Spanish Terrorism Insurance Program: Overview & Recent Evolution

Transcription

1 Spanish Terrorism Insurance Program: Overview & Recent Evolution Conference on Terrorism Insurance OECD International Network on the Financial Management of Large-Scale Catastrophes Paris, 1 st june 2010 Ignacio Machetti. General Manager. Consorcio de Compensación de Seguros - SPAIN

2 GENERAL CONTENTS 1. Short historical overview 2. Legal nature and structure 3. Main features of the insurance program 4. Some statistical data

3 1. Short historical overview 2. Legal nature and structure 3. Main features of the insurance program 4. Some statistical data

4 1.1. The Origins Damages from Civil War ( ) Riot Risks Compensation Consortium (1941) Provisional insurance tool Severe damages in Santander (1941) - fire Canfranc (1944) - fire El Ferrol (1944) - fire Cádiz (1947) - mine explosion Alcalá de Henares (1948) - gunpowder arsenal explosion

5 1.2. Stabilisation and Developement Consorcio de Compensación de Seguros (Law of december 16th, 1954) Permanent insurance tool Law of december 19th, 1991: Legal Statute 1. New legal nature 2. Board of Directors 3. Principles: - Subsidiarity (no competence: collaboration with the industry) - Flexibility and adaptability - Multi-task institution

6 1. Short historical overview 2. Legal nature and structure 3. Main features of the insurance program 4. Some statistical data

7 2.1. Legal Nature The CCS is a PUBLIC BUSINESS INSTITUTION Own legal personality Own assets (independent from the State s) Subject to laws regulating privates insurance companies

8 2.2. Structure MINISTRY OF ECONOMY AND FINANCE BOARD OF DIRECTORS (equal private-public composition) Chairman: DIRECTORATE-GENERAL FOR INSURANCE AND PENSION FUNDS GENERAL MANAGER 18 REGIONAL OFFICES NETWORK TECHNICAL & REINSURANCE DEPARTMENT FINANCIAL DIRECTOR OPERATIONS DIRECTOR I.T. DIRECTOR SECRETARIAT GENERAL

9 Board of Directors CHAIRMAN (Director-General for Insurance and Pension Funds) 18 MEMBERS appointed by the Minister of Economy and Finance 9 MEMBERS FROM PRIVATE INSURANCE COMPANIES: - ALLIANZ - AXA - CASER - CATALANA OCCIDENTE SEGUROS - ESPAÑA SEGUROS - MAPFRE - MUTUA PELAYO - REALE - VIDACAIXA 9 MEMBERS FROM THE GOVERNMENT

10 1. Short historical overview 2. Legal nature and structure 3. Main features of the insurance program 4. Some statistical data

11 3.1. What are the extraordinary risks? NATURAL PERILS SOCIAL-POLITICAL EVENTS Floods and sea dashes Earthquakes Tsunamis Volcanic eruptions Storms (tornadoes and gusts of wind above 135 km./h. included) Falling of meteorites Terrorism Rebellion Insurrection Riots Mob misbehaviour/street violence Actions of armed forces in peacetime

12 3.1. What are the extraordinary risks? NATURAL PERILS SOCIAL-POLITICAL EVENTS Floods and sea dashes Earthquakes Tsunamis Volcanic eruptions Storms (tornadoes and gusts of wind above 135 km./h. included) Falling of meteorites Terrorism Rebellion Insurrection Riots Mob misbehaviour/street violence Actions of armed forces in peacetime

13 3.2. How are they covered? INSURANCE POLICY - Damage to Property - Life or Personal Accidents 2 simultaneous contracts ORDINARY RISKS (fire, theft, etc.) Private insurer (Voluntary premium) EXTRAORDINARY RISKS (flood, storm, terrorism, etc.) Consorcio de Compensación de Seguros (Compulsory premium surcharge-)

14 3.3. What kind of losses does it compensate for? PROPERTY Direct material damages (repair or replacement). Supplementary expenses (mud extraction; demolition and removal; rubble disposal or transport to landfill). ACCIDENTS and LIFE Death. Permanent disability. Temporary disability. Business interruption. Only losses from events occurred in Spain + personal injuries from events occurred abroad

15 3.4. What are the lines of insurance included? Cover compulsorily attached to ordinary policies in certain PROPERTY and PERSONAL lines of insurance PROPERTY LINES Fire Natural ordinary events Land vehicles (vehicle damages, not civil liability) Railways vehicles Robbery Plate glass Machinery breakdown Electronic equipments and computers Completed civil works Business interruption (Post 9/11) PERSONAL LINES Personal accidents Life (Post 9/11/2001 and 3/11/ New!!!)

