Consumers of financial services must be sure that their interests and property rights are protected by the state. To increase the growth of confidence in insurance in many countries, the system of guaranteeing insurance payments has been working effectively for a long time.
Guarantee Funds are the key element of the guarantee system. This institution guarantees the settlement of insurance claims filed against insolvent insurance companies.
In many countries, participation in such a fund is a prerequisite for an insurance company to obtain a license for a certain type of insurance. In world practice, there are two models for organizing guarantee funds: specialized funds covering a specific type of insurance and a universal fund guaranteeing all insurance contracts. A specialized fund is created to maintain and develop a separate type of insurance. The purpose of the universal fund is to guarantee payments to policyholders and other beneficiaries. The assets of the guarantee fund are formed from the contributions of insurance companies. In some cases, a certain part of the fund's assets helps to form the state.