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On Saturday 16 January 2016, the digital newspaper El Economista published an article explaining good news for companies and self-employed workers.
This was an achievement made possible by the work and initiative of the Spanish Association of Insurance Brokers, ADECOSE. Under Law 5/2015 on promoting business financing, financial institutions are required to inform SMEs and self-employed workers about policies linked to financing.
Insurance associated with financing flow is considered to be insurance taken out from 6 months before to 6 months after the perfection of credit or loan agreements making up the financing flow, or any extension of it.
Banks must inform entrepreneurs and companies at least 3 months in advance if they decide to cancel or reduce by at least 35% the financing flow they had been granting.
What Information Must They Provide?
Financial institutions must report on the credit history of the last 5 years, provide a solvency rating and detail the insurance policies linked to that financing flow.
The Information on Policies Linked to That Financing Must Include:
- the type of cover,
- the insurer,
- the amount subscribed,
- and the expiry date.
The lines most affected by this system of banking requirement and linkage were liability, industrial multi-risk policies, life risk for directors and even home insurance.
What Will This Achieve?
SMEs and self-employed workers will have time to:
- adjust their treasury,
- look for other sources of financing,
- and decide whether to cancel insurance policies that were linked to those credits or loans.
With this information 3 months in advance, the insured party will have enough time to compare, request offers from brokerages specialising in companies and cancel policies more than 1 month in advance, as required since January 2016.
ADECOSE trusted that the Bank of Spain would approve without delay the Circular that would enter into force 3 months after its publication in the BOE.[/vc_column_text][/vc_column][/vc_row]