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Singapore proposes changes to insurance protection scheme

The Monetary Authority of Singapore (MAS) has proposed imposing caps on an insurance protection scheme to keep both industry levies and consumer premiums affordable.19 Apr 2017

Singapore's Policy Owners' Protection Scheme (PPF scheme) is designed to protect policy owners if life insurance or general insurance providers fail. Insurers pay a levy to be a member of the scheme.

To make sure that the scheme remains "relevant in the face of market developments", MAS has issued a consultation paper proposing that the scheme should exclude some high-value property damage claims from protection. This would involve a cap of S$50,000 (£28,000) for own-property damage motor claims under personal motor insurance policies, and S$300,000 for property damage claims under personal property insurance policies.

These caps would help keep PPF levies and insurance premiums affordable for scheme members and consumers respectively, MAS said.

"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," it said.

The consultation paper also suggests that a 'personal' insurance policy should be defined as one that is owned by an individual. That would allow claims on damage to property owned and used by an individual even if it is sometimes used for commercial purposes, such as cars sometimes used for hire, 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," MAS said.