CONSORCIO DE COMPENSACIÓN DE SEGUROS: THE CATASTROPHE INSURANCE PROGRAM IN SPAIN

Transcription

1 CONSORCIO DE COMPENSACIÓN DE SEGUROS: THE CATASTROPHE INSURANCE PROGRAM IN SPAIN Alfonso Nájera Sofia June 17, 2014

2 CCS: a tool at the service of the insurance market in which it is integrated Consorcio de Compensación de Seguros The institution. Main aspects Own legal nature public business institution attached to the Ministry of Economy and Competitiveness 1941: origins provisional solution 1954: permanent solution Full operational capability Subject to laws regulating private insurance companies CCS Legal Statutes (1991) Board of Directors Own assets independent from those of the State Equal private-public composition Premiums, Surcharges and investment returns Multi-functions Managing several insurance solutions Complementary and subsidiary role Cooperation with the market Private-public partnership

3 PRINCIPLES OF THE EXTRAOIRDINARY RISK INSURANCE SYSTEM SOLIDARITY MUTUALIZATION OF RISK UNIVERSALITY COMPULSORY ADVERSE SELECTION GEOGRAPHICAL COMPENSATION AMONG RISKS INTER ANNUAL COOPERATION INSURANCE INDUSTRY (SUBSIDIARY ROLE) AFORDABLE PRICES

4 WHAT ARE THE RISKS COVERED? THE EXTRAORDINARY RISKS NATURAL PERILS SOCIAL-POLITICAL PERILS Floods and the battering of the sea Storms (Tornadoes and gusts of wind > 120 km/h), Earthquakes and tsunamis Volcanic eruptions Terrorism Rebellion, insurrection, riots and civil commotion Actions of armed forces in peacetime Meteorites and sidereal bodies

5 HOW DOES CONTRACTING WORK? INSURANCE POLICY In lines of - Damage to property - Life and/or personal accidents Issued by insurance companies Coverage clause covering Extraordinary Risks has to be compulsorily included in policies of these lines 2 simultaneous contracts into the same policy ORDINARY RISKS (fire, theft, etc,) EXTRAORDINARY RISKS (flood, terrorism, etc,) Private insurer (free tariff) Consorcio de Compensación de Seguros Premium Compulsory surcharge

6 JOINT MANAGEMENT OF THE COVERAGE: CCS-INSURANCE INDUSTRY CCS covers the extraordinary risks through the ordinary policy issued by the company (taking into account the same amount insured and the same compensation conditions established in that policy) The private company manages the policy (issues the contract and collects the CCS surcharge jointly with its premiums) CCS manages the loss claims (adjustment included) and pays the indemnifications CCS does not directly issue any policy

7 HOW IS THE COVERAGE FINANCED? COMPULSORY SURCHARGE IN FAVOUR OF THE CCS A per thousand rate over the sum insured of the ordinary policy Insurance companies collect the surcharges together with their premiums Companies pay the surcharges to the CCS on a monthly basis Collecting commission retained by the companies is 5%

8 THE SURCHARGE TARIFF - Property insurance a,- Direct material damages Housing: 0.08 per thousand Offices: 0.12 per thousand Shops, shopping centres, other simple risks: 0.18 per thousand Industrial risks: 0.21 per thousand Motor vehicles: depending on type (i,e, 3.5 for a car) Civil works: rates range from 0.28 to 1.63 per thousand b,- Business interruption Housing: per thousand (on the amount insured for material damages) Other risks: 0.25 per thousand (on the amount insured for business interruption) - Accidents and Life insurance per thousand

9 WHAT LOSSES DOES THE CCS COMPENSATE FOR? PROPERTY ACCIDENTS AND LIFE Direct property damages (repair or replacement), Supplementary expenses (mud extraction; demolition and removal; rubble disposal and transport to landfill), Death, Permanent disability, Temporary disability, Business interruption, Only losses from events occurred in Spain + personal injuries from events occurred abroad

10 WHAT ARE THE COMPENSATION TERMS? References The same property or persons The same sum insured The same compensation conditions Established in the ordinary policy DEDUCTIBLES: Property damage (direct material damage) 7% of the indemnification amount, None for cars and housing, Business interruption The same deductible established in the ordinary policy Personal injuries No deductibles

11 LOSSES ASSESSMENT This task is made by experts designed by CCS They are professionals whose services are taken on in the market Number of experts designed: depending on the volume of the damage Experts are not CCS workers

12 COVERAGE FEATURES DEFINED BY LAW Legal security for customers QUALITATIVE BUT NOT QUANTITATIVE To determine the events entitled for compensation the system does not take into account: A minimum amount of total losses The number of insureds affected The size of the affected area AUTOMATIC COVER A previous official declaration about the catastrophic nature of the events is NOT required

13 EQUALIZATION RESERVE AND STATE GUARANTEE EQUALIZATION RESERVE A real Catastrophe Fund Endowed with annual profit after taxes 5.8 Bn (Dicc. 31st, 2013) RISK IS NOT TRANSFERED TO THE REINSURANCE MARKET STATE GUARANTEE Never made used

14 Exposures Number of policies and capital insured Property Persons Amounts in euros Year Policies Capital insured Year Policies Capital insured

