Gable Insurance, whose insurances were mediated in Denmark by Husejernes Forsikring, went into bankruptcy proceedings in November 2016. In light of the bankruptcy and its effects of rendering Danish insureds without cover, the Danish Parliament passed new regulation regarding guarantee funds for insurance companies on 11 May 2017. The new regulation allows foreign insurers to join the Guarantee Fund for Non-life Insurance Companies (the “Guarantee Fund”) (in Danish Garantifonden for skadesforsikringsselskaber); a fund which provides cover for insureds in case of a non-life insurance company’s bankruptcy.

Gable Insurance, an insurer based in Lichtenstein, went into bankruptcy proceedings in November 2016. In Denmark, Gable Insurance had mediated insurance policies through Husejernes Forsikring, an insurance intermediary, which also entered bankruptcy proceedings in December 2016.

The costumers who had taken out insurance from Gable Insurance through Husejernes Forsikring were thus left without insurance cover. However, these Danish insureds were saved by a law passed in urgency by a large majority in the Danish Parliament in December of 2016. The law ensured that the claims of Gable Insurance’s Danish costumers would be covered by the Guarantee Fund, even though Gable Insurance was not a member of the Guarantee Fund (and its insureds thus not covered by it). Not all insurance policies are covered by the Guarantee Fund; it primarily covers consumer insurance as well as motor liability and property fire insurance.

As a consequence, the Danish Parliament passed an amendment to the Danish Guarantee Fund for Non-life Insurance Companies Act and the Danish Insurance Mediation Act. The amendment makes it possible for non-life insurance companies domiciled in another Member State of the EU, or domiciled in countries with which the EU has concluded an agreement in the financial field, underwriting insurance policies in Denmark (either directly or through an intermediary), to join the Guarantee Fund.

Furthermore, the amendment contains new information requirements for insurance in-termediary companies (primarily aimed at insurance agents) which must be fulfilled in connection with the marketing of non-life insurance contracts to consumers. One new requirement is that it must be disclosed in the marketing material whether the insurer is a member of a guarantee arrangement in its home country which covers any claims the customer might have in case of the insurer’s bankruptcy.

The act enters into force on 1 July 2017.

Bech-Bruun’s comments

The amendment makes it possible for foreign insurers underwriting insurance policies in Denmark to join the Fund. The intention is to increase the financial security for Danish consumers who take out insurance with foreign insurers.

It should be noted that the new arrangement is voluntary. Thus, insurers may still choose not to take part in the arrangement. Customers with insurers who have chosen not to be a member with the Guarantee Fund are therefore – in case of bankruptcy – relegated to any guarantee arrangements in the home country of the insurer.