reporting on apply to four unities test to determine whether aggregation is appropriate? Please give a short description of the legal basis.

Yes

The Singapore courts generally apply the four unities test, in determining whether or not certain losses are sufficiently closely connected with each other to be regarded as having resulted from a single event or occurrence – being time, locality, cause and motive. The courts will also consider whether there is sufficient causal connection between each individual loss and the event or occurrence from which the loss is alleged to result.

35

Have courts in the country you are reporting on issued jurisprudence concerning whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the legal basis.

No

36

Has the highest court in the country you are reporting about issued judicial opinions or guidance concerning whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

No

37

If the answer to the question above is yes, did the highest court in the country you are reporting about determine whether insureds can aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

There is no specific Singapore case law on this issue from our research to date.

38

If the highest court in the country you are reporting on has not issued such jurisprudence, have other courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether insureds may aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

There is no specific Singapore case law on this issue from our research to date.

39

If the answer to the above question is yes, do courts in the country you are reporting about permit insureds to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

40

Do the courts in the country you are reporting on permit an insured to aggregate claims related to multiple properties or business locations arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

There is no specific Singapore case law on this issue from our research to date. That said, we would expect the usual aggregation considerations as discussed in Question 34’s response to be applied.

41

Do the courts in the country you are reporting on permit an insured to aggregate claims related to multiple lockdown or stay-at-home orders arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

There is no specific Singapore case law on this issue from our research to date. That said, we would expect the usual aggregation considerations as discussed in Question 34’s response to be applied.

42

Have courts in the country you are reporting on issued jurisprudence concerning whether cedents can aggregate claims arising out of Covid-19? Please give a short description of the legal basis.

No

43

If the answer to the above question is yes, have courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether cedents may aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

44

If the answer to the above question is yes, do courts in the country you are reporting about permit cedents to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

45

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of COVID-19 and aggregating claims.

No

Property damage

Yes/

No/

N/A

Additional comments, if any.                      

46

Have courts in the country you are reporting on issued jurisprudence concerning whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the legal basis.

No

47

Has the highest court in the country you are reporting about issued judicial opinions or guidance concerning whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

There is no specific Singapore case law on this issue from our research to date.

48

If the answer to the question above is yes, did the highest court in the country you are reporting about determine whether losses arising from Covid-19 qualify as property damage losses? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

There is no specific Singapore case law on this issue from our research to date.

49

If the highest court in the country you are reporting on has not issued such jurisprudence, have other courts in the country you are reporting on interpreted this issue consistently? In other words, is there uniformity in jurisprudence as to whether losses arising from Covid-19 constitute property damage? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

There is no specific Singapore case law on this issue from our research to date.

50

If the answer to the above question is yes, do courts in the country you are reporting about permit insureds to aggregate claims arising out of Covid-19? Please give a short description of the conclusions in such judicial opinions or guidance.

N/A

There is no specific Singapore case law on this issue from our research to date.

51

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 and property damage.

No

Exclusions

Yes/

No/

N/A

Additional comments, if any.

52

Has Covid-19 been deemed a ‘natural peril’ in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

No

There is no specific Singapore case law on this issue from our research to date.

53

Has Covid-19 been deemed force majeure in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

Yes

From our research, there has only been one reported case in Singapore to date that specifically dealt with legal arguments and issues relating to the pandemic. This particular case resulted from the 2020 ‘circuit breaker’ measures that were taken by the Singapore government to control the Covid-19 pandemic – Dathena Science Pte Ltd v Justco (Singapore) Pte Ltd [2021] SGHC 219. Although not specifically related to a force majeure clause, the court considered the doctrine of frustration

The key case facts are as follows. On 16 January 2020, Dathena Science Pte Ltd (Dathena) and JustCo (Singapore) Pte Ltd (JustCo) entered into a Membership Agreement whereby Dathena agreed to lease certain offices at OCBC centre (the OCBC Premises) from JustCo for two years from 1 May 2020 to 30 April 2022. However, Dathena did not occupy the OCBC Premises starting 1 May 2021 or at all due to unexpected and/or unforeseen events, including the circuit breaker measures.

Due to the circuit breaker measures, JustCo claimed it could not prepare the OCBC Premises for Dathena in time for moving in on 1 May 2020. After failed negotiations, Dathena issued a Notice of Termination to JustCo. Dathena’s request for a refund was rejected by JustCo.

Notwithstanding Dathena’s termination of the Membership Agreement, it was still prepared to consider JustCo’s offers of alternative premises. However, the alternative premises were eventually rejected.

