Spain: Surcharges Cut On Motor Insurance Premium

Next month, Spain's Consorcio National Guarantee Fund contribution rate reduces to 1.5% from the current 2%. The lower rate applies to all motor insurance contracts issued or renewed from 1 July 2016.

The Spanish Official Gazette recently published two resolutions BOE-A-2016-5431 and BOE-A-2016-5432 approved by the Spanish insurance regulator, the Direccion General de Seguros. From 1 July 2016, the Consorcio National Guarantee Fund contribution rate reduces to 1.5% from the current 2%. The lower rate applies to all motor insurance contracts issued or renewed from 1 July 2016.

The resolution BOE-A-2016-5432 introduces a scaling down of the Consorcio Extraordinary Risk premium rate for all categories of land vehicles that are registered in Spain and insured in Spain. In addition, it amends the law to include mandatory motor third party liability insurance into the Extraordinary Risks surcharge regime, which is applicable currently only on Motor Hull insurance, with effect from 1 July 2016. The following table outlines the reduction of the Extraordinary Risk premium across the various types of vehicle:

Where voluntary liability insurance is also taken out alongside compulsory motor hull and liability insurance, the Extraordinary Risk surcharge is subject to either policy, but not both.

IPT Quote, TMF Group's online calculation tool is updated with the new rates and effective date. Users who run a rate check or create a quote with mandatory motor insurance can simply select the 'Motor' Line of Business, where the Consorcio National Guarantee Fund contribution and the Extraordinary Risks surcharge is shown and calculated.

Users who wish to calculate taxes on voluntary motor insurance policies will need to tick the Line of Business "Third Party Liability" at the Rate Check where only the Consorcio National Guarantee Fund contribution is displayed. For creating a quote with combined mandatory and voluntary motor policies, users should select both lines and allocate the premium to the two lines in order to calculate the correct tax amount due.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.