New Insurance Authority Head Advocates for Creation of Portuguese Seismic Fund
The recently appointed president of the Authority for the Supervision of Insurance and Pension Funds (ASF), Gabriel Bernardino, has announced his support for the creation of a national seismic fund. During a hearing before the parliamentary Committee on Budget, Finance, and Public Administration (COFAP), Bernardino stated that such a mechanism is 'very important' for a country like Portugal, which is geographically 'exposed to extreme events.' This government-level announcement signals a potential new legislative and regulatory chapter for property owners, as the establishment of such a fund would likely introduce new financial obligations for homeowners and real estate investors. The objective of the proposed fund is to create a financial buffer to manage the economic fallout from a major earthquake, a significant risk in regions like Lisbon and the Algarve.
The specific details of how the new fund would be structured or financed have not yet been outlined, but the ASF president's public endorsement is a critical first step in the legislative process. Gabriel Bernardino emphasized the principle that 'the cost of preventing is less than the cost of repairing,' suggesting a proactive approach to risk management. He assured the committee that the conditions are favorable to move forward with the initiative, stressing that while international discussions on the matter exist, 'Portugal has to do its part.' The implementation timeline is not yet clear, but property owners and investors should anticipate future discussions around mandatory insurance contributions or a property levy designed to capitalize the fund. The compliance requirements would be a crucial factor for anyone owning or planning to purchase property in Portugal.
The new legislation would affect a broad spectrum of stakeholders, from individual homeowners to large-scale commercial real estate investors. The primary goal is to mitigate the widespread economic disruption that would follow a significant seismic event, which current insurance schemes may not adequately cover. The ASF's role would be to oversee the fund's creation and regulation, ensuring its financial stability and proper governance. Penalties or consequences for non-compliance would likely be integrated into the property tax or insurance systems, making participation unavoidable. The government's rationale for this change is rooted in enhancing national economic resilience and protecting property assets from catastrophic loss.
Industry reaction to the legislative proposal is expected to be mixed. While the insurance sector may see opportunities in managing or contributing to such a fund, property developers and homeowners' associations will be keenly focused on the cost implications. Legal professionals specializing in real estate will be tasked with interpreting the new rules and advising clients on compliance. The ASF has indicated a willingness to engage in further studies, with Gabriel Bernardino noting that 'a lot needs to be done' and showing openness to exploring similar funds for other types of catastrophic events. This suggests a broader strategic shift towards more robust, state-overseen risk management frameworks for the country.
During the hearing, Bernardino also commented on the financial behavior of Portuguese citizens, noting a strong 'aversion to loss' that leads to suboptimal savings strategies. He called for 'much more modern' investment policies and improved financial literacy. However, the most significant takeaway for the real estate sector remains the clear and present intention to establish a seismic fund. This initiative, if it moves forward, will become a fundamental aspect of property ownership in Portugal, introducing new costs and legal obligations that investors must factor into their financial planning. Navigate Portuguese property regulations with expert guidance at realestate-lisbon.com.