16 The CCS covers the extraordinary risks through the ordinary policy issued by the company (taking into account the same amount insured and the same compensation conditions): - The company manages the policy. - CCS manages the loss claims and compensation (adjustment included). The Consorcio does not directly underwrite the coverage

17 3.5. What are the terms (clauses) of the compensation? Reference point The same goods or persons The same insured capital The same compensation conditions established in the ordinary policy Deductibles: For direct material damages (except for cars and housing): 7% of the indemnification amount. For business interruption: the same deductible established in the ordinary policy. For personal injuries: None.

18 3.6. Objectively defined coverage The system doesn t take into account: the amount of the losses the number of insured persons affected the size of the affected area A previous official declaration about the catastrophic nature of the event is NOT required

19 3.7. How is it financed? A) Compulsory premium (surcharge) in favor of the CCS: To be applied on amount insured in the ordinary policy Insurance companies collect surcharges together with their premiums Companies will credit surcharges to Consorcio on a monthly basis Collection commission retained by the companies: 5%

20 SURCHARGE RATES: a) For property insurances a.1.) Direct damages:. Housing: 0.08 per thousand.. Offices: 0.12 per thousand.. Business, Shopping centres: 0.18 per thousand.. Industrial risks: 0.21 per thousand.. Motor vehicles: rate according to type of vehicle (cars: 3.50 per policy).. Civil works: rate according to type (up to 1.63 per thousand for sporting ports). a.2.) Business interruption:. Housing: per thousand on amount insured for material damages.. Other risks: 0.25 per thousand on amounts insured for business interruption. b) For accidents and life insurance: per thousand.

21 B) Other financial revenues: Investment returns.

22 3.8. Technical Provisions Regulations identical to those of the private insurance companies (Provision for outstanding claims, Provision for unearned premiums ). Special regulation for the Equalization Reserve. IT IS A REAL CATASTROPHE FUND Built up with total profits after tax (Amount in 2007: aprox. 4.1 billion ) State Guarantee (never applied).

23 3.9. Loss Assessment - Adjusters do not belong to the Consorcio s staff. - They are used on an ad hoc basis. Used regularly: 40 No. of ADJUSTERS Used very often: 120 Used ocasionally: depending on disaster intensity and claims Adjustment expenses represent 4% of the losses paid by Consorcio

24 1. Short historical overview 2. Legal nature and structure 3. Main features of the insurance program 4. Some statistical data

25 4.1. General Figures Total claims distribution per causes (period ) CAUSE PROPERTY PERSONAL ACCIDENTS BUSINESS INTERRUPTION (*) Flood 3,108,091, % 4,019, % 12,046, % Earthquake 34,071, % 205, % 5, % Storms 571,748, % 66, % 16,044, % Meteorites 93, % - 0.0% - 0.0% Terrorism 317,641, % 79,476, % 4,556, % Riots 1,038, % 163, % - 0.0% Mob misbehavour Acts of Armed Forces 68,795, % - 0.0% 2, % 2,094, % 159, % - 0.0% TOTAL 4,103,575, % 84,092, % 32,655, % Euros Updated (*) Period

26 4.1. General Figures Total claims distribution per causes (period ) CAUSE PROPERTY PERSONAL ACCIDENTS BUSINESS INTERRUPTION (*) Flood 3,108,091, % 4,019, % 12,046, % Earthquake 34,071, % 205, % 5, % Storms 571,748, % 66, % 16,044, % Meteorites 93, % - 0.0% - 0.0% Terrorism 317,641, % 79,476, % 4,556, % Riots 1,038, % 163, % - 0.0% Mob misbehavour Acts of Armed Forces 68,795, % - 0.0% 2, % 2,094, % 159, % - 0.0% TOTAL 4,103,575, % 84,092, % 32,655, % Euros Updated (*) Period

27 4.1. General Figures Total claims distribution per causes (period ) CAUSE PROPERTY PERSONAL ACCIDENTS BUSINESS INTERRUPTION (*) Flood 3,108,091, % 4,019, % 12,046, % Earthquake 34,071, % 205, % 5, % Storms 571,748, % 66, % 16,044, % Meteorites 93, % - 0.0% - 0.0% Terrorism 317,641, % 79,476, % 4,556, % Riots 1,038, % 163, % - 0.0% Mob misbehavour Acts of Armed Forces 68,795, % - 0.0% 2, % 2,094, % 159, % - 0.0% TOTAL 4,103,575, % 84,092, % 32,655, % Euros Updated (*) Period

