PIDM’s Role in Malaysia’s Financial System

What is the role of PIDM (Perbadanan Insurans Deposit Malaysia)? Did you know that PIDM does more than just protect your money in your savings account in Malaysia? An in-depth look at PIDM including the intricacies of the Deposit Insurance System, and Takaful and Insurance Protection System (TIPS).

Contents

About PIDM

Government agency established in 2005 under Akta PIDM
Administers Deposit Insurance System (DIS) and Takaful and Insurance Benefits Protection System (TIPS)
Provides insurance against loss of deposits in members banks
Provides incentives for sound risk management in the financial system
Promote or contribute to the stability of financial system
Pronounced as P-I-D-M and not “pi-dum”

Vision: To be a best practice financial consumer protection and resolution authority

Deposit Insurance System (DIS)

PIDM protects bank deposits up to RM250k per depositor per member bank in the event of a member bank failure.
Member banks: all commercial banks licenses under FSA 2013 and Islamic banks licensed under IFSA 2013.
Provided automatically with no registration or application required.
RM250k limit applies separately to conventional and Islamic deposits covering both principal and interest/returns.
Joint accounts, trust accounts and company accounts all enjoy separate RM250k deposit insurance protection.
If a bank merger occurs, RM250k separate coverage will be applicable for up to two years.
Exclusions: Conventional structured products that are not principal-guaranteed, deposits not payable in Malaysia, negotiable instruments of deposits, unit trusts, stocks/shares, gold investment accounts.

Takaful and Insurance Protection System (TIPS)

PIDM protects insurance policies and takaful certificates in event insurer member fails.
Insurer member: all takaful operators under IFSA 2013 and insurance companies, including locally incorporated subsidiaries.
Non-members: reinsurance companies and takaful operators, international takaful operators, financial guarantee insurers, offshore insurance companies.
Provided automatically with no registration or application required.
Exclusions: takaful certificates and insurance policies in foreign currency, losses due to acts of dishonesty, damage payable for professional negligence, investment portion of ILP.
Benefits limit (as below) applies for each individual/group certificate/policy except if same insurer member + same risk event + same life assured/policy owner.

Family Takaful/Life Insurance Benefits Limit

Death: RM500k
Permanent disability: RM500k
Critical illness: RM500k
Maturity value (Excluding ILP units): RM500k
Surrender value: RM500k
Accumulated cash dividends: RM100k
Disability income: RM10k monthly
Annuity income: RM10k monthly
Medical expenses: 100% incurred
Refundable prepaid premiums: 100% amount prepaid

General Takaful/General Insurance Benefits Limit

Loss/damage to property: RM500k per property/vehicle/ship/aircraft
Death: RM500k
Permanent disability: RM500k
Critical illness: RM500k
Disability income: RM10k monthly
Medical expenses: 100% incurred
3rd party indemnity claims: similar to above
Refundable prepaid premiums: 100% amount prepaid

Recovery and Resolution Planning (RRP)

PIDM is the resolution authority in Malaysia for member banks and insurer members. Bank Negara and PIDM works closely for implementation considering each financial institution (FI) working collaboratively. PIDM has a range of legislative powers to intervene early in distressed member institutions to mitigate the possibility of a member institution failure. If necessary, once a member institution is deemed no longer viable by Bank Negara Malaysia, PIDM can assume control over the institution, transfer to another FI, or take such intervention action to resolve the member institution in a manner that minimizes costs to the financial system.