Guarantee Fund for Non-life Insurance Companies Act
Consolidated Act no. 457 of 10 june 2003
Act No.457 of 10 June 2003
This is an unofficial translation based on the latest official Act No. 457 of 10 June
2003. Only the Danish document has legal validity.
We, Margrethe II, by the grace of God Queen of Denmark hereby make known: Folketinget
has adopted and We with Our consent hereby enact the following Act:
Part 1
Status and Objective of the Guarantee Fund and Scope of the Act
1.-(1) The Guarantee Fund for non-life Insurance Companies (the Fund) is a private, selfgoverning institution.
(2) The Fund shall provide coverage in accordance with section 5 below when a non-life
insurance company, which has been granted permission (authorisation) from the Danish
Financial Supervisory Authority to carry out insurance business, is declared bankrupt.
2. The Fund shall cover the business of the insurance company mentioned in section 1(2)
above carried out in Denmark or via branches or cross-border services within the European
Union or in countries with which the Community has entered into agreements.
Part 2
Duty to make contributions and determination of contributions
3.-(1) The insurance companies mentioned in section 1(2) above shall be members of the
Fund and make contributions.
(2)
The capital of the Fund shall total no less than DKK 300 million.
(3) Insurance companies have a duty to contribute to the Fund. The contributions from
insurance companies shall be calculated on the basis of direct gross premiums received in
Denmark for consumer insurance, cf. subsection 6 hereof.
(4) An insurance company may not be subject to an annual contribution greater than 0.5 per
cent of its direct gross premium income in Denmark.
(5)
The Fund may take out loans with a state guarantee.
(6) The Danish Financial Supervisory Authority shall lay down more detailed rules on
contributions by insurance companies to the Fund and on the type of insurance to be covered
by the duty to pay contributions.
(7) The Minister for Economic and Business Affairs may change the requirement regarding the
value of the capital of the Fund in accordance with subsection 2 hereof and the requirement
regarding the amount of the contribution in accordance with subsection 4 hereof.
4.-(1) Until the capital of the Fund amount to DKK 300 million, a policyholder may not cancel
an insurance agreement because of an increase in the premium that is solely for the purpose
of contributing to the Fund.
(2) If the Minister for Economic and Business Affairs applies the provision on requiring a
greater capital in the Fund than DKK 300 million, subsection 1 hereof shall apply
correspondingly.
Part 3
Coverage areas and notification of claims
5.-(1) The Fund shall cover insurance claims that remain uncovered as a result of a non-life
insurance company being declared bankrupt by the following:
1)
policyholders with private insurances (consumer insurances),
2)
third parties insured against personal injury or damage to property under thirdparty motor liability insurances,
3)
third parties insured against personal injury under other third-party liability
insurances, and
4)
collective insurances to the extent that an insurance corresponds to the individual
insurances covered.
(2) The Fund shall cover claims not covered which have arisen prior to a bankruptcy order
being issued and up to four weeks after the liquidator has notified the creditors of the
bankruptcy of the insurance company, cf. section 124 of the Bankruptcy Act.
(3) The Fund shall cover premiums paid prior to a bankruptcy order being issued, though with
an excess of DKK 1,000 per policy.
(4) The Fund shall not cover claims and premiums from members of the board of
management or the board of directors of the insurance company.
6.-(1) The Fund shall be notified of claims to be covered by the Fund as soon as possible and
no later than six months after the bankruptcy order being issued.
(2) The Fund may not invoke the time limit in subsection 1 hereof in order to refuse payment
to a legitimate claimant, cf. section 5 above, if the claimant has not been able to invoke his
right to receive payment of compensation and premium.
Part 4
Payments from the Fund
7.-(1) Payments from the Fund shall be made as soon as possible and no later than three
months after notification of the claim.
(2) On request from the Fund, the Danish Financial Supervisory Authority may extend the
time limit mentioned in subsection 1 hereof.
Part 5
Public notification
8.-(1) Immediately following the issue of the bankruptcy order, the Danish Financial
Supervisory Authority shall insert a notification in the daily press including the following:
1)
the bankruptcy of the insurance company,
2)
cancellation of insurance cover,
3)
new compulsory insurances and similar insurances, and
4)
notification of claims under the guarantee scheme.
(2) The Danish Financial Supervisory Authority shall lay down more detailed rules on the
obligations of the Fund to provide information about the bankruptcy of the insurance company
as well as notification of claims to the Fund.
Part 6
Recourse
9. To the extent it has provided cover, the Fund shall be subrogated to the claims of the
insured against the insurance company that has gone bankrupt.
