Kuala Lumpur, 28 May 2015: Perbadanan Insurans Deposit Malaysia (PIDM) today re-affirmed the stability of the financial system when it released a statement reviewing its operations for its financial year ended Dec 31, 2014.
As the statutory body mandated by Parliament to protect financial consumers, PIDM administers six separate Funds under the Deposit Insurance System (DIS) and, the Takaful and Insurance Benefits Protection System (TIPS) which form a safety net for depositors and policy owners.
As part of the national financial safety net, PIDM noted that both DIS and TIPS have contributed to the stability of the financial system by providing an explicit guarantee for the deposits and the specified benefits of insurance and takaful policies underwritten by member institutions (MIs).
“Both DIS and TIPS have gone a long way to give consumers the peace of mind in that their deposits and relevant policy benefits are guaranteed. This bolsters confidence and, confidence is a critical factor in ensuring stability of the financial system,” said PIDM Executive General Manager Rafiz Azuan Abdullah.
“DIS, which guarantees up to RM250,000 per depositor per bank, effectively fully covers 99 per cent of depositors in our 43 member banks. TIPS, which guarantees up to RM500,000 or more per relevant insurance or takaful benefit, now fully covers 95 per cent of individual policy owners in our 43 insurer members,” he said.
Rafiz pointed out that the remaining one per cent of depositors and five per cent of policy owners were still covered – up to those specified limits. They had deposits of more than RM250,000 in any bank or policies with relevant benefits exceeding RM500,000.
In reviewing the year, PIDM reported it had successfully implemented its initiatives for 2014 towards fulfilling its statutory mandate of promoting and contributing to the stability of the Malaysian financial system.
“We made good progress in 2014, completing our key initiatives as set out in the Corporate Plan 2014 - 2016 within the Board-approved financial plan. Efforts were directed at enhancing the Corporation’s foundations as well as ensuring operational effectiveness and efficiency in providing protection to financial consumers,” he said.
The two Deposit Insurance Funds (DIFs) totalled RM973.1 million (up 27% from RM768.4 million in 2013) while the four Takaful and Insurance Benefits Protection Funds (TIPFs) stood at RM1,234.2 million (up 7 % from RM1,148.2 million in 2013).
The two funds under DIFs are the Conventional Deposit Insurance Fund (RM831.3 million) and the Islamic Deposit Insurance Fund (RM141.8 million).
Under TIPFs are four funds:
PIDM recorded a total revenues of RM374.7 million, comprising RM311 million in premiums, and RM63.7 million in investment income. Operating expenditure totalled RM83.9 million, which was RM17.1 million or 16.9% below budget. As a result, the Corporation’s net surplus for the year totalled RM290.8 million as compared to a budget of RM261 million.
Significant progress was also made in enhancing PIDM’s overall capabilities in risk assessment and monitoring of member institutions including the implementation of the Rating Prediction Model of the Early Warning System for member banks and enhancing the Risk Assessment System for insurer members.
“These are part of PIDM’s continuous risk assessment and monitoring function, and complement the existing risk assessment and monitoring framework for member institutions. Early detection of risks will allow PIDM to undertake prompt corrective measures for effective early intervention action in distressed member institutions, mitigating the possibility of a failure,” he added.
“In line with our mandate, PIDM also provides incentives for MIs to implement sound risk management practices via our premium assessment systems which will promote stability of the financial system,” Rafiz explained.
During the year, the Differential Premium Systems (DPS) for member banks was enhanced to better reflect the risks in the assessments of premiums, and the development of a Differential Levy System (DLS) for the takaful operators continued and will be completed in 2015 to replace the current flat-rate levy system. The DPS for member banks has been implemented since 2008, whilst the DLS framework for conventional insurer members was introduced in April 2013.
Moving forward, PIDM’s efforts will be directed towards achieving continuous operational effectiveness and long-term sustainability. Some of the key initiatives planned include the completion of the Target Fund framework for TIPS as well as the development and enhancement of the Information Regulations for TIPS and DIS respectively.
The Information Regulations require that MIs provide financial consumers with accurate, relevant and timely information about DIS and TIPS to make informed financial decisions about their deposits and insurance benefits. This would increase public understanding about the protection systems, particularly about the limits, coverage, and insured products and benefits.
“MIs are a vital channel in communicating these important information to their customers before they make key financial decisions, and hence we will be developing a compliance programme for our members to ensure the objectives of the Regulations are met,” Rafiz said.
Other initiatives to educate and enhance public awareness of PIDM, DIS and TIPS will continue, including briefings, road shows, training sessions, seminars and Train-the-Trainer sessions.
The Annual Report 2014 is available at the PIDM website (www.pidm.gov.my) in four languages – Bahasa Malaysia, English, Chinese and Tamil.
For more information about this press release, kindly contact:
Hasina Mohamed, Acting General Manager, Communications and Public Affairs Division
(Tel: 03-2173 7462; 012-347 5014 Email: firstname.lastname@example.org)
Juli Murshidah, Manager, Communications and Public Affairs Division
(Tel: 03-2173 7465; Email: email@example.com)
For further information:
PIDM protects your deposits in the bank as well as your takaful and insurance benefits in the unlikely event of a failure of a member bank or a takaful operator / insurance company.