The Consorcio surcharge must be compulsorily applied within the premium bill for all insurance policies within the modalities referred to, both when it is foreseen that the cover for all or any of the extraordinary hazards is to be assumed by the policy in question, or when the policy expressly does not assume such covers (in which case the Consorcio would assume them automatically, which is overwhelmingly the most frequent case).

Mandatory nature: The justification for the mandatory nature of this surcharge is based on the principles of COMPENSATION and SOLIDARITY that preside in the Spanish system. without its application it would not be possible to support the natural non-selection of these risks. In effect, it is evident that if the payment of the surcharge was only required for the risks that one would voluntarily opt to have covered by Consorcio, then only those with an obvious high degree of exposure to these hazards would be willing to be included in the system, which would make it unfeasible from the start.

Tariff: The Consorcio rate for covering extraordinary risks is, at present, a percentage of the sums insured. Although there are special rules for certain cases (see the Resolution of the Directorate-General of Pension Funds and Policies), the general level of the annual rate is as follows:

For damage to property:

• Residential properties: 0.07 per mille.
• Offices: 0.12 per mille.
• Shops, shopping centres, stores/warehouses, other single properties and industrial properties: 0.18 per mille.
• Automobiles: fixed amount depending on the type of vehicle (for passenger cars, 2.10 euros per vehicle).
• Civil works: different rates depending on the type, which vary from 0.28 per mille for motorways, roads, railways and conduits, to 1.63 per mille for marina ports.

For personal injury (life and accident insurances):

• General rate of 0.003 per mille, special cases excluded.

For loss of profits/business interruption:

• Residential properties: additional rate of 0.0035 per mille, which is applied to the sum insured for property damage.
• Other risks: rate of 0.18 per thousand, to be applied on the insured capital for business interruption.

The current tariff was approved by resolution of March 28, 2018, of the Directorate General of Insurance and Pension Funds. Annex I of the said Resolution features the rates corresponding to the different types of cover susceptible to being insured within the scope of the Spanish Extraordinary Risk Scheme.

Collection and settlement: Consorcio surcharges are collected by the insurance entities together with their premiums, and are deposited on a monthly basis in Consorcio after retention of a 5% collection commission plus the corresponding V.A.T.

Freedom of establishment and freedom to provide services: Article 82.1 of the Law of Organisation and Supervision of Private Insurances (redrafted text approved by Legislative Royal Decree 6/2004 dated 29th October) expressly determines that insurance contracts underwritten within the Regime of Freedom of establishment and freedom to provide services that cover localised properties or assume commitments in Spain, are subject to the surcharges in favour of Consorcio de Compensación de Seguros to cover the needs of said entity in the exercising of its different functions (compensation of extraordinary risks, Guarantee Fund for Third Party Motor Liability, liquidation of insurance entities), as well as the remainder of surcharges and taxes legally applicable under the same conditions as those insurance contracts underwritten by Spanish insurance entities.

Likewise, and in accordance with article 86.1 of the same Law, those insurance entities whose domicile is in another Member State of the European Economic Area intending to operate in Spain under the Freedom of Establishment and Provision of Services Regime, will be obliged to designate a representative with a fiscal domicile in Spain for the purposes of taxation obligations referred to in the abovementioned Law with regard to the activities that they carry out on Spanish territory.