Gaia 8 - LatAm Report
-
Upload
thiago-ribeiro -
Category
Documents
-
view
231 -
download
1
description
Transcript of Gaia 8 - LatAm Report
Mr. Xavier Castellanos visits Zurich Head Office
Argentine Primary elections: Starting over (once again)?
New Brazilian Fund and Guarantee Management Agency ABGF
www.zurichseguros.com.br
Microinsurance in Brazil
Reinsurance in Mexico: Recent Developments in a Dynamic Legal Framework
Latin America Report
LatAm ReportGAIA8
Insurance and Reinsurance
IndexSummary
Argentine Primary elections: Starting over (once again)?Marcelo E. Bombau
6
New Brazilian Fund and Guarantee Management Agency ABGFJosé Talarico
8
Microinsurance in BrazilAluízio Barbosa
10
Mr. Xavier Castellanos visits Zurich Head OfficeJosé Talarico
Reinsurance in Mexico: Recent Developments in a Dynamic Legal FrameworkJoaquín Rodríguez
14
Latin America ReportArgentina18Brazil24Chile32Mexico40Venezuela62
4
José Talarico
Mr. Xavier Castellanos visits Zurich
Head Office
5
Antonio Cássio dos Santos Chairman Latin América CEO General Insurance
• Given the invitation made by Antonio Cassio, the CEO of
International Federal of Red Cross and Red Crescent Associa-
tion Latam, Mr. Xavier Castellanos, visited Zurich Head Office
last August 15, when several humanitarian themes were dis-
cussed, such as the Flood Resilience Project of Mexico and a
possible partnership involving the Minas Gerais State (Brasil)
and the Regional and International Red Cross. The restructur-
ing of Red Cross in Brasil was also a topic of discussion.
On that occasion, Mr. Castellanos offered, as a way to straight-
en relationship with Zurich, the IFRC Security Trainning, with-
out any cost. Mr. Mario Orozco, the Regional of Risk Engineer-
ing, will be the person responsible for the next steps of the
training implementation.
Another subject we talked about was the creation of a stan-
dard Flood Resilience project for LatAm, the princi-
ples of which are being discussed internally.
6
The once bright star that guided the last ten years of the Kirchner administration in Argentina is clearly fading away as evidenced by recent primary elections held in August.
Argentine Primary elections: Starting over (once again)?Marcelo E. Bombau
7
The main consequence will be that with the
shift of political power on the horizon as a result
of these elections, the hypothesis of a constitu-
tional amendment aimed at allowing the cur-
rent president to run for a third term will have
vanished forever. This, in turn, leads to a succes-
sion issue within the governing party. Personally
speaking, and regardless of how the political
forces may realign after these elections or who
could be elected president in 2015, one can val-
idly argue that things will necessarily change in
Argentina after 2015. Though this anticipated
future change will surely have different shades
of gray, it is quite certain that Argentina will see
a more friendly and tolerant business, social and
political environment.
However the true main question these days is:
what can be expected in the near future if the
government loses the October mid-term elec-
tions considering that they will still have two
more years in office? Though having insisted
that under no circumstance will it deviate from
its road or change the “model”, some econom-
ic adjustments to the same would need to be
made. If the government will insist on its present
game plan or if it will (forced by the circumstanc-
es) make it more flexible is still a story to be told.
From a purely logical point of view some changes
would be more than advisable. However, world
history and politics have shown more than once
that nothing can really be taken for sure, espe-
cially when a government is on its way out…
The 2011 presidential election, which
re-elected current president Cristina F. de
Kirchner to her second term in office with
a 54% landslide, is long past history. Those
glory days for the Kirchner administration
are no longer around. The recent primary
elections in anticipation of the October
2013 mid-term elections for legislative offic-
es has shown a very important decrease in
the 2011 support.
Trying to explain this change in the voter´s
desires may seem a feat but the explanation
can be simplified to a certain extent when
the government insists that the “model”
will not only remain unchanged, but that –
rather – it will be strengthened. This inabil-
ity or unwillingness to read the message of
the primaries’ results, coupled up with the
insistence in not admitting nor correcting
what may need to be corrected, is the DNA
of this Argentine government. To a certain
extent, it has become its own enemy.
A highly intervened business atmosphere
accompanied by a closed market in many
senses, with inflation and insecurity on the
rise and a lack of openness and dialogue
with other political and social forces (let
alone with the rest of the world) are just
some of the reasons which could try to
explain the recent electoral outcome.
It is predicted that the October mid-term
elections will not show a drastic change in
what has come out of the primary elections.
So, what will this represent in practice? Marcelo E. BombauPartner at M. & M. Bomchil
• Argentina's Article
8
New Brazilian Fund and Guarantee Management Agency ABGFJosé Talarico
Through decree 7.976, published on April 1st, 2013, the Brazilian Fund and Guarantee Management
Agency “ABGF” was formally approved and is expected to begin operations by the end of 2013,
according to government officials. ABGF's stated purpose is to accept risks usually covered by
lines such as engineering, surety and credit insurance whenever the insurance market is unable
to provide coverage for such risks, either totally or partially. The ABGF can act in areas including
infrastructure projects, naval construction, the granting of credit for the aviation industry, public-
private partnerships and other programs that the Brazilian government deems to be strategic.
Two major funds will function within the ABGF managing: one for infrastructure financing (FGIE)
with resources up to R$11 billion and another for foreign trade (FGCE) with capital up to R$14
billion. The new agency, with resources from existing "surety funds" for small business, student
credits, among others, that the government is planning to cancel, will be able to offer surety to
the so called "decentralized risks" (spread over small operations) that could turn into standard
insurance policies.
Additional concern comes from article 38 of Law 12.712 that creates ABGF, which states that the
agency will not grant surety to those risks that are fully covered by the private insurance market, as
long as the market is providing it in rates and conditions compatible with those adopted by ABGF,
which could turn out to be some sort of a price control mechanism in the (re)insurance market.
9The ABGF can offer direct cover when insurers
decline to accept all or part of the risk and can offer
indirect insurance and reinsurance cover provided
that the insurers and reinsurers retain at least 20%
of the total responsibility for the operation.
ABGF administered funds may benefit major infra-
structure projects which form part of the govern-
ment’s program to accelerate economic growth
- Programa de Aceleração do Crescimento (PAC);
finance projects for naval construction; credit opera-
tions for the civil aviation sector; public-private part-
nership projects; other strategic programs defined by
the Executive; risks directly linked to the 2014 World
Cup and related events and the 2016 World Olympic
and Paralympic Games.
Operations which are of less interest to the mar-
ket and have a lower cost – such as insurance for
mortgage lending, educational credit and financing
for small business – are to have guarantee funds for
which the ABGF will be directly responsible.
The Law 12.712 brought together several govern-
ment guarantee funds under the administration
of ABGF, and also established two separate funds
specifically for the areas of infrastructure and guar-
antee of exports, respectively. The establishment of
specific funds for higher volume operations (which,
in some cases involve higher risks), avoids the risk
of exposure of the the recently created state entity
in the event of a call on the guarantees.
The ABGF may also acquire a stake in public or
private insurance or reinsurance companies and in
companies which perform complementary activities
for the sector. The stake acquired may or may not
be a controlling share hold. Private insurers al-
ready operating on the market regard these provi-
sions which authorize the ABGF to act freely on the
market as a potential threat of unfair competition
by the government.
The establishment of the ABGF may give rise to
a situation of privilege and asymmetrical rights
and obligations, which may in turn put pres-
sure on the profit margins and risk subscription
policies of private insurers. In this context, the
widely held view in the private sector is that
these measures may lead the public sector to
assume excessive risks or that the new rules will
permit the government to enter with predatory
force onto the market, distorting competition.
The National Confederation of General Insur-
ance, Private Pension and Life, Supplementary
Health and Capitalization "CNseg" and other
observers fear that the government has paved
the way for ABGF to offer capacity across all
insurance lines and not only those related to
large infrastructure projects and other special
cases, and is poised to extend state interven-
tion (already prevalent in other industries) to
the insurance sector. The law creates conditions
for the government, via ABGF, to purchase
stakes in private insurance companies.
ABGF will be regulated by the Private Insurance
Superintendence "SUSEP", but apparently it
will receive a different treatment from the rest
of the private insurance companies, since rules
that will apply to ABGF are still to be deter-
mined in the near future by SUSEP, which prob-
ably means that it will receive special regulatory
treatment over the rest of the industry.
In summary, Brazil has now established a new
state-owned player in (re)insurance, with fa-
vored treatment on the regulation and super-
vision side, creating "legal but unfair competi-
tion" with the rest of the industry.
José TalaricoHead of Government & Industry Affairs - LATAM
• Brazil's Article
10
Microinsurance in Brazil
After the initial moment of this growth of income, which improve the acquisition
of goods necessary for subsistence (food, medicines, etc.), this part of population
started to know a universe of possibilities that never had access before and, in
that context, microinsurance begins to have room to be developed.
The structural and economic changes experienced by Brazil in recent years allow the emergence of a part of society able to consumer goods and services, due to the growth of its income.
Aluízio Barbosa
11In 2006 was formed the IAIS-CGAP (International
Association of Insurance Supervisors - Consultative
Group to Assist the Poor) Joint Working Group on
Microinsurance (JWG-MI), with the participation of
SUSEP - Brazilian Private Insurance Commission as
a member and contributor. In October 2007, the
Chairman of SUSEP was elected president of the
JWG-MI and the IAIS Microinsurance Subgroup
Since 2011 microinsurance was regulated by
SUSEP but, until now, is not unanimity in the mar-
ket, and especially among insurers.
At this moment 12 insurers are allowed to operate
microinsurance in Brazil and collected so far, ap-
proximately, US$ 1,002,000.00 in direct premiums.
· Microinsurance legal and regulatory aspects in BrazilOn a different way of the so-called popular insurance, which insured risk has certain characteristics
(e.g. second hand automobile insurance), microinsurance is prepared for a specific part of the pop-
ulation, which has a per capita income of up to two minimum wages (approximately US$ 577.00)
and for individual microentrepreneurs ¹.
Similar to other insurance products, several factors can be used for product underwriting, such as
(i) demographic criteria, considered as those that refer to age, income, gender, family size, educa-
tion, occupation, among others; (ii) geographic criteria, considered as those that refer to specific
regions, climate zones, proximity or remoteness of the sea, among others, (iii) social criteria, con-
sidered as those that refer to social programs, among others (iv) economic criteria, considered as
those that refer to specific economic activities, among others.
Another important characteristic concerns the limits of insured sums for microinsurance products.
