Policyholder guarantee fund

French Law no. 99-532 of 25 June 1999 set up the Fonds de garantie des assurances de personnes, funded by the life and protection insurers that remain solvent. It covers life savings up to 70,000 euros per policyholder per failed insurer, and 90,000 euros for protection annuities. In the UK the FSCS pays compulsory insurance and life policies in full, and 90 per cent of the rest. The principle is the same everywhere: when an insurer is wound up, the fund compensates its policyholders with its competitors' money. It protects the individual and, above all, cuts contagion, since without it one failure would set off surrenders and cancellations across the market. It does not stand in for the strength of the carrier. Cover is capped, so a heavy loss is only partly paid. Scope follows the class and the country, and commercial risks are the least protected, often not at all. Payment takes months, sometimes years, during which the policyholder carries the loss alone. Brokers and cedants therefore keep security lists and track each carrier's rating, guarantee fund or not.