30 May 2018
On 17 May 2018, the Deposit Insurance and Policy Owners’ Protection Schemes (Amendment) Bill (“Bill”) was tabled in Parliament for first reading.
The Deposit Insurance and Policy Owners’ Protection Schemes Act (“DI-PPF Act”) governs the operation of the Deposit Insurance Scheme (“DI Scheme”) and the Policy Owners’ Protection Scheme (“PPF Scheme”). The DI Scheme and PPF Scheme were implemented in 2006 and 2011 respectively to protect the savings of small depositors and owners of commonly purchased insurance policies should a member bank or insurer fail.
The DI-PPF Act is being amended to ensure depositors and policy owners continue to have an adequate level of protection and to enhance the operational processes of the Schemes.
MAS targets to implement the enhancements to the DI Scheme and PPF Scheme on 1 April 2019.
The following are the main changes arising from the Bill:
Raise DI coverage limit from S$50,000 to S$75,000
The DI Scheme currently insures Singapore Dollar non-bank deposits held with full banks and finance companies up to S$50,000 per depositor per scheme member. The Bill will raise the DI coverage limit from S$50,000 to S$75,000. The increased coverage will raise the proportion of depositors that are fully insured from 87% to 91%, which is in line with international norms. With the higher DI coverage limit and growth in deposits, the absolute size of the DI Fund will increase. To meet the target fund size within a reasonable period while managing the increase in premium rates, 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 DI Fund will increase marginally, by no more than 1 basis point
Extend PPF coverage to certain types of properties and setting limits on compensation payouts
The Bill will introduce a definition for “personal” insurance policy as one that is issued to a natural person. This will allow individuals using their personal properties (e.g. cars and homes) for commercial purposes to be protected under the PPF Scheme.
The MAS had proposed to implement, on a per policy basis, a cap of (a) S$50,000 for own property damage motor claims, under personal motor insurance policies, and (b) S$300,000 for property damage claims, under personal property (structure and contents) insurance policies. To implement this proposal, the Monetary Authority of Singapore (“MAS”) will be empowered under the Bill to prescribe in regulations caps on compensation payouts for certain types of insurance policies.
The introduction of the Bill follows public consultations conducted by MAS on the proposed changes:
- Consultation Paper on Proposed Enhancements to the Deposit Insurance Scheme and Legislative Amendments to the Deposit Insurance and Policy Owners’ Protection Schemes Act and Regulations (4 August 2017)
(“August 2017 Consultation Paper”)
- Consultation Paper on Review of Policy Owners’ Protection Scheme - Scope, Coverage & Operational Issues (18 April 2017) (“April 2017 Consultation Paper”)
- Consultation Paper on Proposed Amendments to the Deposit Insurance and Policy Owners’ Protection Schemes Act (11 September 2014)
On 17 May 2018, MAS released its Response to the feedback received on the consultation papers.
- Deposit Insurance and Policy Owners’ Protection Schemes (Amendment) Bill
- MAS Explanatory Brief
- MAS Media Release
- MAS Response