The regulation has established the following coverage limits (approximate values based on recent
average dollar exchange rate in Brazil):
The majority of microinsurance products
currently commercialized are personal
microinsurance with covers to (i) Death; (ii)
Accidental Death; (iii) Reimbursement of Fu-
neral Expenses; (iv) Total Permanent Disabili-
ty by Accident; (v), Medical, Hospital and/or
Dental expenses arising from personal injury;
(vi) Hospitalization daily rates; (vi) Daily Rate
by Temporary Disability; (vii) Unemployment
and (viii) Critical Illness.
Nowadays there is only one property and ca-
sualty microinsurance product registered in
SUSEP, with coverage for fire, lightning and
explosion to homes throughout the country.
US$ 10,200.00
US$ 10,200.00
US$ 1,700.00
US$ 10,200.00
US$ 1,150.00
US$ 10,200.00
Death
Accidental Death
Reimbursement of Funeral Expenses
Total Permanent Disability by Accident
Medical and Hospital Expenses
Loan Protection Insurance
¹ According to the Brazilian law, individual micro-entrepreneur is the entrepreneur who executes
certain activities allowed by law and whose annual gross income does not exceed US$ 25,530.00.
• Brazil's Article
12
· Underwriting and commercializationIn the same way that others insurance products,
microinsurance can be commercialized directly
by an authorized insurer or through an insur-
ance broker.
However, it should be highlighted an innovation
introduced by the regulation of microinsurance,
with the beginning of correspondent microin-
surance, as well as commercialization through
remote devices, methods that are not applicable
Thus, due to the amounts involved, it is clear that microinsurance was created for the low-
income population.
Educational
Hospitalization daily rates
Daily Rate by Temporary Disability
Unemployment
Critical Illness
Travel
death on travel
total permanent disability by accident on travel
cancelation of travel
loss of luggage
medical/dental expenses on travel
transfer of body
Dwelling real estate
Dwelling real estate with professional activities
Real estate only with professional activity
Equipments
Civil Liability - Dwelling
Civil Liability - Entrepreneur Dwelling
Vessel
US$ 10,200.00
US$ 21.00
US$ 21.00 (it can be demanded a 15 days deductible)
monthly income of US$ 425.50
US$ 10,200.00
US$ 10,200.00
US$ 10,200.00
US$ 850.00 for domestic travels US$ 2,120.00 for international travels
US$ 425.00
US$ 1,150.00
US$ 127.00 with an additional value of US$ 1.00 per Km outside city
US$ 12,700.00
US$ 17,000.00
US$ 25,530.00
US$ 4,250.00
US$ 4,250.00
US$ 4,250.00
US$ 8,500.00
for traditional insurance. It also should be
mentioned that the commercialization of
traditional insurance by remote devices was
placed on a Public Hearing by SUSEP but, at
this moment, there is any regulation re-
garding this to the other types of insurance,
except microinsurance.
The concept is obviously to expand forms of
commercialization, allowing insurance to have
a good penetration in all layers of society.
• Brazil's Article
13
Regarding correspondent microinsurance, should be
noted that these are divided in general and financial
correspondents and, both of them, may not have, as
main activity, the insurance commercialization, thus
allowing the most distinctive shops to commercialize
microinsurance (e.g. coffee shops, beauty salons,
bakeries, restaurants, etc.).
The correspondents, which should be contracted by
insurers, could execute the following activities:
I. offer and promotion of microinsurance products, including by remote devices, on behalf of the insurance company;
II. receive proposals for microinsurance plans on behalf of the insurance company;
III. collection and delivery, to the insurance company, of registration data and documentation of insured participants and applicants;
IV. collection of microinsurance premiums on behalf of the insurance company;
V. receiving notices of claims on behalf of the insurance company;
VI. payment of compensation or benefit on behalf of the insur-ance company;
VII. assistance to insured and their beneficiaries, including by remote devices, on behalf of the insurance company;
VIII. logistical and administrative support to the insurance com-pany, intending the microinsurance contracts maintenance; and
IX. other control services, including control and data processing operations on behalf of the insurance company.
Regarding correspondent microinsurance, should be
noted that the financial correspondents have joint
several liability in relation to the insurer, which does
not occur with the general correspondent, where the
insurer shall be fully liable for correspondent acts and
damages caused to third parties.
Surely this is a point of concern, since that the vast
majority of general correspondents are simple estab-
lishments, that are not used to sell insurance, which
therefore will require a large investment in training by
insurers that opt for this commercialization model.
Regarding commercialization through remote devices,
it should be mentioned that it must be done through
a system with personal login and password, but only
by the insured, once that it won't be allowed
the participation of the insurance broker in
this specific process.
It should also be pointed out that contracting
through remote devices can be done even
through the correspondent's website, and not
only on the insurer's website.
When contracting through remote devic-
es, it should be provided to the insured all
protocols that prove the effectiveness of the
contract. Besides that, it should be send elec-
tronic messages to the insured reporting on
the due date of the insurance installment with
at least 2 days in advance, as well as sending
messages about the end of the term with 2
days in advance, to coverage periods less than
1 year, and 30 days in advance, to coverage
periods longer than 1 year.
· The future of microinsurance in BrazilNaturally questions as contracts by remote de-
vices and through correspondents, with insur-
er sole liability, still generate further distrust
of the various players in the insurance market
(insurers and insurance brokers, mostly).
Anyway, it should be noted that the outlook
on the potential consumer market for micro-
insurance in Brazil is encouraging: data from
FGV - Getulio Vargas Foundation, one of the
most renowned Brazilian centers of economic
studies, estimate a consumer market of 100
million microinsurance customers to 2020, 40
million by 2016, which are extremely positive
numbers.
Certainly during this process some regulatory
adjustments may be necessary but, in any
case, the basis for the growth of this market
is already sowed.
Aluízio BarbosaPartner – Pellon & Associados Law FirmProfessor – FGV – Getulio Vargas FoundationProfessor – FUNENSEG – Brazilian National Insurance School
14
Reinsurance in Mexico:Recent Developments in a Dynamic Legal FrameworkJoaquín Rodríguez
With a strong international presence where more than half of the insurance companies
have foreign capital, Mexico is domicile to the main global insurance players, but national
companies also have strong market participation and leadership. The enormous potential
for growth, as stated by current low insurance penetration of close to 2 percent or around
30 percent of the OECD countries’ average, remains to be exploited.
The Mexican insurance market is second only to Brazil in terms of assets and premium in Latin America.
1 Source: International Monetary Fund, Country Report No. 12/67, Mexico: Detailed Assessment of Observance of International Association of Insurance Supervisors (IAIS) Insurance Core Principles, March 2012, page 8, available at: http://www.imf.org/external/pubs/ft/scr/2012/cr1267.pdf. 2 Lloyd’s, through its Global CEO, Mr. John Nelson, confirmed that the combination of factors present in Mexico gives relevance to the risk transfer services they offer and reaffirmed the company’s interest in Mexico. For additional reference see: Torres, Yuridia, “Mexico has turned appealing to Lloyd’s”, El Economista, April 23, 2013. Lloyd’s is currently integrated by 90 insurance companies.
15companies are adapting to new models to estimate
capital and reserves (Solvency II provisions were incor-
porated), which will be revised by risk raters, will have
to strengthen their corporate governance rules and
increase transparency of their operations.
The new regulation explicitly clarifies aspects of the
Insurance Institutions Law, e.g. those regarding the
participation of insurance institutions or Foreign
Reinsurers with respect to the reinsurance contract.
The reinsurance contract is defined as “the contract
through which an insurance institution, a Foreign
Reinsurer or foreign reinsurer entity agrees to assume:
i) all or part of a risk covered by an Insurance Institu-
tion or the ii) outstanding damage with respect to an
insured amount”.
In coordination with the new framework, a draft of a
new Unified Insurance Circular is being revised by the
Ministry of Finance. The Ministry estimates that once
the review and proposals of the draft are concluded,
the regulation may be ready to be published in Sep-
tember-October 2014.
Initiatives to promote financial culture, the use of fi-
nancial products and services have been submitted to
the Congress and will be discussed during the follow-
ing months. The incipient penetration of the insurance
industry in Mexico, along with its sustained growth
and industrialization, the revised legal framework and
promotion of the financial culture will surely represent
an area of opportunity for insurance and reinsurance
institutions in Mexico during the years to come.
3 Discussions regarding the Energy Reform will initiate in the following Session’s Period of the Congress (i.e. September 2013). The Telecommunications Reforms are about to be implemented by the Executive Branch, and the Financial Reform, among others, are still pending of discussion and analysis. 4 Executive branch changed on December 1st, 2012.5 Those foreign reinsurers or rebonding institutions registered with the General Registry of Foreign Reinsurers. Such registration is necessary in terms of article 107 of the new law, in order for such entities to be able to enter into reinsurance or rebonding agreements with local insurance institutions or mutualistic companies.
The reinsurance market has also a promising growth
potential considering the political stability of the
country, its conservative, yet savvy managed economy
and its growth promoting government. These charac-
teristics are blended with three main factors: Mexico’s
industrial development represents industrial risks; plus
the country’s vulnerability to natural catastrophes and
its developing energy sector, all will generate interest
for reinsurers in Mexico.
The Mexican government has been actively promoting
the modernization and development for the insurance
and reinsurance industry, as can be shown by the
recent amendments to its legal framework.
Reinsurance was mainly regulated by the General
Law for Insurance Institutions and Mutualistic Com-
panies (“Insurance Institutions Law”) and by the
Law for the Insurance Contract, both enacted back
in 1935. As part of a dynamic set of legal reforms
led by the current administration (which have not
yet concluded), on October 25, 2012 the President
presented to the Senate an initiative of law regarding
insurance and bonds, namely the Law for Insurance
and Bonds Institutions.
The new Law for Insurance and Bonds Institutions
was approved by the Congress and subsequently pub-
lished on April 4, 2013 in the Federal Official Gazette.
Pursuant to this new Law, the Law for the Insurance
Contract was also amended.
The new Law for the Insurance and Bonds Institu-
tions will become effective as of April 2015. When
in force, it will replace the Insurance Institutions Law
and the Federal Law for Bonding Institutions. With
this dynamic framework, insurance and reinsurance Joaquín RodriguezPartner at Chacón & Rodríguez, S.C.
• Mexico's Article
16Argentina Report
17
18 Argentina ReportARGENTINA: RULES AND REGULATIONS – JULY AND AUGUST 2013
NIA = National Insurance Agency (Superintendencia de Seguros de la Nación).
LRA = Labor Risk Agency (Superintendencia de Riesgos del Trabajo).
• Latin America Report - Argentina
1 · Communications NIA 3651 and 3696. Investments. Admissible Investments. July 16th and August 5th.
In line with the new investment regime set forth by Treasury Department
Resolutions Nº 620/12 and 365/12 and NIA Resolution Nº 37,163, both
of which amended the General Regulation of the Insurance Activities, these communications establish certain investment instruments which
are considered “productive” and, hence, eligible for being applied to the
referred mandatory investment regime.
