Act on the Guarantee Fund for Property Insurance Companies

Act on the Guarantee Fund for Property Insurance Companies

This Act on the Guarantee Fund for Property Insurance Companies, cf. Act No. 2067 of 12 November 2021, is hereby promulgated with the amendments resulting from Section 1 of Act No. 480 of 12 May 2023, Section 339 of Act No. 718 of 13 June 2023, Section 3 of Act No. 1546 of 12 December 2023, Section 10 of Act No. 481 of 22 May 2024, and Section 4 of Act No. 1666 of 30 December 2024.

Chapter 1
Status, Purpose, and Scope of Application of the Guarantee Fund

Section 1. The Guarantee Fund for Property Insurance Companies (the Fund) is an independent institution.

Subsection 2. The Fund shall provide coverage to policyholders and the insured in accordance with Section 5, subject to Subsection 3, for insurance in insurance companies covered by Section 3, Subsections 1 and 2, when:
1) claims for compensation arise from an insurance contract with a property insurance company that is declared bankrupt, or
2) a life or property insurance company has its permit to conduct work accident insurance business revoked and the Danish Financial Supervisory Authority has made a decision that the work accident insurance portfolio shall be taken under the administration of the Fund, cf. Section 200, Subsection 3, Section 205, or Section 264, Subsection 3, of the Act on Insurance Business.

Subsection 3. The Fund shall provide coverage to injured parties residing in Denmark for damage to property and personal injury caused by a vehicle covered by motor liability insurance in an insurance company that has received the Danish Financial Supervisory Authority's permit to conduct insurance business, or that has received equivalent permission in another country within the European Union or a country with which the Union has concluded an agreement in the financial area, from the time when:
1) the insurance company is placed under bankruptcy proceedings, or
2) the insurance company enters liquidation.

Subsection 4. The Act on Public Access to Information in the Public Sector, the Act on the Parliamentary Ombudsman, the Administration Act, and the Archives Act do not apply to the Fund.

Subsection 5. Upon the termination of the Fund, the Minister of Industry, with the approval of the Minister of Finance, shall decide on the use of the Fund's assets. A decision on the use of the Fund's assets shall be made after hearing the insurance companies mentioned in Section 3, Subsection 1.

Subsection 6. The Minister of Industry may set detailed rules regarding the Fund's administration.

Section 2. The Fund covers the business conducted by the insurance companies mentioned in Section 3, Subsections 1 and 2, in Denmark for risks in Denmark, subject to Subsection 2.

Subsection 2. The Fund covers injured parties residing in Denmark for damage caused by a vehicle with motor liability insurance taken out in an insurance company that has received the Danish Financial Supervisory Authority's permit to conduct insurance business, or that has received equivalent permission in another country within the European Union or a country with which the Union has concluded an agreement in the financial area.

Section 2a. (Repealed)

Chapter 2
Obligation to Contribute and Determination of Contributions

Section 3. The following property insurance companies shall be members of and contribute to the Fund:
1) Directly underwriting property insurance companies that have received the Danish Financial Supervisory Authority's permit to conduct insurance business.
2) Branches located in Denmark of directly underwriting property insurance companies with their head office in another country within the European Union or a country with which the Union has concluded an agreement in the financial area.
3) Directly underwriting property insurance companies with their head office in another country within the European Union or a country with which the Union has concluded an agreement in the financial area, which are notified to conduct insurance business in Denmark via cross-border provision of services.

Subsection 2. The following life insurance companies shall be members of and contribute to the Fund:
1) Directly underwriting life insurance companies that have received the Danish Financial Supervisory Authority's permit to conduct work accident insurance business.
2) Branches located in Denmark of directly underwriting life insurance companies that have permission to conduct work accident insurance business, with their head office in another country within the European Union or a country with which the Union has concluded an agreement in the financial area, subject to Section 4a, Subsection 2.
3) Directly underwriting life insurance companies with their head office in another country within the European Union or a country with which the Union has concluded an agreement in the financial area, which are notified to conduct work accident insurance business in Denmark via cross-border provision of services, subject to Section 4a, Subsection 2.

