Central bank to offer more protection for insurance policyholders

Authority plans to include more people in the insurance protection scheme, but will impose a cap on claims values

Central bank to offer more protection for insurance policyholders

Insurance News

By Gabriel Olano

The Monetary Authority of Singapore (MAS) is expanding its scheme that protects policyholders in case of insurer insolvency to cover even private property used for commercial gain, such as Uber and Airbnb.

The initiative to strengthen the Policy Owners' Protection (PPF) Scheme was created in response to the growing trend of Singaporeans using their dwellings or vehicles to generate extra cash.

According to the MAS, these owners deserve to be protected by the PPF scheme, which will protect both life and general insurance policyholders in case the company fails.

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The MAS is also proposing to institute a cap for motor and property damage claims under the PPF, to avoid instability that may be caused by paying out extremely expensive claims, such as that for a sports car or a high-end residential property. The cap will help keep costs affordable for PPF member companies and consumers.

A cap of SGD50,000 for motor insurance claims and SGD300,000 for property damage claims is being eyed, reports the Straits Times. The PPF scheme has a target fund size of approximately SGD32 million.

“The caps have also been calibrated for the PPF Scheme to fully cover more than 99% of such claims, based on industry data over the past few years,” said the MAS in a statement. “The introduction of caps is also aligned with practices in other jurisdictions which have in place similar schemes.”

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