The Norwegian Non-Life Insurance Guarantee Scheme

The purpose of the non-life Insurance Guarantee Scheme is to ensure coverage of insurance claims filed under agreements on direct non-life insurance, to the secured and injured party. The task of the guarantee scheme is to cover claims from policyholders in insurance undertakings which are placed under public administration and member of the Guarantee Scheme, provided that the claim falls within the scope of coverage of the Guarantee Scheme.

General information about the guarantee scheme

The non-life Insurance Guarantee Scheme (the “Guarantee Scheme”) is regulated by Act no. 17 of 10 April 2015 on financial undertakings and financial groups (Norwegian Financial Undertakings Act) chapter 20 and 21, as well as Regulations no. 1502 of 9 December 2016 on financial undertakings and financial groups. Additionally there are articles of association approved by the Ministry of Finance.

The Guarantee Scheme is a legal entity in its own right and none of the members has a proprietary right to any part of the funds of the guarantee scheme. The Guarantee Scheme is headed by a board consisting of five members with personal alternates, all of them appointed by the Ministry of Finance for four years. Finanstilsynet (the Norwegian Financial Supervisory Authority) is secretariat for the board.

The Guarantee Scheme is considered to be a public administrative agency. The Guarantee Scheme is subject to the provisions of the Freedom of Information Act and to a substantial part of the Public Administration Act. The provisions on impartiality, duty of secrecy, the right of the parties to acquaint themselves with the documents of the case and reversal of an administrative decision in the Public Administration Act apply to the activities of the Guarantee Scheme. In relation to decisions of disbursements some of the provisions concerning the handling of cases and appeal apply.

According to the Norwegian Financial Undertakings Act, the Guarantee Scheme is subrogated to the assured’s rights. Claims covered by insurance policies covering direct insurance as a main rule receive priority of payment ahead of other creditors.

The activities of the guarantee scheme

The purpose of the non-life Insurance Guarantee Scheme is to ensure coverage of insurance claims filed under agreements on direct non-life insurance, to the secured and injured party. The task of the guarantee scheme is to cover claims from policyholders in insurance undertakings which are placed under public administration and member of the Guarantee Scheme, provided that the claim falls within the scope of coverage of the Guarantee Scheme.

If there is a need for disbursements from the Guarantee Scheme, the board will normally decide to call for contributions from the members. The provisions of the Public Administration Act on the case handling and appeal do not apply to such decisions.

In relation to the coverage of claims, the board may base its decision on the examination and approval of the insurance claim made by the bankruptcy court. If the insurance claim is contested by the insurance undertaking or its administrations estate, the one who raised the claim may be referred to bring an action against the insurance undertaking or its administration estate. Considering the nature of the claim and if the board otherwise consider it justifiable, the disbursements may be made before the claim is examined and approved.

The board have to decide whether the claim falls within the scope of coverage. As regards the coverage of claims, the board may decide disbursement by instalments, partial payments up to NOK 20 millions of each claim for each injured party in respect of each insured event. When the board finds it necessary, it may decide to cover only parts of a claim (reduction of claims).

The provisions of the Public Administration Act about formal requirements, grounds for the decision and notification as well as the provisions on appeal apply to decisions of disbursements from the guarantee scheme. The decision may be appealed to the Ministry of Finance.

The claims covered by the Guarantee Scheme

The Norwegian Financial Undertakings Act chapter 20 and Regulations no. 1502 of 9 December 2016 on financial undertakings and financial groups set out which claims are covered by the Norwegian Guarantee Scheme.

As a main rule, the Norwegian Guarantee scheme covers insurance claims filed under agreements on direct non-life insurance, to the secured and injured party. The claims have to arise from a risk existing in Norway.

The Ministry of Finance can place an insurance company under public administration in certain circumstances. The coverage of the company’s insurance policies ceases to apply three months after the decision to place the company under public administration has been made.

As a main rule, the Guarantee Scheme does not cover the following claims:

  1. Credit insurance
  2. Life insurance contracts undertaken/assumed by non-life insurance companies
  3. Energy insurance
  4. Aviation insurance
  5. Marine insurance
  6. Commercial/business insurance for businesses that at the time of the contract formation (or later renewals) fulfil two or more of the following requirements:
    1. Employs more than 250 people
    2. Has an annual sale of at least 100 million NOK according to last available annual settlement
    3. Owns at least 50 million NOK according to last available balance sheet
  7. Claims reinsured in captive insurance company
  8. Claims made by the public sector/public authorities

The Guarantee Scheme covers insurance claims filed under agreements on statutory compulsory liability insurance.

The Guarantee Scheme does not cover more than 90 per cent of each claim. An exception applies for claims filed under insurance contracts for residence/housing and compulsory liability insurance. These claims are covered 100 per cent.

The Guarantee Scheme does not cover claims on interest. An exception applies for claims on interest in relation to insurance on residence/housing and compulsory liability insurance.

The Guarantee Scheme does not cover claims beyond 20 million NOK per claim/per policy holder/per insurance event.

The Guarantee Scheme does not cover claims on insurance companies that provide cross-border services into Norway without branches.

Publisert: 09.04.2015