Subsection 3. The Fund's assets shall amount to at least DKK 600 million, of which:
1) at least DKK 300 million of the Fund's assets shall consist of contributions from insurance companies that underwrite certain insurances not covered by items 2 and 3, in Denmark for risks in Denmark,
2) at least DKK 200 million of the Fund's assets shall consist of contributions from insurance companies that underwrite work accident insurances, including assault damage insurances taken out as an extension of work accident insurance, and independently underwritten assault damage insurances, in Denmark for risks in Denmark, and
3) at least DKK 100 million of the Fund's assets shall consist of contributions from insurance companies that have received the Danish Financial Supervisory Authority's permit to conduct insurance business, that underwrite motor liability insurances for risks in Denmark and in other countries within the European Union or countries with which the Union has concluded an agreement in the financial area.

Subsection 4. Each new member of the Fund shall pay a one-time contribution to the Fund of DKK 100,000.

Subsection 5. In addition to the one-time contribution, cf. Subsection 4, the insurance companies are obliged to pay ongoing contributions to the Fund. The insurance companies' contributions consist of the sum of an amount per policy for certain consumer insurances set annually by the Danish Financial Supervisory Authority, and an amount per insured person under a work accident insurance policy and an amount per insured person under an independent assault damage insurance policy set annually by the Danish Financial Supervisory Authority, cf. Subsection 10.

Subsection 6. The Danish Financial Supervisory Authority shall, once a year, announce the size of the amount per policy for certain consumer insurances, and the amount per insured person under a work accident insurance policy and the amount per insured person under an independent assault damage insurance policy, which the insurance companies shall use when calculating contributions to the Fund. In setting the amount, the Danish Financial Supervisory Authority shall take into account that the insurance companies underwriting work accident insurances, to the greatest possible extent, cover the expenses associated with the Fund's administration of work accident insurances. The Danish Financial Supervisory Authority shall publish the announcement no later than 6 months before the insurance companies are to pay contributions to the Fund.

Subsection 7. The insurance companies shall, in connection with the submission of the annual accounts, submit a declaration from a state-authorised or registered auditor to the Fund stating that the paid contributions have been correctly calculated.

Subsection 8. If the annual contribution to the Fund does not exceed DKK 50,000, the insurance company may, regardless of Subsection 7, submit a declaration from the company's responsible management to the Fund stating that the paid contributions have been correctly calculated.

Subsection 9. The Fund may take out loans guaranteed by the State.

Subsection 10. The Danish Financial Supervisory Authority shall set detailed rules regarding the insurance companies' contributions to the Fund and regarding which types of insurances are covered by the obligation to contribute.

Subsection 11. The Minister of Industry may increase the requirement for the size of the Fund's assets in accordance with Subsection 3.

Subsection 12. The Minister of Industry may permit the Fund, for a period, not to meet the requirement in Subsection 3 regarding the size of the Fund's assets, without the Danish Financial Supervisory Authority simultaneously announcing that contributions are to be collected from the Fund, cf. Subsection 6.

Section 3a. The Fund shall reimburse the insurance company with which the Fund has concluded an agreement on the handling of reported claims under Section 5a, the amounts that the insurance company has paid to policyholders, the insured, and third parties, and incurred expenses for administration and coverage in connection with the assessment of damages.

Subsection 2. The Fund shall step into the shoes of the policyholder, the insured, or a third party regarding claims against Gable Insurance AG and any reinsurance companies, to the extent that the Fund has provided coverage in accordance with Section 5a.

Subsection 3. The Fund shall bear the expenses for a legal opinion on the possibility of asserting liability against the former management of Gable Insurance AG, the former management of Husejernes Forsikring Assurance Agentur ApS, their cooperation partners in the distribution of insurances, and other advisors.

Section 4. A policyholder may, until the Fund's assets amount to DKK 600 million, not terminate an insurance contract due to an increase in the premium that is used solely for payment of contributions to the Fund.

Subsection 2. If the Minister of Industry utilizes the authority to require a larger asset size in the Fund than DKK 600 million, Subsection 1 shall apply correspondingly.

Subsection 3. A policyholder may terminate an insurance contract with an insurance company mentioned in Section 3, Subsection 1, items 2 or 3, and Subsection 2, items 2 or 3, with immediate effect if the Danish Financial Supervisory Authority prohibits the insurance company from conducting business in Denmark, cf. Section 14, Subsection 3. The insurance company may not charge a fee to the policyholder upon such termination.

