In other words, the accountability is the price that institution pays for its independence. In democracies, every independent institution or 3 organization is accountable to the public and to its institutional stakeholders . Third, the participation principle ensures that every person in the system, in one way or the other, has 4 a voice in the decision-making process . 1  AusAID, (April, 2003). “Economic Governance and the Asian Crisis”. Quality Assurance Series. 2  United Nations, Economic and Social Commission for Asia and the Pacific. “What is Good Governance”  3  Ibid. 4  AusAID, (April, 2003). “Economic Governance and the Asian Crisis”. Quality Assurance Series. BIS Review 35/2007  1  And last but not least, good governance requires a fair legal framework and impartial enforcement of this legal system that protects property and individual rights and constitutes a strong base for prudent 5 policy-making . This legal structure assigns the principle of the rule of law. Distinguished guests, The analysis of good governance brings me directly to the question of why good governance is important. The good governance provides key institutions and policies for the equitable and efficient allocation of 6 resources, both labour and capital . To put it differently, it allows an economy to yield higher growth rates by using the same amount of factors of production. The strengthened economic governance across a broad spectrum of policy, administrative and institutional issues, is now widely accepted as a key factor in rebuilding domestic and international 7 confidence in an economy .

Two new specialist bancassurance players have established operations in Singapore, and contributed significantly to this trend. Increasing resilience Amidst these new opportunities, more than ever, we now need to strengthen the resilience of the insurance industry. The MAS has for some time, been working with the insurance and reinsurance industry to raise standards of corporate governance, internal controls and professionalism. Many of our companies are already at international best practice standards. However, as in all countries, practices vary, and we aim to have all our insurers to attain best practice standards by 2005 if not earlier. 2  BIS Review 44/2002  Risk-based supervision In 1998, MAS embarked on a strategic change in our regulatory philosophy. We moved from a bottomup, audit-based inspection approach to a top-down, risk-based supervisory approach. This approach, being prospective in nature, is well suited to today's world of new and increased risks. Risk-based supervision evaluates the major risks faced by an institution and assesses how well these risks are being mitigated. This will help both regulators and companies to identify and, importantly, to pre-empt problems. Well-managed institutions will be given greater flexibility, while less well-managed ones will be subject to closer scrutiny. Singapore's risk-based supervisory framework for insurers The basic framework for risk-based supervision of insurers in Singapore has been set up. MAS is now developing risk profiles for each Singapore-based insurer. We have devised a five-step "supervisory ladder of intervention", and will use it to classify insurers according to their risk rating.