Part 7
Management and administration of the Fund
10.-(1) The Fund shall be managed by a board of directors consisting of five members who
shall be appointed by the Minister for Economic and Business Affairs. The members and their
proxies shall be appointed for three years.
(2)
The members of the board shall represent legal, actuarial, and accounting expertise.
(3) Persons who take part in the management of, or have other links to a non-life insurance
company that could give rise to a conflict of interest between the insurance company and the
Fund may not be appointed chairman or vice-chairman.
(4)
Decisions shall be based on simple majority of votes.
11.-(1) The articles of association of the Fund and the rules of procedure of the Board of
Directors shall be approved by the Danish Financial Supervisory Authority.
(2) The articles of association shall contain provisions on the application and placement of the
assets of the Fund, submission of financial statements, and audit.
12. The Board of Directors shall employ the necessary assistance and no later than three
months following the end of the calendar year shall submit financial statements for the
previous year together with a report on the activities of the Fund to the Danish Financial
Supervisory Authority.
13.-(1)
The costs of administration of the Fund shall be met by the Fund.
(2) The Fund shall pay a fee to the Danish Financial Supervisory Authority. The fee shall be
set in accordance with part 7a of the Financial Business Act.
14.-(1) The Fund shall notify the Danish Financial Supervisory Authority if an insurance
company omits to fulfil its obligations as a member of the Fund.
(2) The Danish Financial Supervisory Authority may withdraw an insurance company's
authorisation to carry on business if the insurance company does not comply with the
regulations in this Act, regulations issued in pursuance of this Act, or provisions in the Fund's
articles of association.
Part 8
Supervision
15.-(1) The Danish Financial Supervisory Authority shall carry out supervision of the Fund. The
Danish Financial Supervisory Authority and the Fund may demand from the insurance
companies covered by the Fund all the information deemed necessary to ensure compliance
with regulations in this Act, regulations issued in pursuance of this Act, and provisions in the
articles of association of the Fund.
(2) Section 73 of the Financial Business Act shall apply correspondingly to supervision by the
Danish Financial Supervisory Authority under this Act. Only the Fund shall be considered as a
party in relation to the Financial Supervisory Authority.
Part 9
Disclosure of information
16. Members of the board of the Fund, auditors, members of the board of management, and
other employees of the Fund may not, without due cause disclose or use confidential
information obtained during the performance of their duties.
Part 10
Appeals
17. Decisions made by the Fund may be brought before the Danish Insurance Complaints
Board no later than three months after the decision was issued to the relevant person.
Part 11
Penalties
18.-(1) Unless more severe penalty is due under other legislation, a fine shall be imposed on
any person who
1)
supplies incorrect or misleading information or fails to disclose information in
connection with notification, calculation, or payment of claims for compensation,
2)
omits to provide the Danish Financial Supervisory Authority or the Fund with the
information required by section 15 above or otherwise supplies misleading information
for use in supervision of the Fund, or
3)
without due cause forwards or uses confidential information in contravention of
section 16 above.
(2) An insurance company shall be penalised in the same way if it does not meet its
obligations as a member of the Fund.
(3) Limited companies etc. (legal persons) may be subject to criminal liability in accordance
with the provisions of Part 5 of the Penal Code.
Part 12
Entry into force etc.
19. The Minister for Economic and Business Affairs shall lay down the date for entry into force
of this Act.
20.-(1) The Fund shall repay the Danish Insurance Association the amounts paid by the
Association to policyholders and insured parties who have suffered loss in connection with the
bankruptcy of the insurance company Plus Forsikring A/S.
(2) The part of the assets of the Fund that is designated to cover the amounts mentioned in
subsection 1 hereof shall be collected by the contributing companies, cf. section 3 above, from
their policyholders as a fixed amount per policy. Different amounts may be collected for
different types of policy.
(3) The Minister for Economic and Business Affairs shall lay down more detailed regulations
on collection by the Fund of amounts to cover the amounts dealt with in subsection 1 hereof,
as well as the amounts which may be refunded to the Danish Insurance Association.
(4) Payments from the Danish Insurance Association to insured persons who have suffered a
loss in connection with the bankruptcy of the insurance company Plus Forsikring A/S shall be
treated for tax purposes in the same way as if the payment had been made from Plus
Forsikring A/S.
21. This Act shall not extend to Greenland, but may be brought into force by Royal Decree for
this part of the realm subject to any variations in its operation necessitated by the specific
conditions prevailing in Greenland.
Christiansborg Slot, 10 June 2003
Margrethe R.
/Bendt Bendtsen
This is an unofficial translation based on the latest official Act No. 457 of 10 June
2003. Only the Danish document has legal validity.