MAS to Beef up Protection for Insurance Policy Owners with Revised Schemeby Fintech News Singapore December 7, 2023
The Monetary Authority of Singapore (MAS) has announced its intention to revise the Policy Owners’ Protection Scheme.
This initiative, currently open for public consultation, is aimed at expanding coverage, streamlining the scheme’s design, and improving operational effectiveness.
The MAS suggests broadening the scheme to include mandatory third-party liability insurance for specific mobility devices like bicycles and motorised wheelchairs under the Active Mobility Act 2017.
Additionally, the scheme will now encompass personal travel insurance policies issued to corporations as the policy owner (e.g. an employer, travel agency, credit card company), ensuring protection for individual travelers.
To make the scheme more transparent, MAS plans to list covered and non-covered benefits in specified personal line insurance. General insurers participating in the scheme will be required to explicitly state excluded benefits in their policy documents.
Also, to expedite claim settlements, the scheme may now cover claims arising even after the insurer’s liquidation process begins, barring policy surrenders. This aims to reduce disruptions for consumers during liquidation.
Simplification of scheme design
MAS is also proposeing a uniform method for calculating refunds of unused premiums for general insurance policies, aiding policy owners in securing alternative coverage.
Another proposal includes a simplified calculation for maximum benefits under whole life, endowment, and term policies, based solely on aggregate guaranteed death benefits.
This ensures that policy owners with guaranteed death benefits up to S$500,000 per life assured do not experience reduced aggregate death benefits.
Enhancing operational efficiency
MAS, in collaboration with the Singapore Deposit Insurance Corporation Limited (SDIC), is refining the operational processes for scheme payouts in the event of an insurer’s failure.
This includes defining the roles and responsibilities of involved parties, like MAS, SDIC, Scheme members, and liquidators, for various payout scenarios.
Other operational improvements include introducing a reasonable time limit for reporting eligible claim events to balance policy owners’ interests with administrative cost efficiency.
The consultation paper is available for review, and MAS invites comments on the proposals until 16 February 2024.
Marcus Lim, Assistant Managing Director (Banking & Insurance), 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.”
In September, the regulator had designated AIA Singapore, Income Insurance, Prudential Assurance Company Singapore, and Great Eastern Life Assurance Company as the four domestic systemically important insurers (D-SIIs).
These four insurers would face higher capital requirements according to a D-SII framework that will come into effect on 1 January 2024 as parts of its efforts to strengthen the resilience of the financial sector.