A scheme that protects policyholders if their insurer goes belly up may soon be extended to cover private property and vehicles that owners may sometimes use for commercial gain, such as driving for Uber.
The move to broaden the Policy Owners' Protection (PPF) Scheme reflects the growing trend for people to generate extra cash from their homes or cars. The Monetary Authority of Singapore (MAS) yesterday said such people deserve protection under the PPF Scheme, which protects policy owners if a life or general insurer that is a scheme member, fails.
Another key proposal is to exclude certain high-value property damage claims from protection under the PPF Scheme. There are now no caps for general insurance policies under the scheme as it provides 100 per cent coverage.
But the MAS noted that unless caps are imposed, the PPF Scheme, which has a target fund size of around $32 million, could be exposed to huge payouts.
It cited the risks that claims for damage to an expensive sports car or a high-end residential unit could pose for the PPF Scheme. The MAS proposes to impose a cap of $50,000 for own property damage motor claims, under personal motor insurance policies, and a $300,000 cap for property damage claims, under personal property (structure and contents) insurance policies. Own property damage motor claims refer to damage inflicted on your car, which is insured under your name.
The MAS said "the caps will help keep PPF levies and insurance premiums affordable for the scheme members and consumers". "The caps have also been calibrated for the PPF Scheme to fully cover more than 99 per cent of such claims, based on industry data over the past few years. The introduction of caps is also aligned with practices in other jurisdictions which have in place similar schemes," it added.
General Insurance Association (GIA) chief executive Derek Teo backed the proposals: "This is a positive move. Individuals who own cars under their names and use them for hire and rewards will enjoy a wider protection and have an opportunity to recoup their losses, if the insurer goes belly up. Otherwise, they get nothing."
Imposing the caps is a "prudent move without which the liability aspect will be astronomical", he said.
A consultation paper has been issued detailing the above proposals. Feedback would need to reach the MAS by May 19. The PPF Scheme, which was last reviewed in 2011, is administered by the Singapore Deposit Insurance Corporation.