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Regulating insurance guarantee schemes (IGS) in the EU

Udgave: 4 / 2009 | Kategori: Økonomi og kapitalforvaltning, EU og international forsikring, Forsikringsret, Forsikringsteknik | Forfatter: Mari Pekonen-Ranta

The discussion on possible EU regulation on Insurance Guarantee Schemes (IGS) is currently a hot topic as a European issue, and national solutions have been proposed in many countries. The current economic situation has made the issue of IGS regulation even more topical. An IGS provides protection to policyholders and beneficiaries when insurers are unable to fulfil their contract commitments in case of insolvency of an insurance undertaking. An IGS can offer protection by paying compensation to policyholders or beneficiaries, or by securing the continuation of insurance contracts. An IGS might also be described as a joint liability scheme for insurance undertakings, as insurance undertakings jointly cover the shortage of an undertaking in a failure. Finally, the cost of the guarantee scheme borne by insurance undertakings is usually in the long run transferred to policyholders in the form of higher premiums collected. The need for guarantee schemes reflects the fundamental aim to protect policyholders´ and beneficiaries´ interests in the event of an insurance undertaking becoming insolvent. There exists also other means to protect these interests, as explained below in this article. This article describes different options chosen in European countries to regulate guarantee schemes and the current Commission work on possible EU level regulation on IGS. In addition, the article presents analysis of potential impacts of the possible EU regulation.