Guarantee schemes

Insurance Guarantee Schemes (IGS) provide last-resort protection to consumers when insurance undertakings are unable to fulfil their contractual commitments. They thus protect people against the risk that claims will not be met if their insurance undertaking becomes insolvent.

Only a few Member States have one or more insurance guarantee schemes in place. The lack of Community harmonisation in this area may hinder effective and equal consumer protection. This may lead to a loss of consumer confidence in the relevant markets and may ultimately put at risk market stability. It may also impede the functioning of the internal insurance market by distorting cross-border competition.

In the banking and the securities sectors, however, specific directives on guarantee schemes were adopted respectively in 1994 and 1997 (Directives 94/19/EC and 97/9/EC). In 2001 the Commission has set up a working group to examine the issue of guarantee schemes for policyholders in case of winding-up of an insurance undertaking. At the final meeting of the working group at the end of 2005 a majority of member States pleaded in favour of some European coordination in this area, although no consensus on the extent and content of such coordination could be found PDF - 57 KBEnglish.

The recent financial turmoil has made people far more aware of the existence and limits of consumer protection/guarantee schemes in all financial sectors. Although not at the root of the crisis the insurance sector has proved far from being immune. In order to remedy the existing regulatory loopholes and inconsistencies caused by the fragmented IGS landscape in the Union, the Final Report (Recommendation 5) of the de Larosière Group recommended setting up harmonised IGSs throughout the EU. This has prompted the Commission to announce a thorough review during 2009 of the adequacy of existing insurance guarantee schemes in view of making appropriate legislative proposals.

White Paper on Insurance Guarantee Schemes

The Commission in its Communication of 4 March 2009 “Driving European recovery”PDF - 57 KB underlines the need to reinforce the protection of consumers, investors and small companies. The Commission stresses that additional measures are needed to reinforce depositor, investor and policyholder protection. An effective and comprehensive legal framework for retail financial services needs to be put in place. The Whitepaper on IGSPDF is part of a broader package on compensation and guarantee schemes that also includes two proposals for amendment of the Directive on Investor-Compensation Schemes and of the Directive on Deposit Guarantee Schemes.

The White Paper sets out a coherent framework for the direction of EU action on IGS protection of policyholders and beneficiaries. In particular it proposes introducing a Directive in order to ensure that IGS exist in all Member States and that they comply with a minimum set of design features. The White Paper builds on the extensive work undertaken so far, including by the Working Party on IGS, the CEIOPS’ input, the findings of the OXERA Report Insurance Guarantee Schemes in the EU, and the results of the preceding public consultation on those findings as well as of informal consultations with stakeholders. In line with the better regulation principles the White Paper is accompanied by an impact assessment.

The White Paper raises a number of issues in relation to the introduction of a legally binding EU solution for IGS. The Commission’s preferred options are clearly set out in text boxes in section 3 and 4 of the White Paper. The Commission calls upon all interested parties to provide their views on these options. Contributions to this consultation process should be sent to the Commission at the following address: by 30 November 2010.


CEIOPS’ input and Stakeholder meetings

During the review process in 2009 the Commission has sent out a letter to CEIOPS asking the newly set up CEIOPS taskforce on insurance guarantee schemes for a contribution on the feasibility of the design options of a European solution on IGS. CEIOPS submitted its input, including two annexes, on 30 June 2009.

Furthermore on 8 May 2009 and 11 June 2009 the Commission held informal stakeholder meetings in Brussels.

Public Consultation on insurance guarantee schemes

The European Commission consulted insurance guarantee schemes from 7 May 2008 to 7 July 2008.

The purpose of this consultation was to provide stakeholders with the opportunity to comment on the main findings of the OXERA report and to make known their views on the desirability and feasibility of Community action in this area. In addition to collecting written comments, the Commission held a Public Hearing on insurance guarantee schemes in Brussels on 02 June 2008.

Oxera Study on insurance guarantee schemes in the EU

In order to have a comprehensive picture of the situation in EU Member States and a better insight into the functioning of existing schemes, the Commission contracted Oxera Consulting Ltd to prepare a report on IGS in the EU both for life and non-life insurance (excluding motor insurance):

07.01.2008 Insurance Guarantee schemes in the EU:Comparative analysis of existing schemes, analysis of problems and evaluation of options

Final report prepared for the European Commission DG Internal Market and Services PDF - 57 KBEnglish

09.01.2007 Contract award notice
23.08.2006 The European Commission launches a Call for tender: insurance guarantee schemes in the EU: comparative analysis of existing schemes, analysis of problems and evaluation of options and their feasibility. See MARKT/2006/20/H for more information.

Last update: 17.04.2012