SINGAPORE: More small depositors will get insurance coverage, while private-hire drivers who use their own vehicles will be extended insurance protection after an amended Bill was passed in Parliament on Monday (Jul 9).
The Deposit Insurance and Policy Owners' Protection Schemes (Amendment) Bill 2018, which provides a basic level of protection to small depositors, will insure up to S$75,000, up from the current S$50,000.
“While there is no international standard on the level of coverage, our objective is to ensure that a vast majority of depositors should be fully covered,” said Education Minister Ong Ye Kung, who is also a Monetary Authority of Singapore (MAS) Board member.
He was speaking during the Second Reading of the Bill, on behalf of Minister-in-charge of MAS Tharman Shanmugaratnam.
Mr Ong said that a survey by the International Association of Deposit Insurers found that the international norm is to fully cover about 90 per cent of all insured depositors. When MAS raised the limit to S$50,000 in 2011, it fully covered over 90 per cent of insured depositors, he said.
However, since then, incomes have grown and savings have also increased, meaning that S$50,000 fully covers about 87 per cent of insured depositors today, he added.
“Increasing the limit to S$75,000 will restore the percentage of fully insured depositors to above 90 per cent, ensuring that the Deposit Insurance Scheme continues to serve its objective,” he said.
To support the higher coverage limit of S$75,000, the annual premium contributions to the Deposit Insurance Fund - which supports the Deposit Insurance scheme - will be raised by up to 1 basis point per scheme member.
POLICY OWNERS’ PROTECTION SCHEME
The Policy Owners’ Protection Scheme was set up in 2011 to cover commonly purchased insurance policies. The scheme provides compensation for life, accident and health, and also motor, personal property and travel insurances, in the event that the insurer fails.
The Bill will introduce a definition for “personal” insurance policies which will effectively extend protection to claims on damage to properties owned and used by individuals, even if these properties are sometimes used for commercial purposes.
“This change addresses a potential protection gap today, given that more individuals are using their personal properties for commercial purposes, such as using their cars to provide private-hire transport services,” Mr Ong said.
The Bill will also give MAS the flexibility to prescribe caps on compensation payouts for specific classes or types of policy or claim event insured under the scheme. Currently, the fund could potentially be exposed to very large claims, which could translate into higher premium rates for all consumers, Mr Ong said.