How are they protected their premiums if your insurer bankruptcy?

May 22, 2011 | In: insurance

The fear of a bank failure has caused everyone to know because your bank savings are guaranteed up to 100,000 euros per account holder and, like stock investments. But what if that bankruptcy is an insurer? What happens to the premiums that had been paying for years to protect you and yours? Even in cases of natural inclement, in which basic insurance does not cover these contingencies, who is responsible for ensuring?

The recent earthquake in Lorca has put on the table the need to “know”, says Manuel Pardos, President of the Association of Users of Banks, and Insurance (Adicae) on the operation of such products to be paying for a long time, but, fortunately, rarely uses them. “The claims experience shows that the interpretation of the clauses of the insurance are very complex,” said Manuel Pardos. Therefore, claims that “there is a problem of interpretation of these contracts, which should be more generous” by the companies.

The product coverage of the insurance industry is different from that enjoyed both securities (accounts, deposits, etc.) As securities (stocks, funds, etc.). The Insurance Compensation Consortium, an agency under the Ministry of Economy, is in charge of the liquidation of insurers that are in bankruptcy and start a bankruptcy.

No previous limit

The difference of the Consortium in respect of bank guarantee funds is that there is no legal limit for the concerned to collect at least a portion of premiums that have been paying over time. However, the agency sources say that 100% of the cases brought, the Consortium has been able to address these settlements. That is, it has been possible to cover the entire insurance value would correspond to charge.
To finance, applies a surcharge of 1.5 per thousand (0.15%) on the premiums paid on all contracts of insurance, except life and the export credit, which have a tax status.

Up to four years

The liquidated assets of the Partnership is conducted in three phases. In the first, which takes approximately nine months, we collect all the information you provide creditors, including customers of the insurer. In this phase, and develops a balance sheet.
In the second phase, estimated to last two to three years, making the purchase of credits, fix the liability of the insurer and prepares the settlement plan. And in the last stage (six months), it celebrates the meeting of creditors, payments are made for those affected and eventually extinguished the entity.

While operations are generally not too well known, are performed each year in insurance settlements. Specifically, in 2009 (latest data available), started 13 settlement process, which had to add another 36 that were pending to extinguish, from previous years.

Special damages

On other occasions, are the events that occur in an extraordinary way that can cause such great damage to the insured that the law protects them with a special coating.
In particular, it is cases such as floods (including damage caused by the ravages of the sea), atypical cyclonic storms (including tornadoes), earthquakes, tsunamis, volcanic eruptions and fall of astronomical bodies.

In these cases, the Insurance Compensation Consortium damages if certain conditions are met. For example, it is necessary that the affected compensation request “as soon as possible”, as indicated from this organism, although there is no specific deadline to do so.
This operation can be conducted by telephone or Internet, and will have to provide certain key data for the process. Among the required documents are the details of the policy and personal identification, among others.

Besides the extraordinary risks and liquidated assets, protection of insurance in Spain that is done through the Consortium also focuses on the Civil Liability Compulsory Motor Subscription for vehicles whose insurance has been rejected by the entities ; _en farming, through its 10% participation in the Combined Agricultural Insurance (SAC) and for fire coverage, and through reinsurance credits, a starting role two years ago.

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