The Consorcio surcharge is the obligatory inclusion within the premium bill for all insurance policies within the modalities referred to, both when it is foreseen that the cover for extraordinary risks is to be assumed by the policy in question, or when the policy expressly does not assume such cover (in which case the Consorcio would assume responsibility for such cover).


 

Its obligatory nature: The justification for the obligatory nature of this surcharge is based on the principles of COMPENSATION and SOLIDARITY that preside in the Spanish system, without the application of which it would not be possible to support the natural non-selection of these risks. In effect, it is evident that if the payment of the surcharge was only required for the risks that one would voluntarily opt to have covered by the Consorcio, then only those with an appreciable degree of exposure to the risks would be willing to be included in the system, which would make it unviable from the start.


 

The tariff: The Consorcio tariff for covering extraordinary risks is, at present, a rate which is applied to the sums insured. Although there are special rules for certain cases (see the Resolution of the Directorate-General of Pension Funds and Policies) , the general level of the annual tariff is as follows:


 

For damage to property:


 

  • Dwellings and Dwelling Communities: 0.08 per mille.
  • Offices: 0.12 per mille.
  • premises, commercial centres, stores/warehouses and other single risks: 0.18 per mille.
  • Industrial risks: 0.21 per mille.
  • Automobiles: fixed amount depending on the type of vehicle (for cars, 3.50 euros per vehicle).
  • Civil works: different rates depending on the type, which vary from 0.28 per mille for motorways, roads, railways and conduits, to 1.63 per mille for marina ports.

For damage to persons (life and accident insurances):


 

  • General rate of 0.005 per mille except in special cases.

For Loss of Profits:


 

  • Dwellings and Dwelling Communities: additional rate of 0.005 per mille, which is applied to the sum insured for material damage.
  • Remainder of risks: rate of 0.25 per mille, which is applied to the sum insured for Loss of Profits.


 

The current tariff was approved by Resolution of the Directorate-General of Insurance and Pension Funds on 27th November 2006 (Amended by Resolution dated November 12, 2008). Attachment I of said Resolution features the rates corresponding to the different types of cover susceptible to being insured within the scope of the Spanish system for covering extraordinary risks.


 

Its collection and settlements: The Consorcio surcharges are collected by the insurance entities together with their premiums, and are deposited on a monthly basis in the Consorcio after retention of a 5% collection commission plus the corresponding V.A.T


 

Freedom of establishment and provision of services: Article 82.1 of the Law of Organisation and Supervision of Private Insurances (redrafted text approved by Legislative Royal Decree 6/2004 dated 29th October) expressly determines that insurance contracts underwritten within the Regime of Freedom of establishment and provision of services that cover localised risks or assume commitments in Spain, are subject to the surcharges in favour of the Consorcio de Compensación de Seguros to cover the needs of said entity in the exercising of its different functions (compensation of extraordinary risks, Guarantee Fund for Third Party Motor Liability, liquidation of insurance entities), as well as the remainder of surcharges and taxes legally applicable under the same conditions as those insurance contracts underwritten by Spanish insurance entities.


 

Likewise, and in accordance with article 86.1 of the same Law, those insurance entities whose domicile is in another of the Member States of the European Economic Area that hope to operate in Spain under the Freedom of Establishment and Provision of Services Regime, will be obliged to designate a representative with a fiscal domicile in Spain for the purposes of taxation obligations referred to in the abovementioned Law with regard to the activities that they carry out on Spanish territory.