Link: http://portal.ssn.gov.ar/Storage/files/circulares/8238.pdf
Comments
Zurich Argentina S.A. should consider these new applicable investment
instruments and should asses if their current investment regime is in line
with the new regime established by NIA Resolution 37.163.
2 · Communication NIA 3662. Exchange Rates for Foreign Currency and Stock Values. July 18th, 2013.
This communication provides a list with the foreign currency exchange rates
and stock values that must be considered by insurance and reinsurance
companies when preparing their financial reports as of June 30th, 2013
Link: http://portal.ssn.gov.ar/Storage/files/circulares/8254.pdf
Comments
Zurich Argentina S.A. must consider this list in order to prepare its
financial reports as of June 30th, 2013 and should also control that their
auditors do so.
19
3 · Communication “A” 5460, Central Bank. July. 19th.
This communication further enhances the protection for consumers of financial
services, so it is mainly aimed at banks and financial institutions.
However, new regulations regarding insurance activities were also implemented.
As from the enactment of this communication, when insurance services are
an accessory to the financial services being offered, financial institutions must
now (i) provide at least three different insurance options (from three different
companies), and (ii) the insurance price offered by the financial institution cannot
be higher than the price offered directly by the insurance company.
Link: http://www.bcra.gov.ar/pdfs/comytexord/A5460.pdf
Comments
As noted above, this communication is mainly directed to financial institutions.
However, Zurich Argentina should asses that financial institutions offering Zurich’s
services follow its provisions.
4 · Resolution Nº 37,652 of the NIA. Withdrawal of authorization. July 24th, 2013.
This resolution cancels the registration of Zurich Versicherung, withdrawing its
authorization to operate on the insurance market.
Link: http://www.infoleg.gob.ar/infolegInternet/verNorma.
do;jsessionid=0BABA94A4BF85015CBFD4DE219DCE492?id=217713
Comments
This resolution implies that Zurich Versicherung is no longer registered before the
NIA, and cannot longer operate on the insurance market.
20
5 · Communication NIA 3686. Information Requested to Reinsurance Companies. August 2nd, 2013.
This Communication establishes the obligation for reinsurance companies
to submit, before September 16th, 2013, all the information related
to active reinsurance agreements whose inception date is between
January 1st and July 31st, 2013, and their link, if applicable, with the
correspondent retrocession agreement.
Link: http://www.cycweb.com.ar/pdf/8273.pdf
Comments
In case Zurich Argentina S.A. or one of its affiliates or subsidiaries entered
into reinsurance agreements on the above referred dates, it should provide
to the NIA the related information before September 16th.
6 · Resolution 1214/13 LRA. Amendments to the LRA’s organizational structure. August 15th, 2013.
This resolution creates a new organizational structure for the LRA.
Link: http://www.infoleg.gob.ar/infolegInternet/
anexos/215000-219999/218575/norma.htm
Comments
Please find attached, as Annex A, the new organizational chart of the LRA.
Argentina ReportARGENTINA: RULES AND REGULATIONS – JULY AND AUGUST 2013
NIA = National Insurance Agency (Superintendencia de Seguros de la Nación).
LRA = Labor Risk Agency (Superintendencia de Riesgos del Trabajo).
• Latin America Report - Argentina
21
General Manager
Planning, Strategic Information and Quality Control Management
Institutional Communication and Training Management
Superintendence
Prevention Management
IT Managemnent
Medical Management
Entities Control Management
Press Management
OperationsManagement
Legal AffairsManagement
Public Assintance Management
Cabinet of Advisors
Internal AuditUnit
• Annex A
Argentine Labor Risk Agency (“LRA”)
22Brazil Report
23
24 Brazil Report
Normative Acts
SUSEP and CNSP
Circular 470/13 – Oil Risks Policies
It should be highlighted:
• It is covered by this type of insurance, including civil liability coverage, based on the
occurrence or claims made type, and financial losses related to events or activities:
(I) - drilling units and production units, (II) - storage units in the production field on
onshore and offshore pipelines; (III) - maintenance, upkeep and construction of units
from types OU (operating units), PU (production units), SU (storage units) and other
subsea structures, including offshore pipelines, related to oil or gas production or
exploitation; (IV) - oil and / or gas stored at the production and / or offshore
storage unit;
• The insurance companies must request, until January 1st 2014, the filing of cases
involving insurance plans delivered to SUSEP prior to the effective date of this Circular,
whether standardized or not standardized, without any interruption to the insurance
policies in force. However, the absence of this request will represent the interruption of
commercialization;
• The policies in force should be adapted to this new Circular on their renewals, if the
end of their terms of effectiveness occur after January 1st 2014.
Link: http://www2.susep.gov.br/bibliotecaweb/docOriginal.
aspx?tipo=1&codigo=31124
Circular 471/13 – Civil Liability Insurance of Road Transport Operator on International Travel
The insured amounts and limits of liability per vehicle and per event, for vehicles that
travel in Bolivia, Chile, Paraguay, and Peru are the following:
1) For damages to third parties not transported:
a) Death and/or personal injury: US$ 20,000.00 per person.
b) Damage: US$ 15,000.00 per asset.
• Latin America Report - Brazil
25
Having multiple complaints related to the same event, the Insurance Company's
liability is limited to US$ 120,000.00
2) For damages to passengers:
a) Death and/or personal injury: US$ 20,000.00 per person.
b) Damage: US$ 500.00 per person.
Having multiple complaints related to the same event, the liability of the Insurance
Company shall be limited to:
a) Death and/or personal injury: US$ 200,000.00
b) Damage: US$ 10,000.00
The insured amounts and limits of liability per vehicle and per event, for vehicles that
travel in Argentina, Brazil and Uruguay, from July 1, 2013 on are:
1) For damages to third parties not transported:
a) Death and/or personal injury: US$ 50,000.00 per person.
b) Damage: US$ 30,000.00 per asset.
Having multiple complaints related to the same event the Insurance Company's liability
is limited to US$ 200,000.00.
2) For damage to passengers:
a) Death and/or personal injury: US$ 50,000.00 per person.
b) Damage: US$ 1,000.00 per person.
Having multiple complaints related to the same event, the Insurance Company's
liability shall be limited to:
a) Death and/or personal injury: US$ 240,000.00
b) Damage: US$ 10,000.00
Notwithstanding the standard values mentioned above, it may be agreed between
the Insured and the Insurer, higher insured amounts limits, i.e., not less, by particular
clause to be included in the policy, which will be the maximum responsibility assumed
by the Insurer per vehicle and per event.
Link: http://www2.susep.gov.br/bibliotecaweb/docOriginal.aspx?tipo=1&codigo=31125
26
Resolution 288/13 – Directors and Executives Election
The election procedure will be changed on the following basis:
• SUSEP’s approval won’t be necessary on situations that the nomination of Directors
or Executives is made by the Federal Government;
• Besides the above mentioned, the appointment acts, on the situations that must
be made by the Federal Government, must be reported to SUSEP during the first 30
days period after its occurrence, and the Executive or Director of this type of insurance
company, won’t be obliged to publish an Intention Statement.
Links:
http://www2.susep.gov.br/bibliotecaweb/docOriginal.aspx?tipo=1&codigo=19665
http://www2.susep.gov.br/bibliotecaweb/docOriginal.aspx?tipo=1&codigo=31257
Laws
DECREE 8051/13 – CHANGES DE COMPOSITION OF CRSNSP – BRAZILIAN APPEALS COUNCIL OF PRIVATE INSURANCE SYSTEM
The mains changes introduced by this Decree are the following:
• three representatives appointed by the public sector of which two of the Ministry of
Finance, and SUSEP;
• three representatives nominated in a triple list, by request of the Minister of Finance,
by associations of entities from insurance, open private pension, capitalization,
reinsurance and insurance brokerage markets;
• The President will be one of the representatives of the Ministry of Finance and the
Vice-President will be the representative of SUSEP;
• On the Council it won't act anymore only a solely Attorney of the National Treasury,
but, a number of them that should be necessary to analyze the appeals.
• Executive Order of the Minister of Finance may create an Extraordinary Council,
temporarily, to reduce the number of appeals pending judgment or to accelerate their
judgment in the Council.
Link: http://www.planalto.gov.br/CCIVIL_03/decreto/D2824.htm#anexo
• Latin America Report - Brazil
27
DECREE 8052/13 – CHANGES RULES REGARDING EXPORT CREDIT INSURANCE
The mains changes introduced by this Decree are the following:
• The Export Credit Insurance can be used by exporters, financial institutions and export
credit agencies to finance, refinance or guarantee the production of goods and services for
Brazilian exportations and Brazilian exportations of goods and services. It is established that
operations related to the aeronautics industry, where risk analysis occurs on a legal entity
other than the operation's debtor of export credit, the insurance can cover commercial,
political and extraordinary risks related thereto;
• It will be considered as a situation to characterize the insolvency of the debtor, the
declaration of bankruptcy or deferral of processing of bankruptcy of the debtor or other act
of equivalent effect, in accordance with the legislation of the country of the debtor;
• The default of the debtor for a period exceeding 180 days from the due date of the first
unpaid installment, shall not be deemed liable to characterize the situation of the debtor's
insolvency in transactions for aviation industry;
• Besides that, on the aviation industry, the insolvency inherent to (i) insufficient assets
or insusceptible of seizure or attachment, and (ii) declaration of bankruptcy or deferral of
processing of bankruptcy of the debtor or other act of equivalent effect, According to the
legislation of the country of the debtor, may be applied to the legal entity that has been the
subject of risk analysis, even if it is liable for the guaranteed contract, since responsible for
ensuring the flow of funds for the payment of the contract. It should be highlighted that
such entity may be a lessee or sublessee airline, leasing company, a company that acts as a
guarantor of the above or other entity that participates in the operation;
• Regarding the role of political and extraordinary risks regarding the operations of the airline
industry, the situations of (i) general moratorium decreed by the authorities of the country of
the debtor or another country through which payment is to be made and (ii) inability to make
the payment by the debtor by decision of the Brazilian government, foreign governments or
international organizations, the subsequent contracts may be applied to the legal entity that
has been the subject of risk analysis, although it is not liable for the guaranteed contract,
since responsible for ensuring the flow of funds for the payment of the contract. It should be
observed that such entity may be a lessee or sublessee airline, leasing company, a company
that acts as a guarantor of the above or other entity that participates in the operation.
