The Monetary Authority of Singapore (MAS) is seeking public feedback on proposed changes to the policy owners’ protection scheme to enhance its coverage, simplify its design, and improve its operational efficacy.
These proposals are part of MAS’ regular reviews to ensure the scheme remains up to date with market developments. First, to enhance the protection for consumers, MAS proposes that the scheme be extended to cover:
(i) Mandatory third-party liability insurance under the Active Mobility Act 2017 that businesses purchase for specified mobility devices such as bicycle, personal mobility device, power-assisted bicycle, motorised wheelchair or mobility scooter; and
(ii) Personal travel insurance policies issued to corporates as the policy owner (e.g. an employer, travel agency, credit card company) where payouts are due to individual travellers.
For greater clarity and transparency to consumers, MAS will specify a list of benefits that are covered as well as not covered under the scheme for the various specified personal line insurance. Direct general insurers which are members of the scheme will be required to clearly state the benefits that are not covered in their policy documents.
To ensue that all claims are paid expeditiously, MAS proposes that the scheme be extended to also cover claim events, except surrenders, that occur even after the failed insurer has been put in the hands of liquidators. This will minimise disruption to consumers as liquidators explore options to ensure continuity of the protected life insurance policies, such as looking for buyers, or setting up a new company, to take over these policies.
Simplifying the design
MAS is proposing a standardised methodology for calculating refunds of unused premiums for protected general insurance policies, which can be used by policy owners to find alternative cover. Scheme members currently use different approaches to calculate such refunds. Standardising the approach will make it simpler for consumers to understand what to expect and can expedite the processing of refunds.
MAS is also proposing a simpler methodology for computing the maximum benefits that are protected under the scheme for the applicable whole life, endowment and term policies. The simplified methodology will rely on the aggregate guaranteed death benefits alone, and ensure that policy owners who currently have total guaranteed death benefits of up to SGD 500,000 ($372,922 ) per life assured, would not have their aggregate death benefits scaled down, which could be a possible outcome under the current methodology. The proposal will make the scheme easier to understand and operationalise.
Improving operational efficacy
MAS has worked closely with the Singapore Deposit Insurance Corporation Limited (SDIC) to improve on the processes needed to operationalise scheme payouts if an insurer fails. This includes clarifying the key roles and responsibilities of the parties involved, such as MAS, SDIC, scheme members, and liquidators. As the scheme is designed to cater for a range of payout scenarios, including transfer, run-off and termination, greater operational clarity under each scenario will help avoid undue delays in scheme payouts.
Other proposals in the consultation paper to enhance the operational efficiency of the scheme include introducing a time limit for reporting a claim event that is eligible for compensation under the scheme. The proposed time limit is nonetheless set reasonably long, to balance between policy owners’ interests and keeping the cost of administration low.
Marcus Lim, assistant managing director for banking and insurance at MAS, said: “A robust policy owners’ protection scheme complements MAS’ continued supervisory and regulatory efforts to maintain trust and confidence in Singapore’s insurance sector.”
Re-disseminated by The Asian Banker