PM Kevin Rudd has confirmed new protection measures for general insurance customers as part of his latest initiative to restore confidence in Australia's financial institutions.

The move to guarantee all bank deposits for three years, announced yesterday, goes further than the US and UK, which have imposed caps on their schemes. Insurance customers are also protected under the measures.

The Federal Government initially proposed a $20,000 cap for the Financial Claims Scheme, which will pay all valid insurance claims in full should a general insurer fail.

NIBA consultant John Hanks says the decision reflects Australia's strong regulation.

The policyholder protection scheme has been on the agenda for several years - it was recommended by the HIH Royal Commission - and has had a mixed initial response from insurers.

"The scheme wouldn't come into effect unless a company failed," Mr Hanks said. "If a company fails the Government will first try to recover funds from the company and secondly from the industry using a levy."

The PM's announcement came as the International Monetary Fund released its World Economic Outlook, showing the major advanced economies are already in or close to recession.

A World Economic Forum report confirms the strength of the local banking sector, rating Australia the fourth most secure system from 134 countries surveyed.

Mr Rudd says the collapse of superannuation savings is one of the impacts of what's happening in the global crisis.

"The impact of global financial markets on superannuation fund earnings has been massive and it's been ugly," he said.