MAS to revamp policy owners' protection scheme

MAS to revamp policy owners’ protection scheme | Insurance Business Asia

Insurance News

MAS to revamp policy owners’ protection scheme

Changes are to align the scheme with evolving market dynamics

Insurance News

By
Kenneth Araullo

The Monetary Authority of Singapore (MAS) is currently inviting public feedback on a series of proposed amendments to the Policy Owners’ Protection Scheme (POP Scheme) aimed at enhancing its coverage, simplifying its structure, and boosting its operational efficiency. These changes are part of MAS’ ongoing commitment to align the scheme with evolving market dynamics.

“A robust Policy Owners’ Protection Scheme complements MAS’ continued supervisory and regulatory efforts to maintain trust and confidence in Singapore’s insurance sector,” said Marcus Lim, MAS banking and insurance assistant managing director.

In the consultation, one key proposal involves expanding the scheme’s coverage. This includes incorporating mandatory third-party liability insurance required under the Active Mobility Act 2017, which businesses purchase for specific mobility devices like bicycles and motorised wheelchairs. Another addition is the coverage of personal travel insurance policies purchased by corporates, such as employers or travel agencies, where payouts are due to individual travellers.

MAS also plans to increase clarity and transparency for consumers by providing a detailed list of covered and excluded benefits for various specified personal line insurances. Direct general insurers, members of the scheme, will be required to clearly outline the non-covered benefits in their policy documents.

Furthermore, to facilitate prompt claim settlements, MAS suggests extending the scheme to cover claim events, excluding surrenders, even after the insurer enters liquidation. This aims to reduce disruptions for consumers as liquidators seek continuity solutions for protected life insurance policies.

In terms of simplifying the scheme’s design, MAS is considering a standardised methodology for calculating refunds of unused premiums for protected general insurance policies. This uniform approach is expected to ease consumer understanding and accelerate refund processing.

Another proposed change involves a more straightforward method for calculating the maximum benefits protected under the scheme for whole life, endowment, and term policies. This approach, focusing solely on the aggregate guaranteed death benefits, aims to ensure that policy owners with total guaranteed death benefits of up to S$500,000 per life assured do not experience a reduction in their aggregate death benefits, a potential issue under the current system.

Collaboratively working with the Singapore Deposit Insurance Corporation Limited (SDIC), MAS has refined the processes for operationalising scheme payouts in the event of insurer failure. This includes clarifying the roles and responsibilities of MAS, SDIC, scheme members, and liquidators across various payout scenarios to prevent unnecessary delays.

Other proposals include setting a reasonable time limit for reporting eligible claim events under the scheme. This measure balances policy owners’ interests with the need to minimise administrative costs.

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