Deposit Insurance, Free and Automatic

The Jamaica Deposit Insurance Corporation (JDIC) is reminding persons that deposit protection is an automatic, no-cost benefit for all depositors in regulated financial institutions.

In an interview with JIS News, Senior Corporate Communications Officer at the JDIC, Kadisha Sharp, noted that the entity protects depositors, particularly the most vulnerable, “by insuring their deposits up to a coverage limit of $1.2 million per depositor, per financial institution, per ownership category”.

The JDIC currently insures deposit accounts at commercial banks, merchant banks and building societies, ensuring a broad safety net for Jamaicans who rely on the formal financial sector.

Ms. Sharp noted that deposit insurance coverage is not limited to just one account or institution.

“If you are an individual depositor with accounts in multiple banks, your money is insured separately up to the maximum limit of $1.2 million per institution. And within each bank, different categories of ownership – individual, joint, business, or trust accounts are also insured separately,” she indicated.

This means that individuals who hold more than one type of deposit account at the same bank or across different insured institutions can benefit from multiple layers of coverage.

“Just to expound a bit, when I say that deposit insurance is per individual, per financial institution, per ownership category, what that means is that if you’re an individual depositor and you have a deposit account in Bank A you are insured up to the maximum coverage limit. If you also are a depositor that holds accounts in more than one bank insured by the JDIC, then your coverage is per institution,” Ms. Sharp said.

“Ownership categories refer to different types of accounts in banks, for example, it can be an individual account, which means that the person is the sole name on that account, a joint account which is an account that has two names on it, or there is more than one person listed on the account. It could be a business account for the purpose of your business, you can have a trust account, or you can have a nominee account to name a few,” she noted further.

Ms. Sharp reiterated that the coverage is automatic and free to depositors.

“Once you open a deposit account with any of our 11 member institutions, you automatically receive deposit insurance coverage. You don’t pay for this protection; instead, the financial institutions pay an annual premium to the JDIC to build and maintain the Deposit Insurance Fund,” Ms. Sharp explained.

The fund is what is used to reimburse depositors in the event of a financial institution’s failure, thereby providing a critical backstop for the banking system and preserving public confidence.

The JDIC encourages all depositors to know their rights and understand how deposit insurance works, especially as financial literacy becomes increasingly important in today’s economic climate.

The JDIC was established in 1998 following the financial sector crisis of the 1990s, which saw a number of banks going bankrupt and depositors losing their savings.