The Insurance Compensation Consortium is a public business entity in Spain that operates within the insurance sector. It is attached to the Ministry of Economy and Business.
It is a body with its own legal personality, giving it full capacity to act in order to fulfil its purposes, and it has its own assets, separate from those of the State.
The Insurance Compensation Consortium Covers Where Insurers Do Not Reach
It is important to bear in mind that insurers do not cover every possible case, and there are certain risks they do not assume. There are special situations in which compensation for a claim is not guaranteed by ordinary insurance cover.
This institution exists to cover claims caused by natural phenomena, or to compensate insured individuals or companies when the opposing insurer does not take responsibility even though its cover should protect them. In some cases, the Consortium is also used to underwrite policies that insurers do not want to issue, as explained below.
Functions of the Insurance Compensation Consortium
The main functions of the Insurance Compensation Consortium are to cover damage caused by natural phenomena, but it also covers other situations such as:
- Earthquakes
- Floods
- Tidal waves
- Other natural phenomena
- Terrorism
- Civil unrest
Floods can destroy cars, earthquakes can destroy homes, and claims caused by an uninsured driver may not be assumed by an ordinary insurer. There are many situations in which people could feel unprotected if the Consortium did not cover these cases.
Direct Insurance with the Consortium
Another interesting point about the Consortium is that it can cover people directly when they cannot find an insurer willing to cover them for a risk that must legally be insured. This can happen with vehicle insurance, where it is necessary to have liability insurance, but insurance companies are not obliged to insure everyone.
The Consortium only acts when the extraordinary risk occurs in Spain or affects people resident in Spain, since it is an instrument serving the country’s insurance sector and is integrated within it. It also covers direct damage to property, bodily injury and loss of profits resulting from the claim.
Guarantee Fund for Insurance Compensation
The Insurance Compensation Consortium also acts as a guarantee fund when the insurance taken out is with an insurer that becomes insolvent. That is one of the reasons why a percentage of the insurance premium paid goes to this body.
Having good insurance to protect us against unexpected events is essential, but it is no less important to know that there are situations in which we are also protected by the Insurance Compensation Consortium.