We recently read a very interesting article in Cinco Días y El Paísand we wanted to echo it. Cases such as Bankia, Cajasur, CAM,? are well known for the disaster they have meant for the Spanish public coffers. Today we wanted to show why it has not happened in the insurance sector and how it has contributed to Spain.
Bank bailouts and the difficulty of recovering what has been paid out
According to the latest report of the Bank of Spain, issued in June 2017, of the 76,410 million euros that our country contributed to banking, it will only be viable to recover just over 20%. It is estimated that only 16,337 million are those that will be collected again. As of today, only a little more than 4,000 million have been recovered (approximately 6% of what was “invested”).
The data are both categorical and regrettable, given the difficult situation that Spaniards are going through, as has been the case since the beginning of the crisis. If we do the math, the cost per Spaniard of this bailout process and bank mergers has been more than 1,200 euros per person.
The situation of the insurance sector – solvency
Whenever we talk to our clients, especially when they entrust their savings to insurance companies, we explain to them: there is a fundamental difference
- Banks: advance the money, assuming possible risks of non-payment (just what has happened in the crisis due to the lack of control in the granting of loans and mortgages).
- Insurance companies: collect premiums in advance and invest them carefully in order to use them if at some point they have to pay a claim.
Therefore, despite the fact that both sectors have very strict and constant regulation, the behavior of both has been totally different in recent years: banks have lost more than 70,000 jobs and closed more than 30% of their branches, while insurance companies have increased their income and consolidated their position and solvency. Not surprisingly, the performance of the companies in the stress tests has been spectacular, as the head of Unespa’s economic department, Pedro del Pozo, points out.
Insurance companies’ involvement in helping Spain
Moreover, in recent years, Spanish insurers have demonstrated their commitment to the Spanish Treasury. Between 2010 and 2016 when many entities decided not to invest in Spanish public debt, insurers increased their investment by over 200%.
If you want our Savings and Investment Department to advise you on the best insurance companies where to invest your money, we are at your disposal. Be one of the more than 3,500 clients who trust us.
In this regard, a few months ago we talked about how insurance companies were becoming a reliable alternative to savings in banks.