Link: http://www.planalto.gov.br/CCIVIL_03/decreto/D2824.htm#anexo
28
LAW 12.846/13 – BRAZILIAN ANTICORRUPTION LAW
This act, which will be in force on February, 2014, establishes the objective civil and
administrative liability to the legal entities which practice acts against the Public
Administration, the brazilian or a foreign one. It should be highlighted:
1) There are considered, for the purposes of this law, harmful acts to the Public
Administration:
• to promise, offer or give, directly or indirectly, any undue advantage to a civil servant
or a third person related to him;
• on a proven way, to finance, fund, sponsor or otherwise subsidize the practice of
unlawful acts mentioned on in this Law;
• on a proven way, to make use of a third party or entity to hide or disguise their real
interests or the identity of the beneficiaries of the actions taken;
• regarding bids and contracts celebrated to the Public Administration are considered
unlawful practices:
a) to frustrate or defraud, by an adjust, agreement or any other way, the competitive
nature of the public bidding procedure;
b) to prevent, hinder or defraud the execution of any act regarding public
bidding procedure;
c) to keep away or try to keep away the other competitors, by fraud or due to the
offer of advantage of any kind;
d) defrauding public bid or the public contract celebrated;
e) create, on a fraudulently or irregular way, legal entity to participate on a public
bidding or enter into administrative contracts;
f) obtain improper advantage or benefit, on a fraudulently way, due to ammendments
or renewals of contracts with the government, without any kind of authorization by
law, on the public bid or in the contract, or
g) manipulate or defraud the economical and financial balance of the contracts with
the public administration;
• to hinder surveillance activity of any public agency or body, including regulatory
agencies and supervisory bodies of the financial system.
2) On the administrative level will be applied to legal entities held liable for the
• Latin America Report - Brazil
29
harmful acts the following penalties:
• fine in the amount of 0.1% (one tenth percent) to 20% (twenty percent) of the gross
revenues of the last year prior to the initiation of administrative proceedings, excluding taxes,
which will never be less than the benefit received, in the cases that this estimation be possible
or, if not possible, the fine will vary on a range between approximately US$ 2,550.00 and
US$ 25,550,000.00;
• forfeiture of property, rights or securities representing advantage or profit directly or
indirectly obtained from the unlawful practice, subject to the right of the third party in
good faith;
• partial suspension or interdiction;
• compulsory winding up of the corporation;
• prohibition on receiving incentives, subsidies, grants, donations or loans from agencies
or public entities and public financial institutions or controlled by the government for a
minimum period of 1 and maximum of 5 years.
3) The determination of these liabilities will occur through administrative proceedings initiated
by the highest authority of the body concerned, which may offer a Leniency Agreement if:
a) the legal entity is the first to state about its interest to cooperate in the investigation of the
illegal act;
b) the legal entity ceases their involvement in the offense investigated from the date of
entering into the agreement;
c) the legal entity admits its participation on the unlawful practices and fully cooperates
with the investigations and administrative proceedings and, at its own expenses, attends,
whenever requested, all procedural acts, until its closure.
4) The leniency agreement will exempt the legal entity from the penalty regarding the
prohibition to receive public incentives, and will reduce by 2/3 (two thirds) the value of the
applicable fine.
5) It is created, under the federal government, the National Registry of Penalized Legal
Entities - CNEP which will bring together and give publicity to the penalties imposed
by agencies or entities of the Executive, Legislative and Judicial branches of all levels of
government based on this Law;
6) The prescriptive period of claims under this Law is 5 years.
Link: http://www.planalto.gov.br/ccivil_03/_Ato2011-2014/2013/Lei/L12846.htm
30Chile Report
31
32 Chile ReportA. July and August, 2013 Insurance Regulatory Overview.
B. July and August, 2013 Main Insurance Normative Acts.
C. Bill currently in Congress.
A · July and August 2013, Insurance Regulatory Overview.
From an insurance company standpoint, General Rule Nr. 349, and
Circulars Nr. 2114 and Nr. 2115 were the most relevant regulations
enacted during July and August, 2013. Both provide instructions
regarding the SVS’ Policy Deposit, payment of unearned premiums, and
the delivery of judicial resolutions to the SVS in compliance with the New
Insurance Agreement Act which will enter in force on December 1, 2013.
B · July and August, 2013, Main Insurance Normative Acts.
We have selected the main insurance regulatory provisions issued during
July and August, 2013. Please find below a summary of such regulations,
including their issue date, type and number of regulation, identification of
the regulatory agency issuing them and a link to the original regulation.
We have further included a Bill currently being discussed in Congress.
SVS Securities and Insurance Superintendence, Superintendencia de Valores y Seguros.
DS Nr. 1,055 Regulation concerning Insurance Brokers and Loss Adjustment Process, Nuevo Reglamento de Auxiliares del Comercio de Seguros y Procedimiento de Liquidación de Siniestros.
NIAA Act Nr. 20,667 New Insurance Agreement Act, Ley 20.667 que Regula el Contrato de Seguro.
SEIL SVS Online Reporting System, Sistema de Envío de Información
en Línea.
SP Pensions Superintendence, Superintendencia de Pensiones.
Definitions
• Latin America Report - Chile
33
This General Rule modifies Title II, of the Third Book of the General Pension System Regulations
(Compendio de Normas del Sistema de Pensiones) and General Rule Nr. 218. General Rule Nr. 348
provides that life insurance companies commercializing life annuities must inform the SP and SVS
of any technological changes made to their electronic system or platform which may impact its
operation or continuity. Likewise, life insurance companies must submit their technological services
agreements to the SVS.
Among other issues, this General Rule provides that life annuities insureds, who continue working
as dependants after retirement, may transfer once a year their social security funds collected after
retirement to the life insurance company that is paying their life annuities. Commissions paid by said
insureds to sales agents or pension consultants for said funds’ transfer, shall be considered unearned
commissions (comisiones consumidas).
Most provisions of this General Rule entered into force on July 3, 2013. However, certain provisions
shall enter into force on January 1, 2014.
Link: http://www.svs.cl/normativa/ncg_348_2013.pdf
Issue date: July 3, 2013 Issued by: SVS/SP Regulation ID: General Rule Nr. 348
This Official Form Letter sets the discount rate (tasa de descuento) applicable for valuation of
insurance liabilities (pasivos de seguros) corresponding to the month of June 2013 at 2.45%.
Link: http://www.svs.cl/normativa/ofc_795_2013.pdf
Issue date: July 5, 2013 Issued by: SVS Regulation ID: Official Form Letter Nr. 795
This Circular provides instructions regarding the information that must be included in communications
that insurance companies and loss adjustors must send to the insureds or beneficiaries in case of
extension of the term for issuing a report. Circular Nr. 2110 only applies to direct settlements or
settlements performed by loss adjustors. Communications must be sent to insured or beneficiaries
per each claim and shall include, among others matters, information regarding the relevant
claim, number and date of term extension, reasons for the extension, etc. Additionally, the same
information must be submitted to the SVS via SEIL and a copy of the communications sent to the
insureds or beneficiaries must be forwarded to the SVS.
This Circular entered into force on July 5, 2013, and applies to claims settlement’s term extensions as
of June 1, 2013.
Link: http://www.svs.cl/normativa/cir_2110_2013.pdf
Issue date: July 5, 2013 Issued by: SVS Regulation ID: Circular Nr. 2110
34
This Official Form Letter sets the monthly indexed insurance unit of August, 2013 to CLP 168.14.
This shall be applicable to life, personal or personal injury risks insurance companies (i.e. second
group insurance companies).
Link: http://www.svs.cl/normativa/ofc_797_2013.pdf
Issue date: July 9, 2013 Issued by: SVS Regulation ID: Official Form Letter Nr. 797
This Circular sets the amount to be charged to each first group insurance company (i.e. physical/
material and financial risks insurance companies) according to Decree Law Nr. 1,757 and Act Nr.
19,798 with respect to the amounts the SVS must provide firemen to finance their accidents and
diseases, corresponding to the July, 2013 period.
Link: http://www.svs.cl/normativa/cir_2111_2013.pdf
Issue date: July 9, 2013 Issued by: SVS Regulation ID: Circular Nr. 2111
This General Rule replaces General Rule Nr. 124 by providing instructions regarding registration of
model policies and clauses in the SVS’ Policy Deposit, and their requirements, in accordance with
the NIAA provisions. This General Rule maintains most provisions set forth on General Rule Nr. 124.
However, it replaces/introduces the following matters:
i. Policies’ general conditions. It is expressly stated that policies general conditions models may be
used by any insurance company of the same group the relevant conditions refers to. Additionally,
it is provided that general conditions models shall: (i) Have names related to the nature of their
covered risk and may not include references to any insurance company; (ii) Include certain
minimum provisions which was not mandatory before this General Rule (i.e. regulation applicable
to the agreement, risks aggravation or alteration conditions, insured statements, premium and
nonpayment of premium effects, claims reporting process, termination and communication
between parties); (iii) Include a mandatory reference to regulation applicable to the insurance
agreement, expressly stating that provisions of Section VIII of the Second Book of the Commerce
Code shall be mandatory except for provisions thereof that benefits better the insured;
Issue date: July 26, 2013 Issued by: SVS Regulation ID: General Rule Nr. 349
This Official Form Letter fixes the indexed interest rate applicable to capital/equity financing
pension payments of losses (death, first and/or second disability declaration) occurring during
August 2013 to 3.04% annually. This provision is applicable to life, personal or personal injury risks
insurance companies (i.e. second group insurance companies).
Link: http://www.svs.cl/normativa/ofc_796_2013.pdf
Issue date: July 9, 2013 Issued by: SVS Regulation ID: Official Form Letter Nr. 796
• Latin America Report - Chile
35
This Circular replaces Circular Nr. 1762 of 2005 and Official Form Letter Nr. 778 of 2013 and, as per
new provisions of the NIAA, introduces instructions regarding reimbursement of unearned premiums
refund in case of early termination of an insurance policy. Insurance companies shall refund unearned
premiums to the insured or policy holder (whomever paid the relevant premium) within 10 days as of
the insurance company takes knowledge of the termination. Unearned premiums shall be calculated
proportionally as per the remaining time period, without deducting any amounts paid in relation to
the insurance agreement, except if expressly stated by law. Premiums expressed in indexed units, shall
be calculated as per their value as of the date of payment.
This Circular will enter into force on December 1, 2013.
Link: http://www.svs.cl/normativa/cir_2114_2013.pdf
Issue date: July 26, 2013 Issued by: SVS Regulation ID: Circular Nr. 2114
This Circular provides instructions regarding the obligation of insurance companies to submit to
the SVS judicial resolutions related to insurance matters regulated at the Commerce Code, which
were dictated in processes in which an insurance company was part of. These judgments must be
submitted no later than the last business day of the subsequent month as from the month they were
pronounced via SEIL system.
This Circular will enter into force on December 1, 2013, and shall be applicable only to judicial
resolutions notified to an insurance company as of that date.
