Questions & answers
Which Non-life Insurers are covered by the Guarantee Fund?
The Guarantee Fund covers all its members which since January 1, 2019 is Danish Non-life insurers and branches in Denmark as well as Non-life insurers with their head office in all other EU/EEC countries, which through branches or cross-border are notified to carry out insurance business in Denmark.
Guarantee Fund only covers claims for policies, when they are written in Denmark for risks in Denmark.
What is covered by the Guarantee Fund?
In the event of a Non-life insurer’s bankruptcy, the Guarantee Fund will cover claims reported by the following:
- Policyholders with private insurances (typically consumer Insurances as motor liability insurance, home and personal protection insurance, houseowner’s insurance, second home insurance, accident insurance or similar private insurances)
- third parties insured against personal injury or damage to property under motor liability policies (regardless of whether they have been taken out for commercial purposes)
- third parties insured against personal injury under any other liability policies (regardless of whether they have been taken out for commercial purposes)
- policy holders and those insured under collective insurances to the extent that an insurance corresponds to the individual insurances covered
- policyholders with property fire insurances regardless of the type of property and class of policyholders (the purpose of this provision is to ensure indemnification of creditors with a recorded real-property mortgage in case of fire on property on which they hold a mortgage. Therefore, coverage of damage caused by fire is not limited to consumer insurance, i.e. one- or two-family houses or second homes, as the Fund also covers fire damage to commercial properties etc.).
The Fund covers claims on the above mentioned insurance policies, when they are written in Denmark for risks in Denmark.
The Fund covers premiums paid before the issue of the bankruptcy order but with an excess of DKK 1,000 per policy. However, only such part of the premium as corresponds to the remaining part of the insurance period is covered by the Fund.
Who finances the Guarantee Fund?
The Guarantee Fund is funded by the members of the Fund by entrance fee payments, which are paid upon enrollment to the Fund, and ongoing contributions, which are generally paid when the Fund's assets fall below DKK 300 million. The minimum capital of the Guarantee Fund is DKK 300 million, according to the Guarantee Fund Act.
The members can collect the contribution from the policyholders via the premiums.
Are there requirements from EU for establishing a Guarantee Fund?
There is currently no obligation from EU for member states to establish Guarantee Funds. Policyholders in the EU are therefore covered differently in the event of a Non-life Insurer's bankruptcy. The Danish Guarantee Fund has been established to secure Danish policyholders in the event that their Non-life Insurance company goes bankrupt.