JDIC COVERAGE LIMIT MOVES TO
$1.2 MILLION PER DEPOSITOR,
PER INSTITUTION.

Increased protection for depositors


The Jamaica Deposit Insurance Corporation (JDIC/the Corporation) was established in 1998 pursuant to the Deposit Insurance Act with a mandate to protect depositors through the establishment and management of a Deposit Insurance Scheme (DIS), and in so doing promote confidence and stability in Jamaica’s financial system.   Under the DIS depositors of commercial banks, building societies, and merchant banks are protected up to a prescribed amount for which they are reimbursed in case their insured financial institution fails or is unable to make payments on their deposits, that is the deposit insurance coverage limit.

Effective August 31, 2020 depositors will benefit from additional coverage under the DIS, as the deposit insurance coverage limit has been increased to $1.2M, up from the existing $600,000. The coverage limit was adjusted twice since the establishment of the JDIC; first in 2001 from $200,000 to $300,000 and then to $600,000 in 2007.


The JDIC periodically undertakes internal reviews of its deposit insurance coverage framework to ensure that it remains credible and adequately protects depositors and in determining an adequate coverage limit, the JDIC seeks to identify the right balance between depositor protection and maintaining market discipline.  


Generally, coverage limit adjustments are based on factors such as: type of deposit products; size of deposits; values of insured deposits to insurable deposits within the banking system; developments in the regulatory, Policyholders’ and wider macroeconomic environment, including inflation and exchange rate movements. In light of past trends in inflation levels and the foreign exchange movements in the Jamaican economy there was some significant erosion of the real value of the existing coverage limit from the last increase in 2007.  


At present the DIS has eleven member institutions, consisting of the eight commercial banks, two building societies and one merchant bank. Of note, membership in the DIS is compulsory for these institutions. At the new coverage limit approximately 97 percent of deposit accounts held by member institutions are fully covered. Coverage by JDIC is automatic at the time a depositor makes a deposit in their commercial bank, merchant bank or building society.  Depositors are not required to pay for deposit insurance or make a claim on the JDIC in the event of the failure of the institution.  JDIC will compute deposit insurance payments from the records of the institution and make payments to depositors based on the JDIC’s rules of coverage.  

To finance the DIS annual premiums are paid to the JDIC’s Deposit Insurance Fund (the Fund) by commercial banks, merchant banks and building societies, based on the insurable deposits they hold as at December 31st of each year.  The Fund, made up primarily of the annual premiums and investment income,  will be used to pay out depositors if their bank fails, or for any

other resolution strategy implemented by the authorities that is designed to protect depositors in the event of a financial crisis. At June 30, 2020 the Fund balance stood at $25.7 billion.


The JDIC CEO Antoinette McKain in speaking to the coverage limit increase stated that, “the Board and Management remains committed to the JDIC’s mandate for ensuring depositor protection that seeks to reflect the commercial expectations of the vast majority of depositors within the banking system and to provide this protection to all deposit taking financial institutions that will come under the regulation of the Bank of Jamaica. In this regard the JDIC continues to take steps to understand its various stakeholders, and in particular those it serves directly, being our financial system’s depositors. We continue to review the profile of depositors, their vulnerabilities and their consequent needs to be able to continue to enhance the design of the Deposit Insurance Scheme to meet those needs, for depositor confidence and financial system stability in Jamaica.”



Effective August 31, 2020 depositors will benefit from additional coverage under the DIS, as the deposit insurance coverage limit has been increased to $1.2M, up from the existing $600,000. The coverage limit was adjusted twice since the establishment of the JDIC; first in 2001 from $200,000 to $300,000 and then to $600,000 in 2007.

The JDIC periodically undertakes internal reviews of its deposit insurance coverage framework to ensure that it remains credible and adequately protects depositors and in determining an adequate coverage limit, the JDIC seeks to identify the right balance between depositor protection and maintaining market discipline.  Generally, coverage limit adjustments are based on factors such as: type of deposit products; size of deposits; values of insured deposits to insurable deposits within the banking system; developments in the regulatory, Policyholders’ and wider macroeconomic environment, including inflation and exchange rate movements. In light of past trends in inflation levels and the foreign exchange movements in the Jamaican economy there was some significant erosion of the real value of the existing coverage limit from the last increase in 2007.  

The Jamaica Deposit Insurance Corporation (JDIC/the Corporation) was established in 1998 pursuant to the Deposit Insurance Act with a mandate to protect depositors through the establishment and management of a Deposit Insurance Scheme (DIS), and in so doing promote confidence and stability in Jamaica’s financial system.   Under the DIS depositors of commercial banks, building societies, and merchant banks are protected up to a prescribed amount for which they are reimbursed in case their insured financial institution fails or is unable to make payments on their deposits, that is the deposit insurance coverage limit.


At present the DIS has eleven member institutions, consisting of the eight commercial banks, two building societies and one merchant bank. Of note, membership in the DIS is compulsory for these institutions. At the new coverage limit approximately 97 percent of deposit accounts held by member institutions are fully covered. Coverage by JDIC is automatic at the time a depositor makes a deposit in their commercial bank, merchant bank or building society.  Depositors are not required to pay for deposit insurance or make a claim on the JDIC in the event of the failure of the institution.  JDIC will compute deposit insurance payments from the records of the institution and make payments to depositors based on the JDIC’s rules of coverage.  

To finance the DIS annual premiums are paid to the JDIC’s Deposit Insurance Fund (the Fund) by commercial banks, merchant banks and building societies, based on the insurable deposits they hold as at December 31st of each year.  The Fund, made up primarily of the annual premiums and investment income, will be used to pay out depositors if their bank fails, or for any other resolution strategy implemented by the authorities that is designed to protect depositors in the event of a financial crisis. At June 30, 2020 the Fund balance stood at $25.7 billion.

The JDIC CEO Antoinette McKain in speaking to the coverage limit increase stated that, “the Board and Management remains committed to the JDIC’s mandate for ensuring depositor protection that seeks to reflect the commercial expectations of the vast majority of depositors within the banking system and to provide this protection to all deposit taking financial institutions that will come under the regulation of the Bank of Jamaica. In this regard the JDIC continues to take steps to understand its various stakeholders, and in particular those it serves directly, being our financial system’s depositors. We continue to review the profile of depositors, their vulnerabilities and their consequent needs to be able to continue to enhance the design of the Deposit Insurance Scheme to meet those needs, for depositor confidence and financial system stability in Jamaica.”

To JDIC Website

Drupal 7 Appliance - Powered by TurnKey Linux