Link: http://www.svs.cl/normativa/cir_2115_2013.pdf
Issue date: July 26, 2013 Issued by: SVS Regulation ID: Circular Nr. 2115
(iv) Multiple risks general conditions must detail separately each coverage and their conditions; etc.
ii. Policies special conditions. The General Rule limits circumstances on which general conditions
may be modified by special conditions only to the case the latest benefits better the insured, and no
exclusions may be added.
iii. Consumers’ rights. General or special conditions must include Consumers’ Rights Act provisions
regarding minimum conditions that must be specified on commercial standard-form agreements
(Section 17-b of Consumers’ Rights Act) and other consumers’ rights provisions thereof that may be
applicable to the insurance agreement.
This regulation will enter into force on December 1, 2013 and as of that date all new insurance
agreements must include general and particular conditions which do not infringe provisions of
the NIAA.
Link: http://www.svs.cl/normativa/ncg_349_2013.pdf
36
This General Rule modifies General Rule Nr. 331 regarding minimum conditions and coverage
that should include individual or collective mortgage loans related insurance policy models
aiming to protect collateral or debt. Pursuant to this General Rule, the following amendments are
Issue date: August 19, 2013 Issued by: SVS Regulation ID: General Rule Nr. 350
This Official Form Letter fixes the indexed interest rate applicable to capital/equity financing
pension payments of losses (death, first and/or second disability declaration) occurring during
September, 2013 to 3.01% annually. This provision is applicable to life, personal or personal
injury risks insurance companies (i.e. second group insurance companies).
Link: http://www.svs.cl/normativa/ofc_801_2013.pdf
Issue date: August 13, 2013 Issued by: SVS Regulation ID: Official Form Letter Nr. 801
This Official Form Letter sets the quarterly indexed insurance unit of October, November and
December, 2013 to CLP 168.14. Additionally, sets the monthly indexed insurance unit of
September, 2013 to CLP 168.57.
This shall be applicable to life, personal or personal injury risks insurance companies (i.e. second
group insurance companies).
Link: http://www.svs.cl/normativa/ofc_800_2013.pdf
Issue date: August 13, 2013 Issued by: SVS Regulation ID: Official Form Letter Nr. 800
This Circular sets the amount to be charged to each first group insurance company (i.e. physical/
material and financial risks insurance companies) according to the Decree Law Nr. 1,575 and Act
Nr. 19,798 with respect to the amounts the SVS must provide firemen to finance their accidents
and disease, corresponding to the August, 2013 period.
Link: http://www.svs.cl/normativa/cir_2116_2013.pdf
Issue date: August 8, 2013 Issued by: SVS Regulation ID: Circular Nr. 2116
This Official Form Letter sets the discount rate (tasa de descuento) applicable to valuation of
insurance liabilities (pasivos de seguros) corresponding to the month of July 2013 at 2.36%.
Link: http://www.svs.cl/normativa/ofc_799_2013.pdf
Issue date: August 6, 2013 Issued by: SVS Regulation ID: Official Form Letter Nr. 799
• Latin America Report - Chile
37
included, among others:
i. Common conditions related to policies associated to such loans must indicate as insureds both
the owner of the mortgage property and the leaseholder thereof, in case of lease agreements
including a promise to purchase. In addition, the General Rule eliminates provisions by means of
which it was mandatory to express that amendments to these insurance policies required consent
of both the insured and the mortgage creditor.
ii. Fire and complementary insurance policies: it broadness minimum coverage that must be
included in fire policies that are additional to mortgage loans related insurance policies. Likewise,
this General Rule states that a separate insured amount must be determined for demolition
expenses, and provides that coverage of collective insurance policies’ additional clauses, must
cover the mortgage property; etc.
iii. Incontrovertibility of collective insurance policies: as per the Commercial Code provisions (that
will enter into force on December 1, 2013), after 2 years of coverage, the insurer may not invoke
reluctance or inaccuracy of any insured statements that may have determined risks value. This
General Rule provides that said 2 year term shall consider uninterrupted coverage under one or
more bided insurance policies, even if they were hired with different insurance companies.
This General Rule will enter in force on December 1, 2013.
Link: http://www.svs.cl/normativa/ncg_350_2013.pdf
C · Bill currently in Congress. ¹
Bill Name: Sets a Risk Based Regulation System for Insurance Companies
(Establece un sistema de supervisión basado en riesgo para las compañías de seguro).
Bill ID Number (boletín): 7958-05.
Status: Bill has been approved by the House of Representatives and its approval
is being discussed by the Senate. Second Constitutional Stage / Senate.
Last relevant landmark: Bill classified with extreme urgency since August
14, 2013.
Next stage: Congress Finance Commission Report to be reviewed by Senate.
Notes: Bill classified with extreme urgency.
¹ http://www.senado.cl/appsenado/templates/tramitacion/index.php
Please note the Bill progress may be followed up at the official government site (above) by inserting
the corresponding Bill ID number, which is included in this report.
38Mexico Report
39
40 Mexico Report
1 · NORMATIVE ACTS ²
The following normative acts regarding insurance and pensions have been published in
the Federal Official Gazette (DOF) during July-August, 2013:
Ministry of Finance and Public Credit (SHCP)
Amendments to the CUS 32/13, 33/13, 35/13, 36/13, 37/13 and 39/13
These Amendments modify reference rates used for pension insurances (Annex 18.7.9 of
the CUS). For easier reference please refer to the following Table:
Positive: Since the reference rates are updated.
Possible Action: As the reference rates for pension insurance are dynamic, it is advisable
to inform the responsible areas to monitor their modifications.
Amendment to the CUS 29/13
Institutions authorized to provide pension insurances monthly contribute to the mandato-
ry Special Fund set forth in article 52 Bis 1 of the Law for Insurance Institutions and Mutu-
alistic Companies; this amendment was necessary to provide Pensiones Sura, S.A. de C.V.
(“Sura”) with an ID number to comply with its contributions to the aforementioned fund.
Possible Action: Since the amendment relates to a third party (Sura), no further action is
recommended. However, Zurich may want to review if it is complying with the monthly
contributions to the Special Fund on pension insurance.
July - August Report ¹
32/13
33/13
35/13
36/13
37/13
39/13
Amendment to the CUS
July 5, 2013
July 12, 2013
July 26, 2013
August 9, 2013
August 16, 2013
August 23, 2013
Publication Date (DOF)
July 8, 2013
July 15, 2013
July 29, 2013
August 12, 2013
August 19, 2013
August 26, 2013
Effective Date
• Latin America Report - Mexico
41Amendment to the CUS 34/13
This Amendment provides institutions authorized to grant financial guaranty insurance,
with the credit risks adjustment factors necessary to determine capital requirements for
the corresponding operation (second quarter of 2013). This modification to Annex 9.7.1
(“Adjustment Factors for Credit Risks”) of the CUS is already effective.
Positive: Adjustment factors are provided, favoring certainty to insurance calculations.
Possible Action: In case Zurich provides financial guaranty insurance, inform the corre-
sponding area.
Regulations for the Federal Law for the Prevention and Detection of Operations Funded with Unlawful Resources (FLUR)
On October 17, 2012 the FLUR was published in the DOF and became effective in July 17,
2013. Subsequently, its Regulations were published on August 16, 2013 and will become
effective as of September 1st, 2013 (with some exceptions for specific provisions).
The FLUR and its Regulations are applicable to “financial entities” in terms of the referred
law, which include insurance institutions and retirement fund administrators. The FLUR
establishes two main obligations: i) reporting Activities Susceptible to Participation of
Unlawful Resources (“Vulnerable Activities”) to the SHCP, no later than on the 17th day
of each month following the month when the services or operation occurred and ii) a
prohibition to settle payments as well as to collect cash or precious metals equivalent or
exceeding Approx. USD $16K ($14K Swiss Francs).
Sanctions for the nonfulfillment of the foregoing obligations include fines ranging from
Approx. USD $1k to USD $330K ($926 to $305K Swiss Francs), provided that in cases of
providing false information or alteration of the information accompanying the reports a
criminal liability may well arise.
Obligations of filing reports, as well as the cash restrictions, will become effective as of
November 1st, 2013, but must comprise services and transactions occurred as of Septem-
ber 1st 2013 (i.e. date when the Regulations will enter into force).
The Regulations set forth terms for compliance of obligations determined in the FLUR and
vest agencies with attributions on this subject matter.
On August 23, 2013, General Provisions with regards of the FLUR were published in the
DOF, which will become effective as of September 1st, 2013 and will be commented in
the following report.
Positive/Negative: The aforementioned Regulations will reinforce and facilitate compli-
ance to the FLUR and prevention of such operations. Compliance of this law may result
¹ Updated as at August 22, 2013.
² Links to the official publication of the normative acts are provided by clicking in of each of the titles of the Report.
42 somehow cumbersome, and will require special attention to identify, monitor and report
vulnerable activities pursuant to the FLUR and its Regulations.
Possible Action: Inform the corresponding areas of these Regulations to implement con-
trols and checks with clients as regards operations that might be subject to this FLUR and
its Regulations.
Amendment modifying i) the Official Standard Template to Report Relevant, Unusual and Concerning Operations set forth in diverse provisions (including the Law for Insurance Institutions and Mutualistic Companies and the Law for the Retirement Savings System), ii) the Manual to comply with such Official Standard Template (December 2004) and, iii) its prior Amendment (June 2012).
The Amendment modifies required information regarding Nationality, Amount and Type
of Monetary Instrument set forth in the Official Standard Template in order to prevent
money laundry operations and terrorism financing. These modifications aim for the SHCP
to obtain the information in an orderly manner, for its analysis with the Financial Intelli-
gence Unit. The Amendment was published in the DOF on August 1st, 2013 and will be
effective 60 calendar days after its publication (i.e. October 1st, 2013).
Positive: The reports rendered by insurance institutions and retirement fund administra-
tors have been reinforced to prevent money laundry and terrorism financing.
Possible Action: Inform the responsible areas regarding reports to the SHCP.
Amendment to the General Provisions Applicable to Brokerage Firms and Credit Institutions regarding Investment Services (General Provisions).
Even if though this Amendment is not addressed to insurance institutions, it is worth no-
ticing that this modification repealed such General Provisions since July 15, 2013. A new
draft of General Provisions is being analyzed by COFEMER, please see Section 3 of this
report for additional information in this regard.
Resolution to issue the Official Standard Template to report International Funds Transfers, in terms of the General Provisions referred to in article 115 of the Law for Credit Institutions.
Even though this Amendment is not addressed to insurance institutions, it may be relevant
to remark that recently the SHCP has issued resolutions to homologate reports required to
diverse entities of the financial system. Therefore, a similar provision may subsequently be
issued and result applicable to insurance institutions and retirement fund administrators.
Possible Action: Monitor the DOF for a similar provision that may become applicable to
insurance institutions and/or retirement funds administrators.