15 Big events in terms of indemnification since 2000 Date Location Nº Event Payments Claims Octubre de 2000 C, Valenciana Inundación 6,897 88,684,035 R, de Murcia Inundación 2,042 11,649,259 TOTAL 8, ,333,294 Septiembre de 2001 C, Valenciana Inundación 3,425 40,755,281 Noviembre de 2001 Illes Balears T,C,A, y Embate de mar 7,029 37,203,397 Marzo de 2002 Canarias Inundación 1,899 41,378,684 Agosto de 2002 País Vasco Inundación 4,599 25,281,750 Marzo y Abril de 2004 C, de Madrid Terrorismo (11M) 1,264 50,516,297 Marzo de 2004 Andalucía Este Inundación 2,903 22,511,008 Septiembre de 2004 C, Valenciana Inundación y T,C,A, 8,795 38,863,164 Octubre de 2005 Cataluña Inundación y T,C,A, 5,329 51,821,376 Noviembre de 2005 Canarias Inundación y T,C,A, 15,482 98,042,083 Septiembre de 2006 Cataluña Inundación 3,873 66,129,734 Noviembre de 2006 Galicia Inundación 4,066 33,714,736 Diciembre de 2006 C, de Madrid Terrorismo (T4) ,449,108 Septiembre de 2007 C, Valenciana Inundación 4,484 34,289,293 Octubre de 2007 Illes Balears T,C,A, 9,516 47,475,785 Octubre de 2007 C, Valenciana Inundación 10,782 94,997,251 Junio de 2008 País Vasco Inundación 5,831 65,323,449 Enero de 2009 Varios T,C,A, (Klaus) 266, ,949,449 Septiembre de 2009 C, Valenciana Inundación 10,418 53,996,671 Diciembre de 2009 Andalucía Oeste Inundación 2,753 40,503,257 Enero de 2010 Varios T,C,A, (Floora) 39,400 47,577,108 Febrero de 2010 Varios T,C,A, (Xynthia) 39,386 57,395,347 Febrero de 2010 Andalucía Oeste Inundación 1,845 37,020,823 Junio de 2010 Asturias Inundación 2,740 45,361,653 Diciembre de 2010 Andalucía Oeste Inundación 3,437 54,567,787 Mayo 2011 Murcia Terremoto (Lorca) 28, ,232,166 Noviembre 2011 País Vasco Inundación 4,134 54,432,502 Septiembre de 2012 Sureste Peninsular Inundación y T,C,A, 25, ,311,183 Enero de 2013 Varios T,C,A, (Gong) e Inundación 17,935 20,172, ,729 5,148,625,939 Flood Basque Country August 1983 Amounts paid: 829 million Flood Storm Terrorism Earthquake Big event: losses above 20,1 million Updated

16 LOSSES INDEMNIFIED - NATURAL EVENTS PROPERTY Year AÑO INUNDACIÓN FLOOD EARTHQUAKE TERREMOTO STORM TCA ,737,327 89, ,752,353 4, ,384, , ,555,410 59, ,931, , ,409,260 92,875 2,718, ,064, , ,300,400 1,021, ,873,863 1,037, ,734, , ,947,317 1,790,384 2,912, ,389, , ,694,325 16,439,464 1,998, ,561,568 12, ,691,679 23,915 33,561, ,850,995 1,758, ,564, ,405 16,604, ,401, ,467 19,558, ,765,685 8,618,237 90,762, ,805, ,502 15,494, ,368,880 1,443,303 57,585, ,951, ,002 15,681, ,171, , ,250, ,924, , ,127, ,972, ,356,471 4,312, ,053,620 44,709 17,888, ,236, ,297 24,766,016 TOTAL 4,324,094, ,553,422 1,006,222,983 (Amounts in euros. Updated )

17 Losses indemnified per type of event, Property damage TYPE OF EVENT Nº CLAIMS AMOUNTS PAID % OF AMOUNTS PAID AVERAGE COSTS FLOOD 465,946 4,324,094, % 9,280 EARTHQUAKE 40, ,553, % 12,853 ATIPICAL CYCLONIC STORM 440,250 1,006,222, % 2,286 FALL OF METEORITES AND SIDERAL BODIES 3 100, % 33,476 TERRORISM 20, ,984, % 17,320 RIOT 153 1,120, % 7,325 CIVIL CONMOTION 6,004 74,915, % 12,478 ACTS OF ARMY FORCES IN PEACETIME 1,256 2,751, % 2,191 Amounts updated Total: 973,813 6,272,742, % 6,441

18 Million LOSSES PER TYPE OF NATURAL EVENT Property damage ( ) FLOOD EARTHQUAKE STORM (Updated )

19 COMBINED RATIO SURCHARGES/LOSSES PROPERTY Surcharges Payments Combined ratio(%) ,694,402 66,049, ,410, ,264, ,351, ,875, ,252,515 79,074, ,520,645 40,255, ,212,353 94,240, ,228, ,802, ,730, ,887, ,605, ,800, ,290,872 52,920, ,191,662 70,013, ,384,276 93,021, ,061,164 52,917, ,180, ,924, ,849, ,262, ,656, ,883, ,999, ,503, ,697,165 71,193, ,478, ,384, ,442, ,204, ,239, ,293, ,356, ,508, ,020, ,903, ,331, ,341, ,848, ,269, ,679, ,789, ,439, ,165, ,328, ,300, ,560, ,638, ,427, ,936, ,726, ,641, ,477, ,918, ,907, ,041, TOTAL 12,095,581,443 8,363,227, Storm Klaus Lorca earthquake Amounts updated ( )

20 Surcharges and Losses, Property Surcharges Losses

21 THANK YOU FOR YOUR ATTENTION