The Singapore High Court found in favour of Dathena, finding, among other things, that:

  1. Dathena was entitled to give its termination notice even though there was no clause in the Membership Agreement that allowed Dathena to terminate the contract. Even though the Membership Agreement had an entire agreement clause, it did not operate to constrain the application of common law or statutory legislations. The High Court found that the one-sided termination clause (under which only JustCo had the option to terminate the Membership Agreement and to demand payment for membership fees for the entire length of the agreement), among other onerous terms, was unreasonable under the Unfair Contract Terms Act and therefore unenforceable. The High Court accepted Dathena’s position that there was a repudiatory breach of the contract by JustCo when it failed to deliver the OCBC Premises by 1 May 2020, thereby giving rise to Dathena’s right to termination at common law.
  1. Although Dathena had the right to waive its termination notice, the High Court held that Dathena’s willingness to consider alternatives offered by JustCo after the issuance of its termination notice and actions in visiting the OCBC Premises in September 2020 did not amount to any waiver.
  1. The High Court also found that once a supervening event occurs after the formation of the contract without the default of either party which renders the contractual obligation radically and fundamentally different from what was agreed or, a contract becomes impossible to perform, a contract is frustrated. It found that the Membership Agreement had been frustrated by the circuit breaker measures. JustCo’s four-month delay in delivering the OCBC Premises, non-comparable alternatives and additional moving costs were not what parties had agreed to. The result is that both parties were discharged from their contract by operation of law, and Dathena was entitled to the refund.

54

Is Covid-19 acknowledged as a notifiable disease in the country you are reporting on? Please give a short description of the legal basis and relevant jurisprudence.

Yes

The Health Ministry amended the Infectious Diseases (Notification of Prescribed Infectious Diseases) Regulations on 28 February 2020 to include Covid-19 as one of the diseases which has to be notified to the Director of Medical Services.

55

Is it common for insurance policies issued in the country you are reporting on to include a pandemic or virus exclusion? Please give a short description of the legal basis and common insurance practice.

Yes

Yes. It is not uncommon for business interruption policies issued by Singapore insurers to (since the onset of the SARS epidemic in 2003) to include a specific exclusion for business interruption losses arising out of SARS or similar influenza viruses. A typical example of such clause would exclude cover for ‘any occurrence, whether directly or indirectly, arising from AIDS, SARS-CoV or any influenza virus (including but not limited to H5N1, H1N1) or any other mutation, derivative or variation thereof.’

56

Have any courts in the country you are reporting on determined that a pandemic or virus exclusion is void as against public policy in the context of Covid-19? Please give a short description of the legal basis and relevant jurisprudence.

No

57

Have any courts in the country you are reporting on otherwise determined that a pandemic or virus exclusion is unenforceable in response to Covid-19? Please give a short description of the legal basis and relevant jurisprudence.

No

58

If the answer to any of the above questions regarding your country’s jurisprudence was no, please comment on whether there are any other official sources or authorities that have issued contributions to the interpretation of Covid-19 in the context of exclusions.

No

Regulatory oversight

Yes/

No/

N/A

Additional comments, if any.

59

Have insurance regulators in the country you are reporting on issued directives concerning coverage for claims arising out of Covid-19? Please describe the regulations that have been implemented.

No

60

Are regulators requiring or encouraging insurers to provide grace periods to insureds to make payments on premiums? If yes, please give a short description of the legal basis and relevant guidance.

Yes

In 2020, after the initial onset of the pandemic, the Monetary Authority of Singapore (together with the Life Insurance Association and General Insurance Association of Singapore), issued certain measures to support individuals affected by the pandemic. The Life Insurance Association and General Insurance Association of Singapore are made of the respective life and general insurers in Singapore.

This included allowing individuals with life and health insurance policies to apply to their insurer to defer premium payments for up to six months while maintaining insurance coverage during this period. Premium deferment was made available for all individual life and health insurance policies with a policy renewal or premium due date between 1 April and 30 September 2020. Flexible instalment plans were also made available for general insurance policies. Subsequently, the General Insurance Association of Singapore extended the flexible instalment plan option until the end of 2021. The premium deferment option was discontinued after 31 March 2021.

Government action

Yes/

No/

N/A

Additional comments, if any.

61

Has the government in the country you are reporting on implemented relief measures for losses sustained as a result of Covid-19?

Yes

62

If the answer to the above question is yes, are the relief measures available to both individuals and businesses?

Yes

63

Briefly describe the types of relief measures available to individuals and businesses.

The specific details of various relief measures instituted by the Singapore government are extremely lengthy. Instead, we have set out a brief summary of the types of measures that have been imposed by the government since the onset of the pandemic:

  • From 20 April 2020, temporary relief (with varying periods of extensions depending on specific contract type) was provided against parties’ contractual obligations in respect of certain contracts, such as event contracts, tourism-related contracts, construction contracts, performance bonds, and leases of non-residential properties.
  • Deferment of loan repayments, such as residential property, commercial loans, renovation and student loans, and motor vehicle loans.
  • Additional allowance for refinancing of existing property loans without being subject to usual total debt servicing ratio requirements.
  • Covid-19 support grants to all Singaporean citizens.
  • Waiver of property taxes for affected industries’ commercial properties, such as hotels.
  • Calibrated wage subsidies (depending on industry) of up to 75 per cent (of the first SGD4,600 of salary) provided by the government.
  • A relief period of up to six months for debtors that prevented creditors from commencing bankruptcy proceedings for debt recovery in relation to statutory demands.
  • Creation of an ‘SG United Jobs and Skills’ package, designed to create additional jobs.