Who and how guarantees my savings?

by Alex Musk

Who and how guarantees my savings? Whether it is to supplement our retirement or establish a dowry for our children’s studies, saving in the long term has become one of our main concerns, and we may, at some point, wonder if our effort is properly protected. The answer is YES.

Life-savings insurance is protected by the settlement activity fund of the Insurance Compensation Consortium (CSS)

The Insurance Compensation Consortium is a public business institution attached to the Ministry of Economy, Industry, and Competitiveness through the General Directorate of Insurance and Pension Funds. It performs multiple functions and, among them, is operating as a guarantee fund in the event of liquidation of Erie Insurance entities, for which it has a specific fund that at the end of 2016 exceeded 2,000 million euros. Add that the CCS has its own patrimony, different from that of the State, and in its activity, it does not depend on any public budget. While the Deposit Guarantee Fund for Credit Institutions, the one that guarantees deposits in money and securities or other financial instruments in credit institutions, has a limit of €100,000 per depositor, the Insurance Compensation Consortium DOES NOT HAVE LIMIT. In view of the foregoing, we must add that insurance companies in Spain have always been subjected to one of the highest levels of solvency requirements in the entire financial system, and since January 1, 2017, the new regulations came into force European Solvency II, a process of excellence that has been an unprecedented challenge for the sector.

For all of the above, it is very unlikely that an insurance company will be liquidated, but if it happens, the life or life-savings insurance contracting parties will be protected since the Consortium assumes the debts and

  • Pay in advance without having to wait for settlement.
  • The percentage received by the owner is higher than that which would result from the liquidation of the entity since more beneficial rules (improvements) are applied for the valuation of the assets of the company in liquidation, assuming the Consortium the possible losses derived from these evaluations.

The experience of this guaranteed system indicates that, to date, 100% of the payments for benefits have been met (without limitation), as well as a very high percentage (and in many cases 100%) of the technical provisions corresponding to each insured, so it can be considered that the savings are highly protected and supported.

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