29 April 2019
The Deposit Insurance and Policy Owners’ Protection Schemes Act (“Act”) has been amended with effect from 1 April 2019 to ensure depositors and policy owners continue to have an adequate level of protection and enhance the operational processes of the schemes under the Act.
The Act governs the operation of the Deposit Insurance Scheme (“DI Scheme”) and the Policy Owners’ Protection Scheme (“PPF Scheme”) which are put in place to protect the savings of small depositors and owners of commonly purchased insurance policies should a member bank or insurer fail.
Raise DI coverage limit from S$50,000 to S$75,000
Following the amendments to the Act, the DI coverage under the DI Scheme has been raised from S$50,000 to S$75,000 per depositor per scheme member. The increased coverage raises the proportion of depositors that are fully insured to more than 90%. With the higher DI coverage limit, the size of the Deposit Insurance Fund will need to increase to cover the larger pool of insured deposits. To meet the target fund size, the build-up period for the fund will be extended from the current target date of 2020 to 2028 and the annual premium contributions by scheme members to the Deposit Insurance Fund will increase marginally, by no more than 1 basis point per year.
Extend PPF coverage to certain types of properties and set limits on compensation payouts
The Act has been amended to define a “personal” insurance policy as one that is issued to a natural person. This will allow individuals using their personal properties for commercial purposes to be protected under the PPF Scheme. Examples of such properties include privately owned cars used for hire and reward and home offices.
The Act has also been amended to enable regulations to be made to prescribe caps on compensation payouts for certain types of insurance policies. In this regard, the Deposit Insurance and Policy Owners’ Protection Schemes (Policy Owners’ Protection) (Maximum Compensation) Regulations 2019 (“Regulations”) have been enacted and came into operation on 1 April 2019. The Regulations provide for:
- maximum compensation prescribed in respect of personal motor insured policies (S$50,000); and
- maximum compensation prescribed in respect of personal property (structure and contents) insured policies (S$300,000).
Revised MAS Notice
On 1 April 2019, the MAS Notice to Policy Owners’ Protection (“PPF”) Scheme Members Deposit Insurance and Policy Owners’ Protection Schemes Act” (MAS Notice DIPOP - N02) was also revised.
The following materials are available on the MAS website www.mas.gov.sg:
- MAS Notice to Policy Owners’ Protection Scheme Members Deposit Insurance and Policy Owners’ Protection Schemes Act (MAS Notice DIPOP - N02)
- MAS Notice DIPOP - N02 (Amendment) 2019