19 April 17 The Business Times by KENNETH LIM
PRIVATE-HIRE car owners who drive for Uber or Grab will be entitled to protection if their insurers collapse, under a proposal that the Monetary Authority of Singapore (MAS) is considering.
That proposal, as well as a cap on what can be paid out to policyholders when their insurers fail, are among a number of possible amendments included in a public consultation by MAS on the Policy Owners' Protection Scheme.
The scheme, which is administered by Singapore Deposit Insurance Corp, offers compensation to individual policyholders if their insurers go bust. The scheme is funded by the insurance providers, which each pay a risk-based fee calculated from the amount of protected liabilities and premium income it receives.
The last time the scheme was reviewed was in 2011, and the current consultation is part of an attempt to keep it up to date with today's circumstances.
The rise of businesses such as Uber and Grab, through which individual car owners can sign up to provide taxi services, has created uncertainty about whether the scheme's objective of protecting only personal policies extends to insured property (like cars) that are sometimes used for commercial purposes.
"In recent years, there are increasingly more examples where it is less clear if an insurance policy should fall into the 'personal' lines category," MAS said. "In other words, the line between personal and commercial usage has become blurred, especially in the case of personal motor insurance and personal property (structure and contents) insurance."
MAS is proposing to define the scheme's scope of "personal" insurance policies to include any policies that are "owned by a natural person". This would allow not just private-hire cars to enjoy the protections of the scheme but home offices as well.
MAS is also considering imposing caps on payouts under the scheme. The proposal will limit the payout to S$50,000 for damage to the policyholder's own property, such as personal motor insurance, and to S$300,000 for property damage claims for personal property insurance.
The proposed caps will still be able to fully cover more than 99 per cent of claims, MAS said. Imposing a cap, however, is a matter of prudence to ensure that the S$32 million Policy Owners' Protection Scheme fund is not overly exposed to high-value property damage claims.
The proposals also include legislative amendments to cover riders attached to eligible annuities and non-voluntary group policies. Riders are currently not covered for those types of policies.
Another proposal considers what happens if an insurer collapses and there are no suitable buyers for the insurer's policies and it is deemed preferable to terminate a policy. In such instances of "forced surrender", MAS is proposing to waive surrender penalties.
Many of the other proposals involve clarifying ambiguities in the current rules or codifying existing practice.
For example, MAS is proposing not to extend the scheme's coverage for pure accident and health policies to bundled products that also include other kinds of benefits, such as a pleasure craft policy that includes public liability and property loss.
MAS is also seeking to clarify the scheme's coverage of death benefits that are linked to the net value of underlying assets. The regulator is seeking to clarify that the scheme's coverage extends only to guaranteed benefits, not variable ones, unless the variability is a ratchet that sets a minimum amount. Since there is a minimum benefit that is guranteed, that policy will be covered by the scheme.