Mutual Insurance Mechanism: how it works

You won a Horizon Europe grant and received the pre-financing letter. Then you realize that the amount deposited in your bank account is lower than expected. If this has happened to you and you want to know what’s going on, welcome to the Mutual Insurance Mechanism (MIM).

The MIM replaces what was called “Guarantee fund” in Horizon 2020 programme. We already talked about the fund in this article. The EC changed the name to Mutual Insurance Mechanism and extended it to all Horizon Europe funding programmes.

As the name suggests, the MIM is a safeguard instrument. The EC withdraws 5 to 8 percent of the maximum EU grant, depending on what is written in article 4.2 of your Grant Agreement Data Sheet. The company is usually informed when they receive the pre-financing payment letter at the start of the project.

The mechanism aims to cover any risks associated with the amounts due and not reimbursed by defaulting participants.

During the project or after its end, the MIM will intervene in case beneficiaries are in financial default and EU interests are at risk. The interests generated by this mechanism will cover all EU-funded projects. However, if you manage your costs properly and succeed in finalizing the project, the mechanism won’t affect you directly, and you will receive the retained amount together with the balance payment at end of project.

So, the key to the MIM is in the careful management of the project grant funds. Now that you know how it works, it’s up to you.

Do you still have doubts? Do you need help to manage your project? Contact us at