Section 4a. Directly underwriting property insurance companies that have received the Danish Financial Supervisory Authority's permit to conduct insurance business shall pay contributions per motor liability insurance taken out for policyholders in Denmark and in other countries within the European Union or countries with which the Union has concluded an agreement in the financial area.

Subsection 2. Property insurance companies mentioned in Section 3, Subsection 1, items 2 and 3, shall not be members of and contribute to the Fund if they only underwrite motor liability insurances in Denmark.

Subsection 3. The Danish Financial Supervisory Authority shall, once a year, announce the size of the amount per motor liability insurance taken out in Danish property insurance companies for policyholders in Denmark or in another country within the European Union or a country with which the Union has concluded an agreement in the financial area, which property insurance companies that have received the Danish Financial Supervisory Authority's permit to conduct insurance business shall use when calculating contributions to the Fund. In setting the amount, the Danish Financial Supervisory Authority shall take into account that property insurance companies covered by Subsection 1, to the greatest possible extent, cover the expenses associated with the Fund's administration of motor liability insurances. The Danish Financial Supervisory Authority shall publish the announcement no later than 6 months before the property insurance companies are to pay contributions to the Fund.

Chapter 3
Scope of Coverage and Reporting of Claims

Section 5. The Fund covers claims for compensation to the following:
1) Policyholders with private insurances (consumer insurances) and the insured,
2) third parties who are insured against personal injury under other liability insurances,
3) policyholders and the insured under collective insurances, to the extent that an insurance by its nature corresponds to the included individual insurances,
4) policyholders with building fire insurances regardless of the type of property and the insured,
5) insured persons under building defect insurances,
6) insured persons under work accident insurances, including assault damage insurances taken out as an extension of work accident insurance, and
7) insured persons under assault damage insurances taken out as an independent insurance.

Subsection 2. The Fund shall take over the rights and obligations that an insurance company has in accordance with the Act on Work Accident Insurance, including assault damage insurances, when an insurance company's work accident insurance portfolio is taken under the administration of the Fund.

Subsection 3. The Fund covers claims for compensation in accordance with Subsection 1 that arose no later than 4 weeks after either the administrator or the Fund has given notice of the insurance company's bankruptcy to the creditors, or the Danish Financial Supervisory Authority has published a notice that an insurance company's work accident insurance portfolio is taken under the administration of the Fund.

Subsection 4. Regardless of Subsection 3, the Fund covers claims for compensation in accordance with a home sale insurance, a building defect insurance, and a seller's liability insurance for the entire duration of the insurance. Furthermore, the Fund covers claims for compensation in accordance with an insurance taken out with an insurance company that the Danish Financial Supervisory Authority has prohibited under Section 14, Subsection 3, when the insurance was in force at the time of the Danish Financial Supervisory Authority's decision.

Subsection 5. The Fund covers policyholders' premiums that were paid before the pronouncement of the bankruptcy decree, subject to a deductible of DKK 1,000 per policy, subject to Subsection 6.

Subsection 6. The Fund's assets for covering certain consumer insurances, cf. Section 3, Subsection 3, item 1, cover policyholders' premiums for motor liability insurances that were paid before the pronouncement of the bankruptcy decree, for risks in Denmark, subject to a deductible of DKK 1,000 per policy, subject to Subsection 7.

Subsection 7. The Fund's coverage of premiums in accordance with Subsection 6 for Danish motor liability policyholders in foreign insurance companies is limited to coverage in cases where the policyholders' remaining premiums are not covered by a corresponding arrangement in the insurance company's home country.

Subsection 8. Policyholders may not assert claims against an insurance company's bankruptcy estate for the deductible of DKK 1,000, cf. Subsections 5 and 6.

Subsection 9. The Fund does not cover premiums for home sale insurances, building defect insurances, seller's liability insurances, work accident insurances, and assault damage insurances, cf. Subsection 4.

Subsection 10. The Fund does not cover claims for compensation and premiums from the relevant insurance company's directors or board members.

Section 5a. The Fund covers claims that are uncovered as a result of the bankruptcy of Gable Insurance AG, for policyholders and insured persons residing in Denmark who have taken out an insurance with Gable Insurance AG through Husejernes Forsikring Assurance Agentur ApS or are covered thereby. The Fund also covers uncovered claims regarding repairs and remediation of damages carried out by a third party in accordance with an agreement with Husejernes Forsikring Assurance Agentur ApS under an insurance mentioned in the first sentence.

