The policy owners' protection fund (PPF) scheme is an industry funded compensation scheme for insurance policy owners. It will reduce the financial impact on individuals if there is an insurer failure or default. This scheme will enhance policy owners' confidence in the insurance industry and limit the potential disruption to society and the economy.
MAS is reviewing the PPF scheme, which has been in the Insurance Act since 1985, to ensure that it is still relevant. There are two phases to the review. The first phase of the review covering issues on membership, coverage and funding of the PPF scheme has been completed. We have finalised details of the recommendations, taking into account the feedback received from the public consultation in December 2005.
Some of the key changes to the PPF scheme include:
- extending PPF coverage to all accident & health policies written in the life or general insurance fund;
- extending PPF coverage to certain selected personal lines insurance policies such as personal motor insurance, personal property insurance and foreign domestic worker insurance;
- setting up a credible pre-funded PPF by imposing risk-based levies on participating insurers; and
- allowing risk-based levies to be charged to the insurance fund, subject to certain limits
The second phase of the review will focus on the implementation details of the PPF scheme. This covers the structure, organisation and mandate of the PPF administrator, the payout procedures and public education. MAS will conduct another public consultation on these issues before the implementation of the revised PPF scheme.