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Deposit insurance coverage rises to S$75,000; gig workers gain insurance policy protection

DEPOSIT insurance will rise to S$75,000 to give savers more protection in the event of bank or finance company failure.

Insurance policy owners who use their cars or homes to generate income will now also be protected should their insurer go under.

Depositors and insurance policy owners will enjoy such enhanced protection from April 1, 2019, said the Singapore Deposit Insurance Corporation (SDIC) on Thursday. 

The latest changes to the deposit insurance (DI) and policy owners' protection (PPF) schemes protect deposits up to S$75,000 per depositor and extend protection to personal assets used for commercial purposes, it said.

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"The increase in deposit insurance coverage to S$75,000 from next Monday will ensure that more than nine out of 10 depositors will have their savings fully protected if a bank or finance company fails," the SDIC said.

"The existing limit of S$50,000 per depositor was set in 2011 and since then, with rising incomes and higher savings, the percentage of fully-covered insured depositors has come down to 87 per cent. Restoring this ratio to above 90 per cent will keep the DI coverage
in line with international norm", it added.

A key enhancement to the PPF scheme is the definition of a “personal” insurance policy as one that is owned by a person. This clarifies the scope of the PPF coverage for general insurance policies particularly at a time when the gig economy, where people are engaged in short-term contracts or freelance work, is on the rise and more people are using their own cars or homes to generate income.

"With the latest revisions, motor and property insurance policies bought by an individual will be covered even if the car or property is used
for commercial purposes," said the SDIC.

There will also be caps, on a per policy basis, for own property damage motor claims (S$50,000) under personal motor insurance policies and property damage claims under personal property insurance (S$300,000). The caps will cover more than 99 per cent of the claims, based on claims over the past three years, said the SDIC.

But policies that are not commonly purchased such as standalone golfer’s insurance or pleasure craft insurance will not be protected as the intent of the PPF scheme is to protect the insurance policies bought by majority of people while keeping premiums and levies affordable for consumers and PPF scheme members respectively.

SDIC CEO Denise Wong said: “The latest enhancements are necessary to keep the DI and PPF Schemes relevant to the changing needs of consumers and to provide adequate protection to depositors and policy owners in the unfortunate event that a scheme member
fails."

SDIC was established in 2006 to administer the DI scheme which protects the core savings of small depositors in the event of a failure of retail banks and finance companies in Singapore. The scheme protects deposits in savings, current and fixed deposit accounts that
are held with full banks and finance companies.

In 2011, it was appointed to administer the PPF scheme to protect policy owners of life insurance policies and certain general insurance policies in the event of failure of a life or general insurer. Such general insurance policies include accident and health policies, insurance that is required by law and Singapore policies of specified personal lines such as personal motor and personal property (structure and content) insurance.