Subsection 2. For home sale insurances, the Fund covers the claims mentioned in Subsection 1 that were present when the policyholder took over or otherwise gained control of the property, and that are discovered after the takeover of the property and are otherwise eligible for coverage according to the terms of the insurance contract. Claims under a home sale insurance are subject to a deductible of DKK 20,000 for the first eligible damage in the Fund. For subsequent eligible damages in the Fund, the deductible specified in the terms of the insurance contract is deducted from the claim. The fixed deductible of DKK 20,000 is only included in the calculation of whether the policyholder's total deductible payment is kept within any ceiling for the total deductible specified in the insurance contract, with an amount corresponding to the deductible specified in the policy.

Subsection 3. For building defect insurances, the Fund covers the claims mentioned in Subsection 1 that arose before Gable Insurance AG's bankruptcy on 19 November 2016, or that arise during the duration of the insurance. A prerequisite for coverage under the first sentence is that the builder, who has taken out a building defect insurance with Gable Insurance AG, has entered liquidation or been placed under bankruptcy proceedings or similar procedures before Gable Insurance AG's bankruptcy on 19 November 2016 or enters liquidation or is placed under bankruptcy proceedings or similar procedures during the duration of the insurance. In other cases, the Fund does not cover damages under building defect insurances taken out with Gable Insurance AG.

Subsection 4. For insurances other than home sale insurances and building defect insurances, cf. Subsections 2 and 3, the Fund covers the claims mentioned in Subsection 1 that arose no later than 4 weeks after the Fund has given notice of Gable Insurance AG's bankruptcy to the creditors.

Section 5b. The Fund covers claims for compensation in accordance with a building defect insurance taken out with Qudos Insurance A/S for the entire duration of the insurance. A prerequisite for coverage under the first sentence is that the builder, who has taken out a building defect insurance with Qudos Insurance A/S, has been placed under bankruptcy proceedings during the duration of the insurance, and that the insured is not covered by another building defect insurance. In other cases, the Fund only covers claims for compensation in accordance with a building defect insurance in Qudos Insurance A/S that have been reported to the Fund within the deadline following Section 6, Subsection 1, first sentence.

Section 5c. The Fund takes over the rights and obligations that the Labour Market's Occupational Insurance has taken over from insurance companies in connection with the Danish Financial Supervisory Authority's withdrawal of insurance companies' permits to conduct work accident insurance business, and which a company had before the withdrawal of the permit to conduct work accident insurance business under the Act on Work Accident Insurance.

Subsection 2. The Fund steps into the rights, obligations, contracts, and claims that the Labour Market's Occupational Insurance has against the bankruptcy estates where the Labour Market's Occupational Insurance has administered the company's work accident insurance portfolio. The Fund similarly steps into and takes over outstanding amounts that the Labour Market's Occupational Insurance has with the bankruptcy estate or other parties as a result of administering a company.

Subsection 3. The Fund uses the dividend that the Fund receives from the bankruptcy estates, cf. Subsection 2, to reimburse the amounts that insurance companies have paid to the Labour Market's Occupational Insurance and the Appeals Board for the administration of the work accident insurance portfolios. If the dividend is not sufficient to cover the insurance companies' full claims, the Fund distributes the dividend proportionally year by year, so that the amounts paid to the Labour Market's Occupational Insurance and the Appeals Board for the earliest year before the portfolio's transfer are covered first, until the dividend is distributed.

Subsection 4. Regardless of Subsection 3, the Fund may conclude an agreement for full and final settlement of the accounts between the Fund and the individual creditor regarding reimbursement of amounts under Subsection 3 prior to the time of the Fund's receipt of the dividend from the bankruptcy estate, provided that all other creditors who may be entitled to reimbursement under Subsection 3 consent to the conclusion of the agreement.

Section 5d. The Fund covers claims for compensation to injured parties residing in Denmark for damage to property or personal injury caused by a vehicle covered by motor liability insurance. The injured party may request compensation directly from the Fund.

Section 6. Claims for compensation in accordance with Section 5, which are to be covered by the Fund and have not been reported to the insurance company declared bankrupt, shall be reported to the Fund as soon as possible and no later than 6 months after the pronouncement of the bankruptcy decree. Claims for compensation in accordance with Section 5, Subsection 4, or Section 5b, shall however be reported to the Fund no later than 6 months after the termination of the insurance. Claims that have been reported to the company declared bankrupt before the pronouncement of the bankruptcy decree are deemed reported to the Fund.

