THE SPANISH INSURANCE GUARANTEE SCHEME Ignacio Machetti Consorcio de Compensación n de Seguros General Manager

Transcription

1

2 THE SPANISH INSURANCE GUARANTEE SCHEME Ignacio Machetti Consorcio de Compensación n de Seguros General Manager European Commission Public Hearing on Insurance Guarantee Schemes Brussels, june 2nd, 2008

3 GENERAL CONTENTS I. The Consorcio de Compensación de Seguros 1. Legal nature and Structure 2. Functions: Guarantee Schemes II. The Winding-Up activity: a virtual IGS 1. CCS s functions 2. Spanish system 3. Characteristics and main indicators 3

4 I. THE CONSORCIO DE COMPENSACIÓN N DE SEGUROS 4

5 1. Legal nature and structure The CCS is a PUBLIC BUSINESS INSTITUTION Own legal personality Own assets (independent from the State s) Subject to laws regulating privates insurance companies Board of Directors: : Peer Private-Public Public - 9 members from private insurance companies - 9 members from the Government 5

6 2. Functions INSURANCE DUTIES 1 EXTRAORDINARY RISKS SYSTEM Direct Cover (Natural perils, terrorism) AGRICULTURAL INSURANCE SYSTEM Coinsurance (10%) Reinsurance POOL AGROSEGURO 2 Guarantee Schemes 3 COMPULSORY HUNTERS LIABILITY INSURANCE Direct Cover (*) Guarantee Fund COMPULSORY MOTOR VEHICLE INSURANCE Direct Cover (*) Guarantee Fund COMP. TRAVELLERS ACCIDENT INSURANCE Direct Cover (*) Guarantee Fund (*) When the applicant has been rejected by a private insurance undertaking 6

7 NON-INSURANCE DUTIES Winding-Up Activity Export Export Credit Insurance Credit Insurance Funds Management Funds Management Prevention Prevention - - FIVA FIVA (Insured (Insured Vehicles Vehicles Registry) Registry) - - Information Information Centre Centre (4th (4th Directive) Directive) 7

8 II. THE WINDING-UP ACTIVITY: A VIRTUAL IGS 8

9 1. CCS s functions a) Winding-up of insurance companies (except voluntary solvent processes) b) Administrator of the Bankruptcy processes on behalf of the Creditors (according to the Law, one of the three Administrators) When designated by: -Minister of Economy and Finance (nationwide undertakings) - Autonomous Regional Government (local undertakings) By Law 9

10 TWO MAIN TARGETS IN WINDING-UP PROCEEDINGS 1. Accelerating the winding-up proceedings, while taking on the corresponding expenses. 2. Increasing the amounts recoverable by policyholders, beneficiaries or injured third parties, by applying certain legal improvement measures (a general minimum is not yet legally recognised; exception: motor and other compulsory lines). 10

11 2. Spanish system 1. Insurance claims shall, with respect to assets representing the technical provisions, take absolute precedence over any other claim on the insurance undertaking (Option A of Directive 2001/17/CE). 2. In addition, insurance claims shall also take absolute precedence with respect to assets on which the supervisory authority has adopted the measure of prohibition of disposition (with the exception of assets subject to rights in rem). 11

12 Winding-up proceedings by CCS 1. Insurance contract claims 2. Employment contract claims 3. Remaining claims Insureds and Policy holders Beneficiaries Third injureds 12

13 1. Insurance contract claims Purchase of credits Settlements anticipation, much before the end of the proceedings Improvement of the amounts recoverable (with respect to the amounts resulting from the Balance sheet) Aplication of legal improvement measures 13

14 Winding-Up benefits for the insured CCS pays a higher percentage of the credits arising from insurance contracts than what would result from a private liquidation. This results from applying the following IMPROVEMENT MEASURES: IMPROVEMENT MEASURES 1. Listing all amounts claimed from third parties as assets 3. Not considering credit preference when determining the percentage to be paid 2. Valuing financial investments at the highest possible rate (accounting value versus cash value) 4. Not considering winding-up expenditures anticipated by CCS 14

15 2. Employment contract claims Purchase of claims by employees Advanced payment, without waiting for the final winding-up plan Total payment with no precedence consideration 15

16 3. Remaining claims The CCS will not exercise its right to winding-up expenses, in favour of the creditors Par conditio creditorum principle maintained 16

17 3. Characteristics and Main Indicators 1. Economical resources of the CCS Surcharge of 0.3 % on policy premiums (except life assurance) Soon to be reduced to 0.1% Recoveries from final winding-up Balance sheets Financial investment yields Winding-up activity Funds as for December 31st, 2008: 1,230 million 17

18 2.Advanced expiry of the policies - Reasons for the adoption of this measure: To avoid a greater debt on the part of the companies. To avoid the chaos that would ensue when a company being wound up continues to insure. - Consequences: Obligation to return the unearned premiums corresponding to the unconsumed period. 18

19 3.Winding-up activity main indicators (since 1984) Number of insurance undertakings wound up by the CCS: 268 (+ 8 banruptcy proceedings) Number of insurance-related creditors satisfied by the CCS until december 2007: 760,000 Total amount of credits due: 624 million Average percentage of pay-out of credits over time: 75.09% of the amounts due. Percentage of amounts satisfied in the last three years: 100% of the amounts due. 19

20 Distribution according to branches of insurance in which the companies in winding-up and bankruptcy proceedings acted BRANCH Nº of Companies OTHER THAN LIFE INSURANCE 181 Health Care 83 Vehicles 64 Credit and Guarantee 2 Other Branches 32 LIFE 10 REINSURANCE 5 MUTUAL FUNDS 80 Total

21