CNA Explains: What are protected cell companies, and why does Singapore want them for the insurance industry?

Singapore is set to revolutionize its insurance sector with the proposed introduction of Protected Cell Companies (PCCs), a new corporate structure designed to offer greater flexibility and efficiency in risk management. The Monetary Authority of Singapore (MAS) launched a public consultation on the PCC framework, aiming for implementation by 2028, subject to legislative approval.

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Risks today are more complex, more connected, and harder to price. A single disruption can cascade across multiple sectors and geographies.

The PCC model allows a single legal entity to establish multiple "cells," each operating with its own distinct assets and liabilities. This structure provides legal segregation, meaning that if one cell incurs losses, creditors generally cannot access the assets of other cells. Currently, companies seeking to segregate risks often need to create separate legal entities, a process that is both time-consuming and costly.

MAS is proposing this framework in response to the increasing complexity of modern risks, including climate change, geopolitical instability, and supply chain disruptions. These factors make traditional insurance models less adequate, prompting businesses to seek more control over how they finance, retain, and transfer risks. Deputy Prime Minister Gan Kim Yong highlighted that risks are becoming more interconnected and harder to price, leading to significant underinsurance in Asia, where natural disasters alone caused an estimated $65 billion in economic losses in 2025, with over 90% of those losses uninsured.

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Asia remains significantly underinsured.

The PCC structure is primarily intended for specific applications within the insurance industry, not for ordinary retail policies. Key beneficiaries include captive insurance arrangements, where large firms insure their own risks. The PCC framework would enable smaller companies to participate in "rent-a-captive" schemes, leasing a cell rather than establishing a full captive insurer. This could significantly lower the barrier to entry for companies that previously lacked the resources for self-insurance. Additionally, PCCs are expected to facilitate insurance-linked securities, such as catastrophe bonds, allowing insurers to transfer risks to capital market investors.

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This could help companies that 'may not typically have the means or the resources or the economic justification to set up its own captive insurer'.