By Bhupinder Singh
The Perbadanan Insurans Deposit Malaysia (PIDM), which administers the deposit insurance system, is proposing to increase the deposit insurance limit from RM60,000 per deposit per member bank to RM250,000 per deposit per member bank effective January 2011.
The PIDM plans to advance a legislative package to the tabled in Parliament for debate and enactment before year-end as part of government backed measures to enhance financial consumer protection in the country.
The government deposit guarantee will lapse at the end of this year and the new guarantee limit proposed by PIDM will replace it as the higher limit level will provide protection to 99% of depositors.
The premium is paid by the financial institutions annually and the PIDM collected some RM131.8 million in premiums at the end of last year when its total Deposit Insurance Funds amounted to RM369.9 million, with the Conventional Deposit Insurance Fund totaling RM320.9 million and the Islamic Deposit Insurance Fund of RM49.0 million.
The PIDM intends to develop legislation to introduce an explicit Insurance Compensation Scheme (ICS) for insurance and takaful policy holders as well.
The ICS, which will be administered by PIDM, is a scheme designed to protect policy holders from the loss of their policy claims or insured benefits in the unlikely event of a failure of an insurance or takaful company.
Hence, the ICS will ensure policy holders of the 14.4 million or so policies in force till the end of 2009, be it insurance and takaful products, will also enjoy the same level of protection provided by PIDM to depositors of commercial banks and Islamic banks.
“The proposed ICS will enhance financial consumer confidence and promote consumer demand for insurance and takaful products,' PIDM said in a statement yesterday.
PIDM will hold discussions with the various stakeholders on the ICS before its tabled to the government.
[The Malaysian Reserve, 12 May 2010, page 1]