The Insurance Compensation Consortium and its Policyholders, with a Special Focus on Inland Road Freight Transport

In this article we will analyse how the Insurance Compensation Consortium (hereinafter “CCS”) is legally configured, as well as some of the most common cases in which the CCS is related to land transport of goods, delving into the characteristics of the relationship established between the CCS and its insured parties.

The CCS was created in 1954, and is currently defined as a public business entity, framed in articles 103 and following of Law 40/2015, of 1 October, on the Legal Regime of the Public Sector (LRJSP).

Public business entities are public law entities with separate legal personality, their own assets and autonomy in their management. As far as their financing is concerned, article 103 of the LRJSP states that “they are financed with market revenues, and that together with the exercise of administrative powers, they carry out service activities, management of services or production of goods of public interest, which are susceptible to payment”.

In addition, and as a peculiarity, it should be stressed that, although we are talking about public law entities, they are governed by private law. This is stated in Article 104 of the LRJSP, which specifies that “public business entities are governed by private law” and, specifically, it is also regulated in the CCS’s own regulations, in particular in Article 2 of Royal Legislative Decree 7/2004, of 29 October, which approves the revised text of the Legal Statute of the Insurance Compensation Consortium (hereinafter, “Legal Statute of the CCS”). Article 2 which, regarding the legal status of the entity, states: 1. The Consortium shall be governed by the provisions contained in these legal statutes (…). 2. It shall be subject, in the exercise of its insurance activity and, in the absence of special rules contained in these legal statutes, to the provisions of the revised text of the Law on the Regulation and Supervision of Private Insurance, approved by Royal Legislative Decree 6/2004, of 29 October, and in Law 50/1980, of 8 October, on Insurance Contracts. 3. The contracting of the Consortium is governed by private law, (…)”.

If we go to the Legal Statute of the CCS, we find the functions attributed to this public business entity in Chapter III, which is divided into a First Section covering its private functions in the insurance field, and a Second Section containing its public functions. Specifically, it is in the section relating to private functions where we find the different cases in which the CCS can be related to land transport of goods, which are as follows:

• Compensate damage caused by extraordinary risks, understood as natural phenomena, or derived from events of political or social incidence, on the obvious condition of having subscribed an insurance policy for the persons or goods affected.
  This category would include, for example, all the damage suffered by the different tractor units and semi-trailers of hauliers as a result of the altercations and pickets during the strikes and stoppages of activity in the transport sector in March 2021, and which were about to be repeated in November 2022. These strikes or stoppages would fall under one of the extraordinary risks by being classified as “popular unrest”[1].
• Assume the compulsory coverage of vehicles not accepted by insurance companies (e.g., those with foreign registration plates), as well as that of public bodies that request it. Also, compensate for damage caused by unknown, uninsured, or stolen vehicles. Think, for example, when there is a non-payment of premiums and the policy ceases to have effect after the legally established period of time[2], whether it is a private vehicle, a semi-trailer, a tractor unit or any other vehicle that causes damage.

Having analysed these two most common cases in which the CCS is related to land transport of goods, we consider it interesting to determine the characteristics of the relationship that the CCS establishes with its policyholders.

In this sense, our highest Court has been concluding since the 1990s that the relationship that exists between the insured and the CCS is contractual, provided that the insured has taken out an insurance policy with a Spanish insurance company under which the insured pays a surcharge on the premium in favour of the CCS. In such cases, the insured will be deemed to have two insurance contracts, one with the Spanish private insurer with which they took out the policy and the other with the CCS. However, both are instrumented in a single contract or policy, which is the one they sign with the Spanish private insurer.

The Supreme Court has also pointed out on several occasions that each of these two contracts has its own content and, as such, is subject to different legal regimes. Even so, the rules of the Insurance Contract Law will always be applicable to contracts entered into with the Insurance Compensation Consortium insofar as they are not provided for in its specific regulation, among others, the insured objects and their situation; the insured sum or the scope of the coverage; the amount of the premium, the surcharges and taxes; or the duration of the contract with expression of the day and time in which its effects begin and end.

Ultimately, a compulsory supplementary insurance contract is established between the insured and the CCS when the various surcharges on the premiums paid for the insurance are credited. That is why, in most cases, the liability of the CCS will be contractual. In the case of road hauliers, when policies are taken out for each insured tractor unit and/or semi-trailer.

In view of the above, we believe that it is absolutely essential for professionals in the transport sector to be aware of the characteristics of insurance policies, taken out directly or via their insurance brokers, and to review them periodically. This is because they contain intrinsic contractual rights and duties, of vital importance, which directly affect them as insured parties.

All of which is recommended in order to ensure better protection of the risks inherent in its activity and of the services provided to third parties in the event that they are affected by claims or incidents.

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[1] Defined by art. 2.1 k). of Royal Decree 300/2004, of 20 February, approving the Regulation on extraordinary risk insurance.

[2] Art. 15 of Law 50/1980 of 8 October 1980 on Insurance Contracts.