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MAS Proposes Policy Owners' Protection Fund

SINGAPORE: Players in the insurance industry here may have to contribute to a fund to compensate policy owners in the event an insurer defaults.

That is a proposal that the Monetary Authority of Singapore (MAS) is considering in a bid to strengthen the protection of insurance policy owners.

MAS said a proposed Policy Owners' Protection Fund (PPF) will help to alleviate the loss of insurance coverage to policy owners. It is also of the view that such a fund will limit the potential disruption to the society as well as the economy, and will enhance public confidence in the sector.

Among the proposed changes, the PPF schemes will provide 100 per cent coverage of protected liabilities for all life as well as accident and health policies.

The PPF will be administered by the Singapore Deposit Insurance Corporation (SDIC). Member institutions will be assessed once a year for the PPF levies and the minimum levy is S$2,500 per annum.

This is not the first time that such an idea has been broached. In December 2005, MAS issued a consultation paper on the first phase of the PPF review, covering issues relating to membership, scope and funding.

This latest consultation issued on Wednesday revisits some of the issues covered then and takes into account developments since then.

The latest proposals come a year after troubled US insurer AIG nearly collapsed, causing much anxiety to many policy owners here and around the world.

In conjunction with the review of the PPF schemes, MAS also intends to enhance its powers relating to the resolution of insurers.

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