THE limit for deposit insurance coverage in Jamaica is to be increased from a maximum $600,000 to $1.2 million.

The Regulations Committee of the House of Representatives made the decision on Tuesday, and a report was tabled on the same day by chairman of the committee and Deputy Speaker of the House of Representatives Franklin Witter.

The motion was originally moved by current House Leader Karl Samuda in May 2016, and then by Witter, and later referred to the Regulations Committee on June 30, 2020.

The nine-member committee needed just one meeting on July 21, prior to the sitting of the House, to approve the 100 per cent increase in the deposit limit to be covered by insurance.

The Standing Orders of the House of Representatives require that the Regulations Committee shall have the duty of considering all such regulations as defined in the Interpretation Act and are subject to negative resolution.

Deposit insurance is the provision of a guarantee to depositors in banks and other financial institutions that some part of, or all of their deposits will be returned to them if a deposit-taking institution which holds their deposit becomes insolvent and is unable to pay.

The Deposit Insurance Scheme covers the depositors of member institutions up to a maximum of $600,000 per depositor, per insured institution. At this limit, approximately 97 per cent of deposit accounts in member institutions are fully covered under the scheme.

Deposit accounts held in different ownership categories are covered separately, each up to the $600,000 limit. The account ownership categories are: Individual (single owner) accounts, joint accounts, company accounts, trust accounts, and nominee accounts. Deposit accounts in foreign currencies are also covered up to the $600,000 limit. Payments on foreign currency accounts are in Jamaican dollars.

Deposit accounts covered by the Deposit Insurance Scheme include: savings and chequeing accounts, certificates of deposit (CDs), time deposits, and shares in a building society.

In the event of the failure of a member institution, the JDIC must pay depositors the balances in their accounts, up to the maximum limit of J$600,000 under the current regulation, but this figure will be increased to $1.2 million when the new regulation comes into effect. Depositors are automatically covered under the scheme and are not required to pay premiums or make any form of contribution to the scheme in order to be covered. Depositors are also not required to make a claim on the JDIC as the corporation will calculate payments based on the records of the failed member institution.

The JDIC manages the Deposit Insurance Fund, which is primarily made up of annual premiums collected from member institutions and investment income. It is from this fund that depositors will be paid if there is a policyholder failure.

Investment, securities, and insurance companies and the products they offer are not covered under the Deposit Insurance Scheme. These institutions are licensed and regulated by the Financial Services Commission.