• Latin America Report - Mexico
43Ministry for Social Development
Amendment of the Operation Rules of the Pension for the Elderly Program for the fiscal year 2013
The amendment of the Operation Rules of the Program intends to mitigate the vulnerability of
people of 65+ years of age that have no retirement pension, through economic support and social
protection. The Operation Rules for the Program set forth relevant guidelines for providing such
support. At first glance only banks participate in this Program, considering bank accounts are
necessary to receive the economic support.
Positive/negative/Possible Action: If this is of interest, a revision of the Program and its Operation
Rules may prove helpful to further identify its scope.
Federal Commission for Regulatory Improvement (COFEMER)
List of Revised Documents during the months of June and July, 2013. ³
As informed in the previous report, some relevant insurance regulations were revised in June 2013,
e.g. Amendments to the CUS with reference numbers 28/13, 30/13, 31/13 were published in June in
the DOF and Amendment to the CUS 32/13 was published in July (commented in this report).
In addition, during July Cofemer revised the following relevant insurance regulations: e.g. Amendments
to the CUS with reference numbers 33/13, 34/13 and 35/13; please see Section 1 of this report.
The revised documents were commented throughout the May-June report and in Section 1 of
this document.
National Commission for the Protection of Users of Financial Services (CONDUSEF)
Amendment to General Provisions setting forth the Investment Regime for Investment Corporations Specialized in Retirement Funds (SIEFORES)
The amendment has three main purposes: i) to expand to 45 Countries Eligible for Investment
Purposes (Peru and Colombia were included), ii) to maintain investment safety with respect to
international markets and iii) to increase profitability of the investments considering the possible
growth potential. The draft amendment received a favorable opinion from the Bank of Mexico
(Banxico), the National Banking and Securities Commission (CNBV), and from the Advisory Committee
and Governance Board, both of the National Commission for the Retirement Savings System
(CONSAR). The amendment is already effective.
Positive: SIEFORES have more options to invest considering the new countries admitted for
investment purposes.
Possible Action: Inform the corresponding areas, since this Amendment is effective as of July 25.
³ COFEMER’s lists of revised documents are published during the first half of the month following such revision (i.e. the list of documents revised in June is published in the DOF in July).
44 2 · LAWS
During July-August, 2013 no relevant specific insurance laws were published in the DOF.
However, please note that:
i) On July 17, 2013 the Federal Law for the Prevention and Detection of Operations Fund-
ed with Unlawfully Obtained Resources (FLUR) became effective. The FLUR was published
in the DOF in October 17, 2012.
ii) On August 16, 2013, the Regulations corresponding to the FLUR were published in the
DOF (see Section 1 of this report).
iii) On August 23, 2013, General Provisions with regards of the FLUR were published in
the DOF (which will be commented in the following report).
3 · PUBLIC HEARINGS - REGULATIONS
COFEMER
Draft Amendments to the CUS 32/13, 33/13, 35/13, 36/13, 37/13 and 39/13.
The drafts of the amendments were authorized without regulatory impact assessment
(MIR), since no additional costs are required for the applicable sector to comply with its
provisions. Each of the draft amendments modifies reference rates used for pension insur-
ances (Annex 18.7.9 of the CUS). For reference regarding these Amendments, please see
Section 1 of this Report.
Draft Amendment to the CUS 34/13
COFEMER received no comments to this draft regulation and therefore authorized its
publication in the DOF. This modification to Annex 9.7.1 (“Adjustment Factors for Credit
Risks”) was published in August 5, 2013, and is already effective. Please see Section 1 of
this Report for additional reference.
Draft of Amendments the CUS 38/13
The draft aims to amend Annexes 17.4.2 y 17.4.3 of the CUS regarding the Registration
of Foreign Reinsurers authorized to perform Reinsurance and Rebonding Operations in
Mexico. These amendments update information regarding: i) granting and cancelation of
records with the Registry, ii) change of corporate name and modification of operations of
registered reinsurers and iii) authorized agents representing foreign institutions in reinsur-
ance and rebonding operations. The draft is pending of authorization from COFEMER.
Positive: The registration of authorized foreign reinsurers and of companies authorized to
• Latin America Report - Mexico
45perform operations as their representatives provide legal certainty to these operations.
Possible Action: Inform responsible areas concluding operations with foreign reinsurers.
Draft rules for the Registration of Users
According to the Law for the Protection of Users of Financial Services, CONDUSEF must maintain a
Public Registration of Users that have indicated their refusal for the use of their information for mar-
keting and advertising purposes. This Registration aims to protect such registered users from receiving
offers of financial services providers. The draft rules are still being revised by COFEMER.
Positive: Currently the operation of the Registration of Users is set forth in Condusef’s Internal
Guidelines and therefore, did not had the scope to set forth general obligations regarding privacy of
the users. The Rules may result beneficial by way of promoting privacy protection of such users.
Possible Action: When published in the DOF, inform the corresponding areas to avoid sending com-
mercial communication to registered users, if any.
Draft Amendment to General Provisions setting forth the Investment Regime for Investment Corporations Specialized in Retirement Funds (SIEFORES)
The draft amendment was authorized without regulatory impact assessment (MIR), since no addition-
al costs are required for the applicable sector to comply with its provisions. This amendment was pub-
lished in the DOF in July 24, 2013, please see Section 1 for additional reference regarding its content.
Draft Regulations for the Federal Law for the Prevention and Detection of Operations Funded with Unlawful Resources
These Regulations are applicable to “financial entities” in terms of the referred law, which include
insurance institutions and retirement fund administrators, among others. Please see Section 1 for
additional reference.
Draft Amendment to General Provisions applicable to Credit Institutions and others regarding Investment Services.
The General Provisions aim to protect the public at large in its investment operations considering the
population does not regularly receive financial education. In some cases, entities may benefit from
being treated as “any other client”. This Amendment will prevent some entities to be treated as “any
other client” since they are regarded as financial experts, including insurance institutions and retire-
ment funds administrations.
The MIR corresponding to this Draft Amendment is being revised by COFEMER.
Negative: Insurance institutions and retirement fund administrations will not be able to benefit from
being treated as a “regular client” by credit institutions and other entities.
Possible Action: If convenient, the interested areas may submit to COFEMER observations to this
Draft Amendment.
46 Draft Amendment to the Rules setting forth Minimum Capital Requirements for Operation of the Bonding Institutions.
Public contracts are generally secured with bonds. To foster the participation of micro
and SMB (small and medium businesses) in public contracts, the guaranties that bonding
institutions may accept are being modified. Development banks will assume a percentage
of the compliance risk of the administrative bonds granted. This amendment is relevant
considering authorized foreign reinsurers may perform rebonding operations.
Positive: The Amendment may increase the participation of micro and SMBs as suppli-
ers of the Federal Government, which may contribute to economic growth.
Possible Action: If Zurich is performing bonding operations, inform the correspond-
ing areas.
Draft Amendment modifying i) the Official Standard Template to Report Rele-vant, Unusual and Concerning Operations set forth in diverse provisions (includ-ing the Law for Mutualist Insurance Institutions), ii) the Manual to comply with such Official Standard Template (December 2004) and iii) its prior Amendment (June 2012).
This Amendment aims to prevent money laundering operation and terrorism financing
and is applicable to insurance institutions and retirement fund administrations, specifically
regarding their reports to the SHCP. The Amendment was published in the DOF in August
1st, 2013; please see Section 1 for additional information.
4 · BILLS
CHAMBER OF DEPUTIES
In accordance with provisions of the Mexican Federal Constitution, the sessions’ period of
the Congress ended on April 30, 2013. The Permanent Commission may still receive initia-
tives, which will be analyzed until the following period of sessions (starting on September
1st, 2013).
Bill to Amend the Federal Constitution (articles 74 and 123)
The initiative aims to transfer the authority to determine minimum wages to the Chamber
of Deputies (currently minimum wages are calculated by a specialized agency CONASA-
MI). Even though this amendment is not directly related to insurance or pensions, we
consider it may impact the referred matters, considering
minimum wages are used to calculate indemnities. Some penalties applicable to insurance
institutions and retirement fund administrators may also increase, as they are calculated
• Latin America Report - Mexico
47based on the minimum effective wage. The bill was filed by the Movimiento Ciu-
dadano Party and was sent to the Commission of Constitutional Studies.
Negative: We consider that the calculation of the minimum wages is best pon-
dered by the specialized agency of the Executive Branch, than by the Chamber
of Deputies.
Possible Action: Monitor if the discussion of this Amendment is passed (it was
not filed by any of the three main political parties in Mexico).
Bill to issue the new Law for the Institute for the Promotion of Financial
Education and Integration
The bill creates the Institute for the Promotion of Financial Education and Integra-
tion (“Instituto de Fomento a la Educación e Inclusión Financiera”), coordinated by
the Ministry of Finance. This Institute will i) promote financial education in Mexi-
co and will ii) provide inputs for public policies and actions to educate the public
at large regarding the use of financial products and services. This Law considers
insurance institutions and retirement fund administrators as part of the Mexican fi-
nancial entities. The bill was assigned to the Finance and Public Credit Commission
Positive: If the bill is passed, financial education will be more available for the
public at large, thus benefitting both the population and financial entities.
Possible Action: Monitor if this Amendment is passed.
Bill to Amend the Social Security Law to balance invalidity and life insur-
ance premiums with respect to disease and maternity insurance (articles
25, 147 and 242)
The bill aims to modify insurance premiums of the Mexican Institute of Social
Security (IMSS) to mitigate the deficit of the “disease” and “maternity” insurance,
with respect to the “life” and “invalidity” insurance. For this purpose, one per-
cent of the contributions will be transferred through modifications of quotas of
employers and employees. In addition, the Family Health Insurance is amended for
policy subscribers to contribute according to its age group (to prevent an incre-
ment in its operation deficit).
Positive: According to its statement of purpose, this strategy was part of those set
forth in the “Official Financial Report for 2012-2013” of the IMSS addressed to
the Executive Branch and to the Congress.
Possible Action: Monitor if the discussion of this Amendment is passed. Insur-
ance institutions and retirement fund administrators acting as employers, will have
to adjust their contributions for social security with respect to their workers.
48 Bill to Amend articles 20 and 62 of the Federal Transportation Law (FTL)
This initiative sets forth damage liabilities for providers of auxiliary services in terms of arti-
cle 52 (including toll and rescue services) of the FTL caused to their users and their assets.
Therefore, if passed, this bill may benefit insurance institutions providing insurance against
damages. The bill was filed with the Senate and re-sent to the Transportation Commission
of the Chamber of Deputies.
Positive: This damage liability may benefit users of the auxiliary services and insur-
ance institutions.
Possible Action: Monitor if this bill is passed.
Bill to Amend the Social Security Law
The bill modifies, among other provisions the definition of Reference Wage for Social
Contribution Purposes (“Salario Base de Cotización”) and sets forth specific provisions for
season workers (“trabajadores estacionales”). The bill was assigned to the Social Security
Commission of the Chamber of Deputies.
