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MAS proposes caps on policy owners' protection scheme to keep levies, premiums affordable (Amended)
THE Monetary Authority of Singapore (MAS) is proposing caps on policy owners' protection scheme (PPF Scheme) to keep levies and premiums affordable.
The central bank said on Tuesday that the caps will also be calibrated to fully cover more than 99 percent of claims, based on industry data over the past few years.
"The introduction of caps is also aligned with practices in other jurisdictions which have in place similar schemes,'' MAS said in its public consultation release.
The PPF Scheme provides compensation to policy owners for all life insurance policies and certain general insurance policies in the event of default of any licensed direct life or general insurer. 'Certain general insurance policies' refer to accident and health policies, insurance that are required by law, and Singapore policies of specified personal lines, such as personal motor and personal property (structure and contents) insurance.
The PPF Scheme was last reviewed in 2011, following enactment of the Deposit Insurance and Policy Owners' Protection Schemes Act.
"Given the evolution of the insurance landscape in terms of product design, consumer preferences and market practices, the (MAS) has decided to review the design of the PPF Scheme and ensure its continued relevance,'' MAS said, adding that the review also aims to clarify the scope, coverage and operation of the PPF Scheme.
A key proposal is to exclude certain high value property damage claims from protection under the PPF Scheme. Specifically, MAS proposes 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.
It is also proposing that a "personal" insurance policy be defined as one that is owned by an individual.
"...this will allow claims on damage to properties owned and used by individuals to be protected under the PPF Scheme, even if these properties are sometimes used for commercial purposes,'' MAS explained.
Examples of such properties include privately owned cars used for hire and reward and home offices. This proposal recognises the growing trend of individuals using their personal properties for commercial purposes, who nonetheless deserve protection under the PPF Scheme.