28 TOTAL 10,697,897,076 6,473,062, % 551,920,423 Euros Updated (*) Mob misbehavior included Property - Loss Ratio (period ) YEARS PREMIUMS TOTAL LOSS TERRORISM PAYMENTS RATIO (%) PAYMENTS (*) ,047,864, ,340, % 55,203, ,565,661,132 2,275,676, % 175,585, ,204,256,193 1,295,414, % 157,325, ,057, ,444, % 32,356, ,908, ,066, % 23,986, ,005, ,138, % 3,578, ,466, ,326, % 4,482, ,002, ,168, % 8,072, ,722, ,356, % 48,744, ,648, ,683, % 5,828, ,609, ,206, % 25,946, ,693, ,240, % 10,810,702

29 Euros Updated Years with particularly high loss ratio YEARS PREMIUMS TOTAL LOSS PAYMENTS RATIO (%) ,389, ,501, % ,611, ,138, % ,516, ,888, % ,550, ,392, % ,919, ,171, % ,762, ,864, % ,693, ,240, %

30 Million Euros PREMIUMS AND CLAIMS DISTRIBUTION Property Damage (Period ) 1, YEARS PREMIUMS UPDATED TOTAL PAYMENTS UPDATED

31 4.2. Claims Figures from Terrorism MARCH 11th, 2004, TERRORIST ATTACKS IN MADRID Claims personal injuries - 61 material damages - Casualties: Wounded: Total compensations taken on by CCS: 41 mill. Railway vehicles were (incredibly) NOT insured

32 DECEMBER 30th, 2006, TERRORIST ATTACK TO TERMINAL 4 IN BARAJAS AIRPORT Damages to airport terminal: Parking: Terminal & walkways: Debris removal: Loss of profits: Miscellaneous: TOTAL: mill. Damages to vehicles: 1,139 vehicles (around 12 mill. ) CCS will take on damages under all risks and glass breaking policies. Total loss: 46 mill.

33 2009

34 2009 Terrorist Attacks (I) Date Place Nº Claims Loss * Amurrio (Álava) Bus Campo Naciones (Madrid) Office building Bilbao (Vizcaya) Socialist Party building Baracaldo (Vizcaya) Socialist Party building Lazkano (Guipúzcoa) Socialist Party building Amorebieta-Etxano (Vizc) Street violence Amorebieta (Vizcaya) Office building Punta Peña (Cantabria) Telecommunications Equipment Bilbao Street violence 1 101, mill. 5 32, , , , , , , Arrigoriaga (Vizcaya) Car Bombing * Only property damages 10 1 casualty (Police Inspector) 419,000

35 2009 Terrorist Attacks (II) Date Place Nº Claims Loss * San Sebastián (Guip.) Street violence Durango (Vizcaya) Political Party Building Burgos Guardia Civil Building (Bombing) , , mill Magalluf (Mallorca) Guardia Civil Building (Bombing) 12 2 casualties 840, Villabona (Guipúzcoa) Street violence Mallorca Commercial Premises Ondarroa (Vizcaya) Street violence Bilbao Recalde Street violence Rentería (Guipúzcoa) Telephone Company Lekeitio (Vizcaya) Street violence 4 12, , , , , ,000 * Only property damages

36 Date Place Nº Claims Loss * Guernika (Vizcaya) Bus Bilbao Street violence Herat (Afganistan) Military Convoy Navarra Street violence Bilbao Bus Ondarroa (Vizcaya) Street violence Durango (Vizcaya) Bus Llodia (Álava) Unions Building Markina (Vizcaya) Bus Getxo (Vizcaya) Subway Bombing * Only property damages 2009 Terrorist Attacks (and III) 2 149, ,700 1 casualty 5 14, , , , , , ,500 TOTAL PROPERTY DAMAGES: 12,774,200

37 2010

38 2010 Terrorist Attacks Date Place Nº Claims Loss * Santutxu (Bilbao) Street violence 6 50, Afganistan Attack against Military Convoy 1 casualty 6 injured Bilbao (Vizcaya) Street violence Vizcaya Fire Political party building 3 30, ,000 * Only property damages TOTAL PROPERTY DAMAGES: 85,000

39