Positive/Negative/Possible Action: If passed, inform the corresponding areas to identify
if social security contributions of insurance institutions and retirement fund administrators
need adjustments.
SENATE
In accordance with the provisions of the Mexican Federal Constitution, the sessions’ peri-
od of the Congress ended on April 30, 2013. The Permanent Commission may still receive
initiatives, which will be analyzed until the following period of sessions (starting on Sep-
tember 1st, 2013).
Bill to Amend the Social Security Law and the Law for the Retirement Savings Systems, among others.
The bill sets forth, among other obligations of the National Commission for the Retire-
ment Savings Systems (CONSAR), the obligation to render a specific report to the Con-
gress in case of capital losses “minusvalías” affecting the savings of workers invested by
Investment Companies Specialized in Retirement Funds (SIEFORES). These obligations may
affect retirement fund administrators and SIEFORES; considering preparation of the CON-
SAR’s reports. The bill was sent to the Joint Commissions of Social Security and Legislative
Studies of the Senate.
Positive: The obligation to render reports may promote a responsible supervision on be-
half of CONSAR.
Negative: It is unclear if the Congress may have a “concrete beneficial influence” arising
• Latin America Report - Mexico
49from these reports.
Possible Action: Monitor if this bill is passed; if approved, CONSAR’s oversight will
be reinforced.
Bill to Amend the Law for the Protection and Defense of Users of Financial Services (LUFS) and the Law for the Transparency and Control of Financial Services.
The Bill incorporated authorities to CONDUSEF regarding “Financial institutions” in terms of
the LUFS, which include insurance institutions and retirement funds administrators, specifically
regarding i) commissions directed to their users, ii) non-competition practices, and iii) suspen-
sion of information deceiving users of financial services or that does not comply with General
Provisions applicable, among others. The bill was assigned to the Joint Commissions of Finance
and Public Credit and Legislative Studies (II) of the Senate.
Positive: The bill may promote transparency and compliance to the law, in favor of users of
financial services.
Possible Action: Even if this initiative focuses on banks, it may be convenient to review this
bill.
Bill issuing the new Law for the Protection, Information, Counseling and Defense for the Consumer (sic) of Financial Services.
This bill claims to provide a new updated Law with respect to the current effective Law for the Pro-
tection and Defense of Users of Financial Services. If passed, it may be applicable to insurance insti-
tutions and pension administrators. This draft Law may require further analysis to identify modifica-
tions and its possible impact to the current framework. The bill was filed by one of the main political
parties, the National Action Party (PAN) and was sent to the Finance and Public Credit Commission
of the Chamber of Deputies.
Positive/Negative/Possible Action: If interested, further analysis of this draft law is recommended.
Bill to Amend the Social Security Law (article 178) and the Law for the Retirement Savings Systems (article 74).
The bill clarifies the right, in both Laws, for workers to request “at any time” the retirement
fund administrator to transfer the funds to a different fund administrator, provided some
requirements are met. The bill was sent to the Joint Commissions of Social Security and Legisla-
tive Studies of the Senate.
Positive/Negative: The amendment is positive considering it will promote competition in
the pension administration sector, which should favor workers. This possibility of transfers
may require additional recalculations and reports to the authorities on behalf of retirement
funds’ administrators.
50 Possible Action: Monitor if this amendment is passed and inform retirement
funds’ administrators.
Other Bills
In addition to the aforementioned initiatives, three bills filed with the Senate were sent to
the Chamber of Deputies (and therefore were commented in the prior Section):
i) Bill to Amend the Social Security Law. The bill was assigned to the Social Security
Commission of the Chamber of Deputies.
ii) Bill to Amend articles 20 and 62 of the Federal Transportation Law (FTL). The bill
was sent to the Transportation Commission of the Chamber of Deputies.
iii) Bill to Amend the Social Security Law (articles 25, 147 and 242). The bill was sent
to the Social Security Commission of the Chamber of Deputies.
NEWS 4
Insurance
Population density and middle class represent potential for Zurich 5
The CEO of Global Life of Grupo Zurich, Kevin Hogan, indicated that Mexico represents
one of the larger platforms for the insurance and pensions business in Latin America,
considering its numerous population and its vast and young middle class. Mr. Hogan also
referred that even the incipient penetration of the insurance industry in Mexico represents
an opportunity to promote the business and that Mexico is applying various reforms that
may promote a stable, sustainable and greater growth.
Zurich CEO confirmed that in Mexico, the strategy consists of promoting growth in di-
verse sectors: life, investment funds, savings protection. The strategic alliance with Banco
Santander will buttress the bank insurance business (“bancaseguros”).
Positive: According to the analysis of the population dynamics, Zurich may benefit from its
operations in Mexico in the medium and long terms.
Possible Action: As the analysis has concluded, no further action is recommended.
Zurich released data protection insurance 6
Zurich released in Mexico a new data protection insurance, the first in its type to operate
in the country. The product aims to protect companies from theft, unauthorized trade or
misuse of the information they maintain, in accordance to provisions of the Federal Data
Protection Law and its Regulations and Rulings. The product is named Data Protect and
4 Links to each of the news are provided in the corresponding headlines.5 Morales, Yolanda, Densidad de población y clase media, potencial para Zurich, El Economista, July 28, 2013.6 Redacción, Zurich lanza póliza de protección de datos, El Economista, July 11, 2013.
• Latin America Report - Mexico
51
7 Data Protection Law was published in the DOF in July 5, 2010, its Regulations were published in December 21, 2011.8 Reyes, José, Llega Zurich Seguros a Saltillo, primera en Coahuila, Vanguardia, July 26, 2013.9 Agencias, G-20 discutirá sobre grandes aseguradoras, El Economista, July 17, 2013.
10 Business News Americas, Seguros crecen 10.7% en México el primer semestre y fianzas bajan 10.8%, August 2, 2013
offers risk management for abuse or crimes regarding data bases. According to Tim Stapleton,
Deputy Director of Professional Civil Liability of Grupo Zurich, “a filtration of data may represent
an immeasurable damage to a company’s reputation…therefore we aim to provide insurance
and risk management solutions for breaches in companies databases and systems”.
Positive: This new product may provide coverage for a large number of companies that manage
personal data or even sensitive personal data (i.e. hospitals), as has no current competitor. It
also assists companies to comply with obligations arising from the relatively new Federal Data
Protection Law. 7
Possible Action: Monitor the reception of this product in Mexico and share the information
with other Zurich offices abroad for them to evaluate if a similar product may be included in
their portfolios.
Zurich sets its first office in Coahuila 8
As part of its aggressive expansion plans for 2016 in Mexico, Grupo Zurich, initiated activities in
Saltillo, indicated José Luis Ortíz, commercial responsible for the networking of offices in Mexico.
“Currently the company has 37 offices, and aims to reach more than 100 offices set for the year
2016. This is the first office in Coahuila and we will continue growing according to demand and
requirements. We offer automobile, home and damages insurances for SMBs”.
Positive: Zurich is expanding its offices to assist in covering local insurance needs.
Possible Action: Inform the corresponding areas regarding risk and insurance statistics to
identify other convenient locations for Zurich offices to comply with the goal set for 2016.
G-20 will discuss regarding macro insurers 9
The members of the G-20 will meet in Moscow to discuss the problems related to macro insurers
and the risks they represent for global financial stability. Such insurers shall be revised “like we
did with banking institutions”, referred an officer of the German Government.
Positive/Negative/Possible Action: Subject matters discussed in the G-20 have not yet
represented modifications affecting insurance institutions in Mexico, therefore, no effect and
possible action are suggested.
Insurances grew 10.7% in the first half of 2013, bonds receded 10.8% 10
Premiums of the insurance sector summed USD $14.200mn ($13.129mn Swiss Francs) in for
the first half of 2013; direct premiums augmented 10.7% according to the report from the
National Commission for Insurance and Bonds (CNSF). Property insurances (which includes
vehicle insurance) represent 40.8% of the premiums, followed by life insurances representing
39.2% of the premiums. Accidents and health insurances represent 14.0% and pensions
52 represented 6% of the premiums. However, pension insurances, represented the larger
growth rate (+22.6%).
Positive: Insurance culture is augmenting, especially pension insurance. This represents
benefits for the insured persons, for the industry and even for the government (e.g. by way
of complementing per se limited pension expenses).
Possible Action: Share the news with the corresponding areas as it provides an analysis
of the sector.
93% of Mexican nationals lack medical expenses insurance 11
According to an study performed by AXA, in Mexico, 104 millions of Mexicans lack
of a major medical expenses insurance. It is perceived as an unnecessary luxury,
even considering an average of 7 million 300 thousand families may acquire a policy
against a serious medical emergency. Affiliates to public health systems consider such
insurances unnecessary.
Positive: This may represent an area of opportunity for Zurich to cover insurance
needs of the population, currently unattended.
Possible Action: Inform the responsible areas for further analysis.
Health insurance advances 12
During the first half of 2013, health insurance policies reported the largest growth of the
past four years, according to data from the Mexican Association of Insurance Institutions
(AMIS). According to the Executive Manager of the AMIS, Recaredo Arias, the growth is
related to new products released by the insurance institutions.
The Commercial Director of Medi Acces, Juan Romeu, commented that in their case,
growth is related to collective insurance contracts signed with governmental agencies.
According to Mr. Romeu, this company represents 48.37% of the total health insur-
ance market.
Positive: Insurance culture is advancing and there is an ample scope for growth on this
type of insurance.
Possible Action: Inform the responsible areas for further analysis.
AXA releases customized medical insurance 13
This new product may be acquired with the specific coverages that the public at large are
interested on acquiring and can afford. According to Hector Rode, Vicepresident of Life
and Health of AXA, there are 104 millions of Mexicans lacking private health services,
11 Zaragoza, Yazmin, 93% de los mexicanos no cuentan con seguro de gastos médicos mayores, OEM, El Sol de México, August 19, 2013.12 Torres, Yuridia, Crece venta de seguros de salud, El Economista, August 14, 2013.13 Torres, Yuridia, Axa lanza seguro médico a la medida, El Economista, August 15, 2013.
• Latin America Report - Mexico
53which represents growth potential for the insurance sector in the medical insurance area. The prod-
uct is named Flex Plus and is addressed to families with monthly income varying from USD $1,083.00
to USD $2,916.00 Approx. ($1001.34 to $2696.13 Swiss Francs) ; categorized as the intermediate
segment of the population.
Positive: This product favors the comprehension of medical insurance products, which has
represented and obstacle to increase the insurance growth in Mexico, according to the referred news.
Possible Actions: Identify if Zurich may benefit by offering a similar “flexible product”.
Automobile insurances premiums rose 8.6% in the first half of 2013 14
Premiums corresponding to automobile insurance summed USD $2.610mn for the first half of the
year, which represent an increase of 8.6% with respect to the past year, according to the report
of Qualitas, the main vehicle insurer of the country. The increase in automobile insurance followed
that of new automobile sales, which augmented 8.4% with respect to the same period.
