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The Policy Owners’ Protection Scheme and your general insurance policy explained

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What is the Policy Owners’ Protection Scheme (PPF)?

The scheme, set up by an act of parliament, protects insurance policyholders should their general insurance company fail, for instance, if it becomes bankrupt.

The Singapore Deposit Insurance Corporation (SDIC) administers the PPF Scheme in Singapore. The SDIC board is accountable to the Minister in charge of the Monetary Authority of Singapore (MAS).

Are all policyholders protected?

All insurers registered by MAS to carry on direct life business (other than captive insurers) or direct general business (other than captive insurers or specialist insurers) are members of the Policy Owners' Protection (PPF) Scheme. MAS may, however, exempt life or general insurers from being members of the PPF Scheme. For a comprehensive list of insurance companies that are in the scheme go here. (Note Budget Direct Insurance is a member of the scheme and comes under the title Auto & General Insurance in the listing for direct general business.)

Are all my Budget Direct Insurance policies protected under the scheme?

Yes, your motorcar and motorcycle insurance policies, as well as travel insurance policies are all protected under the scheme.

What do I need to do to be covered under the PPF Scheme? Do I need to pay?

Coverage is automatic. There is no need to fill out any application form or pay any premium. Levies are paid by the insurance company. But do remember to keep your insurer updated on your personal details such as name, ID number, mobile number and address so that information or any payment can be sent to you promptly.

How will I be compensated by the Policy Owners’ Protection Scheme?

If your insurance company collapses and the Monetary Authority of Singapore (MAS) decides to activate the scheme’s funds, compensation will be made to the policy owners or claimants for claims incurred, up to 30 days after the winding up order , in respect of the policies covered. If the policy contracts expressly state policy owners’ entitlement to a refund of the premium, SDIC would refund policy owners the pro-rated premiums paid for the unutilised period of the insurance coverage . Policy owners can then seek alternative coverage from other general insurers.

What is my entitlement under this scheme if my insurance company (PPF member) fails?

In the event your general insurer fails and you have a claim to make under a general insured policy, your entitlement to compensation under this scheme is as follows:

  • For a compulsory insurance policy under the Motor Vehicles (Third Party Risks and Compensation) Act, the full amount of any liability of the failed insurer as provided for under the relevant legislation is payable.
  • For a general insured policy such as travel insurance, the full amount of liability of the failed insurer to the insured policy owner under the terms of the general insured policy is payable.

Caps or limits are only applicable to compensation paid out for general insured policies in the following instances:

  • limits specified under the law for compulsory insurance policies
  • S$50,000 for own property damage motor claims, under personal motor insurance policies

Rest assured, the caps are expected to fully cover more than 99 per cent of the claims, based on those made over the past few years.

Note, motor insurance policies bought by an individual will be covered even if the car or motorcycle is used for commercial purposes provided and such usage is covered by the insurance company.

How do I know if the compensation is activated under the scheme?

Official announcements will be made in the media and you may also be notified by your insurance company.

How am I paid compensation?

Arrangements will be made to pay out any compensation to policy owners and other relevant third parties entitled to compensation as soon as possible. Payment will be made by cheques, cashier’s orders or other electronic payment methods.

For more detailed information on the scheme go to Singapore Deposit Insurance Corporation website (www.sdic.org.sg).

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  1. https://www.sdic.org.sg/
  2. https://www.sdic.org.sg/sm_list/pp_scheme_members

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