The Singapore government has introduced several changes to boost protection of insurance policyholders and bank depositors in case of financial institution failure.
The Singapore Deposit Insurance Corporation (SDIC) has expanded the Deposit Insurance (DI) and Policy Owners’ Protection (PPF) schemes to SG$75,000 per depositor per bank, the Straits Times reported. It will also cover personal assets used for commercial purposes.
Prior to the expansion of the DI and PPF schemes, the maximum limit was SG$50,000, which was set in 2011.
The PPF scheme protects owners of life insurance policies and certain general insurance policies in case of insolvency or failure of the insurer. One notable aspect of the expanded scheme, according to the report, was the clarified scope for general insurance policies. This is especially valuable amid the rise of the gig economy – where people are engaged in short-term contracts or freelance work - and more people using their assets such as cars or homes to generate income.
Under the new regulations, motor and property insurance policies bought by an individual will be covered even if the vehicle or property is being used for commercial purposes.
The regulations also institute caps, on a per policy basis, for own property damage motor claims (SG$50,000) under personal motor insurance policies and property damage claims under personal property insurance (SG$300,000). These caps, according to SDIC, will cover more than 99% of claims, based on data collected over the past three years.
In case an insurer defaults, the SDIC is mandated to pay out all outstanding claims. Afterwards, the Monetary Authority of Singapore (MAS) will decide the course of action regarding the failed insurer. It has the option of transferring the failed insurer’s business to another insurer, continue servicing existing insurance policies until they expire, or terminating the policies and refunding the policyholders.