Subsection 2. For the reporting of claims for compensation following a work accident, Chapter 7 of the Act on Work Accident Insurance applies, subject to Subsection 3.

Subsection 3. For the reporting of claims for compensation following an incident covered by an assault damage insurance, cf. Section 49a of the Act on Work Accident Insurance, rules issued pursuant to Section 49a, Subsection 5, second sentence, of the Act on Work Accident Insurance apply.

Subsection 4. The Fund may not, by reference to the deadlines mentioned in Subsections 1 and 2, refuse to make payments to an entitled person, cf. Section 5, who has not been able in time to assert their right to have compensation paid.

Section 6a. Claims that are to be covered by the Fund pursuant to Section 5a, Subsections 2 and 4, shall be reported to the Fund no later than 31 March 2017. Claims pursuant to Section 5a, Subsection 3, shall be reported to the Fund no later than the day the insurance expires. Section 6, Subsection 4, does not apply to reports in accordance with the first and second sentences.

Subsection 2. Claims that follow from a complaint against a decision made by Husejernes Forsikring Assurance Agentur ApS, which has been brought before the Insurance Appeals Board before Gable Insurance AG's bankruptcy on 19 November 2016, and where the complainant is granted full or partial relief, are deemed to have been reported to the Fund in due time. Correspondingly, complaints against claims that have been rejected by Husejernes Forsikring Assurance Agentur ApS within the last 4 weeks before Gable Insurance AG's bankruptcy on 19 November 2016, and which have been brought before the Insurance Appeals Board no later than 4 weeks after the Act's entry into force, and where the complainant is granted full or partial relief, are deemed to have been reported to the Fund in due time.

Subsection 3. Complaints against the Fund's decisions on payments, which are brought before the Insurance Appeals Board pursuant to Section 17, and where the complainant is granted full or partial relief, are deemed to have been reported to the Fund in due time.

Section 6b. Claims for compensation in accordance with Section 5d shall be reported to the Fund as soon as possible and no later than 6 months after the pronouncement of the bankruptcy decree or the property insurance company's entry into liquidation.

Subsection 2. The Fund may not, by reference to the deadlines mentioned in Subsection 1, refuse to make payments to an entitled person, cf. Section 5d, who has not been able in time to assert their right to have compensation paid.

Chapter 4
Payments from the Fund

Section 7. 1) Payments from the Fund shall take place as soon as possible and no later than 3 months after the reporting of the claim, subject to Subsection 2 and Section 7a. If the Fund has not been able to obtain the information necessary to assess the claim and determine the size of the payment, the Fund shall, within the deadline mentioned in the first sentence, notify the insured of what information the Fund needs to obtain.

Subsection 2. Payments from the Fund regarding work accident insurances and assault damage insurances are made in accordance with the rules in the Act on Work Accident Insurance.

Subsection 3. The Danish Financial Supervisory Authority may, upon request from the Fund, extend the deadline mentioned in Subsection 1.

Section 7a. The Fund shall, after reporting of a claim in accordance with Section 5d, give the injured party a reasoned offer of compensation with fully or partially calculated compensation, or a reasoned answer stating whether liability is denied or not fully calculated. The offer of compensation shall be given no later than 3 months after the reporting of the claim.

Subsection 2. The Fund shall pay compensation, cf. Subsection 1, to the injured party without undue delay and no later than 3 months after the injured party's acceptance of the offer of compensation, cf. Subsection 1. If the damage is not fully calculated, the claims regarding payment apply to this partially calculated damage from the time the offer of compensation is accepted.

Chapter 5
Publication

Section 8. The Danish Financial Supervisory Authority shall immediately after the pronouncement of the bankruptcy decree insert a notice in the daily press regarding the following:
1) The insurance company's bankruptcy,
2) the termination of insurance coverage, subject to Section 5, Subsection 4,
3) the renewal of mandatory insurances and insurances that can be equated with them, and
4) the reporting of claims for compensation to the Fund, cf. Section 6, Subsections 1 and 2, and to which reporting can be made.

Subsection 2. The Danish Financial Supervisory Authority shall publish on its website if a property insurance company enters liquidation.

Subsection 3. The administrator shall in the notice sent to the creditors in