Insurance Guarantee Schemes (IGS) provide last-resort protection to consumers when insurers are unable to fulfil their contract commitment, offering protection against the risk that claims will not be met if an insurance company is closed down.
IGS can offer protection by paying compensation to consumers, or by securing the continuation of their insurance contract through, for example, facilitating the transfer of policies to a solvent insurer or the guarantee scheme itself. As opposed to the banking and securities sectors, there is no European legislation on guarantee schemes in the insurance sector today. Currently, 12 Member States operate one or more IGS which cover life and/or non-life insurance policies. They not only vary in terms of protection and eligibility, but also on when they are to intervene or how they are to be funded for example.
In the White Paper that was adopted today, the Commission sets out different options to ensure a fair and comprehensive level of consumer protection in the EU as well as to guard against the need for taxpayers to foot the bill in case an insurance company is to collapse. In particular, it proposes introducing a directive to ensure insurance guarantee schemes exist in all Member States and comply with a minimum set of requirements.
The White Paper on Insurance Guarantee Schemes is up for consultation and all interested parties are invited to submit their comments and further input by 30 November 2010.
White paper
© European Commission
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article