Insurance Compensation Consortium: Providing Compensation for Extraordinary Natural Disasters in Spain’s Province of Ávila

In May 2011, the Murcian town of Lorca suffered an earthquake of magnitude 5.1 on the Richter scale that caused 9 fatalities, more than 300 injuries and 462 million euros in direct economic losses. On December 13, 2021, after 85 active days, the eruption of the volcano on the island of La Palma ceased, leaving behind hundreds of houses, buildings and roads destroyed and also one death from inhaling carbon monoxide and hydrogen sulfide that emanated from the crater. At the beginning of that same year, Storm Filomena, the biggest snow storm in Spain since 1971, caused damage valued at 1,157 million euros. In all cases these were unforeseen and extraordinary natural disasters that left very considerable damage. Damage that, in the case of insured assets, was taken care of by the Insurance Compensation Consortium (CCS), a public entity dependent on the Ministry of Economic Affairs and Digital Transformation through the General Directorate of Insurance and Pension Funds that it carries out. multiple functions in the field of insurance, among which those related to the coverage of extraordinary risks, such as floods, earthquakes, atypical cyclonic storms, riots or terrorism, whose damages are compensable by the CCS.

Of course, the Insurance Compensation Consortium only covers incidents involving insured property or risks. What’s more, the insured allocate a small part of what they pay for their insurance policies (both home and automobile and other assets) to this public business entity that, with these contributions from the insured, creates a ‘piggy bank’ that is with that these incidents are compensated. For this reason, and despite the confusion that sometimes exists, it is not the taxpayers but the insured, as insurance sources specify, who with their contributions contribute to the Insurance Compensation Consortium being able to take care of these extraordinary incidents through of what is known in the sector as “risk mutualization”. For this same reason, these compensations are only intended to cover damage to property that has insurance.

Since 1971, the year in which the statistical information on the annual activity of this public entity began, and until last year, the CCS has attended to 1,799,217 files of damages caused by extraordinary risks to property or insured persons throughout the country. . In total, in these five decades the entity supporting the insurance sector has paid more than 13,164 million euros in our country to compensate for damages caused during this time by floods, earthquakes, acts of terrorism, riots or riots. popular, among other extraordinary risks that the CCS is responsible for.

In the case of the province of Ávila, since 1971 the Insurance Compensation Consortium has attended to 3,121 files requesting compensation for damages caused by extraordinary risks, mostly due to floods, which in the case of the national group represent 64.1 percent of the payments made by this entity in the last 50 years.

In total, since 1971 the CCS in this province has paid close to 15.5 million euros in compensation for damages caused by extraordinary risks to insured property. The year in which the most compensations were paid was 2019, when this instrument at the service of the Spanish insurance sector paid just over 2 million euros, an amount that was largely used to address the damage that the Filomena storm caused in this province and which resulted in 1,212 requests for compensation.

In the last year, the CCS attended to 40 compensation files for damages caused by extraordinary risks in the province of Ávila as a whole, paying 106,145 euros in total to deal with these incidents. This means that, on average, the Avila policyholders served by the Insurance Compensation Consortium in 2022 received 2,653 euros in compensation.

In its latest report, the CCS estimates that in the province of Ávila the insured capital exceeds 23,214 million euros, of which the majority corresponds to housing, with an insured capital of 19,088 million euros; followed by vehicles, with an insured capital of 501 million, and another 3,623 million corresponding to other insurable risks.

In addition to compensating for damages caused by extraordinary risks to insured assets, the CCS also compensates for damages, both due to death and disability, suffered by people who have a life policy. Thus, since 1987 and until last year, the Insurance Compensation Consortium has handled four cases in the entire province of Ávila related to personal injuries caused by extraordinary risks, for which it paid a total of 377,666 euros in compensation. .