Positive: Insurance culture may be advancing with regards to vehicle insurance. Considering Zurich
is providing vehicle insurance this may represent additional area of opportunity for the company.
Possible Action: Considering the data referred to in the news relates to the first half of 2013,
responsible area can work out subsequent forecasts of this tendency.
Only 5.0% of the SMB’s is insured 15
In Mexico only 5% of the small and medium businesses are insured, notwithstanding at least 50% of
such businesses are vulnerable to damages in their facilities, remarked GNP Seguros.
Positive: This lack of insurance represents an area of opportunity for Zurich.
Possible Actions: Inform the responsible areas to evaluate if new products or marketing campaigns
addressed to such companies are advisable.
Verify your coverage for civil liability 16
Until the past year, a death arising from damages to third parties could be indemnified with an
amount of USD$50,000 Approx. ($46,229.97 Swiss Francs). However, amendments to the Federal
Labor Law increased civil liability to USD$308,333 Approx. ($285084.50 Swiss Francs) When the
incident occurs, and the insured sum is not sufficient, assets of the liable person may be targeted
to cover the outstanding amount. If the latter as well results insufficient, persons respond with their
future assets to cover for the caused damages.
Positive: The referred news may promote financial awareness of the risks and benefit insu-
rance contracting.
Possible Action: Share the news to promote financial awareness of the civil liability risks.
14 Business News Americas, Primas de seguros automotores suben 8.6% en México el primer semestre, Business News Americas, August 13, 2013.15 Notimex, Sólo el 5.0% de las pymes mexicanas cuenta con seguro, Yahoo! Noticias, August 7, 201316 Cruz Domínguez, Alejandro, Verifique su cobertura de responsabilidad civil, El Economista, July 29, 2013.
54 Avoid neglecting your life insurance 17
If a person thinks it might be beneficiary of a life insurance of a deceased family member,
it is entitled to have a response from insurers on the subject matter, through the gratuitous
service of the CONDUSEF. It is necessary to accompany the corresponding request
with a copy of the death certificate of the corresponding family member, among other
requirements. This procedure prevents insured amounts to be abandoned, permitting the
beneficiary to perceive such indemnity.
Positive: This procedure reinforces fulfilment of the purpose of the life insurance;
therefore, it may increase reliability in this instrument and increase insurance contracting.
Insurance institutions will only receive requests for information in case of death of a
relative and prior compliance of CONDUSEF’s requirements.
Negative: With this new procedure, less abandoned indemnities will remain with insurance
institutions.
Possible Action: As part of a regular procedure, monitor compliance of Zurich regarding
these information requests and release of indemnities to beneficiaries.
Deceptions regarding life insurance 18
Life insurance has recently been used by some financial institutions to monthly charge the
public at large for a service which terms are ignored by such users. The National Com-
mission for the Protection of Users of Financial Services (CONDUSEF) published an article
“Protect your money” to inform of strategies to stress/force bank users to accept these
charges. E.g. “informing” the user that he has won a life insurance in a drawing, to obtain
his information and then charge for this service, or contracting insurance through a simple
“Yes” (that may be accidental) in regular operation of ATM machines. If the institution
does not provide a satisfactory response to a claim in this subject matter, users may file a
complaint with CONDUSEF.
Positive: Users of financial services are being alerted of non-quite ethical marketing strate-
gies of financial institutions.
Possible Actions: Inform the corresponding areas to identify these actions, to prevent
complaints filed by users with CONDUSEF.
GNP Seguros, the largest multibranch insurer in Mexico 19
GNP guarantees the coverage of damages of its clients through its association with to the
most solid reinsurers in the global market: Swiss Re, Munich Re, Gen Re, Hannover, Map-
fre, Lloyd’s and Patria Re. In this context, GNP Seguros received the Reaction Award as the
best insurer in Mexico. The Reaction Awards grant two acknowledgements per year since
17 Notimex, Infórmese y no pierda su seguro de vida, Yahoo! Noticias, July 31, 2013.18 Notimex, Seguro de vida, necesario, pero sin omisiones o engaños, Yahoo! México Finanzas, July 30, 2013.19 Terra, GNP Seguros, La Aseguradora multiramo más grande de México, Terra Economía, August 15, 2013.
• Latin America Report - Mexico
552008, one for the UK and one for the global market; from this year on, an addition-
al acknowledgement will be granted for Latam.
Positive/Negative/Possible Action: As the news mainly concerns about GNP, no
further action is suggested.
Mapfre releases new insurance for dogs. 20
Mapfre announce this new insurance product specialized in dogs, with aims to
cover a market of 5.4 million of canines with home in the country. This product
will cover medical or veterinarian expenses for the pet and total protection against
attacks, theft of loss of the animal. Insured canines are home pets and assistance
dogs (for blind persons and epilepsy detectors). The coverage is available in Mexico,
with insurance amounts varying from USD $125.00 to USD $2,916.00 Approx. (from
$115.57 to 2696.13 Swiss Francs) depending on coverage.
Positive: This new insurance may cover some frequent risks in Mexico and does not
directly compete with Zurich’s products.
Possible Action: Inform the corresponding areas to identify if a similar insurance
product may be added to portfolio.
Education Insurance as an option. 21
CONDUSEF informed that education insurance aims to guaranty higher education
(middle school and further studies), even in case of lack of the parents or tutors or
in case they become unable to use such resources due to invalidity. Education insur-
ance is honored and provided even if the funds were not totally provided. This dif-
ference is relevant is considering to save in a regular bank account for such purpose.
Positive: Education insurance is being promoted, and this may increase sales of the
product and completion of studies as a consequence.
Possible Action: Share this information to enhance contracting of this product and
promote insurance culture in Mexico.
School insurance 22
In Mexico, only the States of Mexico, Chihuahua, Tamaulipas, Nuevo León, Quin-
tana Roo, Baja California and the Federal District include scholar insurance in their
governmental programs. Seguros S remarked that parents, when choosing the
best school for their children, may inquire regarding if this insurance is provided or
acquire one on their own. Medical scholar insurance only covers accidents occur-
ring during school hours and transportation to the institution (during the scholar
20 Notimex, Mapfre lanza seguro para perros con hogar, El Economista, August 12, 2013.21 Redacción, El seguro educativo como opción, El Economista, August 11, 2013.22 Seguro Escolar, una ventaja, El Siglo de Torreón, August 15, 2013.
56 cycle). According to Seguros S, the most common accidents within schools are minor
scratches and cuts, accidents during the breaks, and related to stairs, windows and
laboratories.
Negative: This type of insurance culture has not been incorporated by most of the
educative institutions.
Positive: Uninsured educative institutions may represent a market opportunity for
insurance institutions.
Possible Action: Inform the corresponding areas to identify if this uninsured sector
may represent an area of opportunity.
Insurers’ abuse in Ciudad Victoria 23
In the last three months, insurers in Ciudad Victoria, registered 637 complaints with
the National Commission for the Protection of Users of Financial Services
(CONDUSEF). According to Maribel Almendariz, officer from CONDUSEF, “at first
glance, the majority of the claims are not concerning non-acknowledged charges,
but regarding account cancellation”.
Ms. Almendariz remarked that banks and insurers receive most of CONDUSEF’s claims;
however, banks conciliate rapidly and insurance institutions require documents to be pro-
duced. According to CONDUSEF’s website, during the first half of 2013, the insurance in-
stitutions with most claims regarding vehicle damages was GNP (17%) of the complaints.
Negative: A high level of claims may negatively affect reliance on in insurance institutions.
Possible Actions: Monitor the claims filed against Zurich Santander to analyze how
they can be mitigated.
Pensions
Chile and Mexico will work jointly regarding pension systems 24
CONSAR and the Chilean Superintendence for Pensions signed a memorandum of
understanding for the exchange of information regarding entities participating in
pension systems in both countries. Main aspects of this exchange of information are
those regarding authorization or licenses of cross border institutions (“CBIS”), supervi-
sion activities, information of the management and shareholders of CBIS and informa-
tion regarding operation of the such institutions, among others.
Positive: Both countries may benefit from this exchange of information.
23 Valadez, Salvador, Aumentan abusos de aseguradoras de Victoria, Conexióntotal.mx, August 9, 2013.24 Redacción, México y Chile trabajarán juntos en sistemas de pensiones, El Economista, July 22, 2013.
• Latin America Report - Mexico
57
25 Torres, Yuridia, Afores tienen que explicar minusvalías a trabajadores, El Economista, July 8, 2013.26 Martínez María del Pilar et al, Pensiones quemarán reserva para enfermedades, El Economista, July 3, 2013.
Possible Action: Identify if this new regulation of CBIS may be appli-
cable and/or benefit Zurich Latam.
Afores must explain capital loss (“minusvalías”) to workers 25
It is necessary for the National Commission for the Retirement Sav-
ings Systems (CONSAR) to explain workers that, even considering
capital loss, retirement fund administrators (afores) grant nominal
profits of 11% in 50 months plans. It is important for workers to
understand that it is not moment to withdraw funds. In addition,
CONSAR must research if afores are properly investing or if they
must modify some aspects of their investment portfolio.
Negative: Afores suffered capital losses during the past two months.
Positive: The news is encouraging CONSAR to participate and deter-
mine how future capital losses can be prevented.
Possible Action: Considering the capital losses of the afores, re-ex-
amine the investment portfolio of Zurich’s retirement fund administra-
tors (if applicable), to prevent future losses.
Pensions will consume social security reserves 26
The Mexican Social Security Institute (IMSS) has started to use a sec-
ond reserve fund to comply with its financial obligations. Its adminis-
trative and labor regime and the amount of the labor debt of the Re-
tirement and Pensions Regime of its own workers, afflicts its finances.
Contributions of IMSS’ workers have not been saved or transferred
to a fund; they have been used to afford a portion of the pensions of
the retired and pensioned workers. To reinforce its finances the IMSS
will set forth diverse strategies, including a new supervision model
regarding incorporation and compliance to the social security system.
Negative: Social security burdens are increasing and the funds may
be insufficient. A legal reform on this subject matter may be neces-
sary in the following years.
Possible Actions: Monitor the publications in the DOF to identify
social security reforms affecting retirement fund administrators and
insurance institutions.
58
27 Flores, Leonor, Gasto para pensiones sube 5.2% real a junio, El Economista, July 31, 2013.28 The Institute for Social Security and Services for State Workers.29 The state owned company named the “Federal Commission for Electricity”.
Expenses related to pensions increased 5.2% in June 27
Pensions payments of the public sector increased 5.2% during the first half of 2013,
according to the report of public finances and debt. This increase is the result of a decrease
of PEMEX’s contributions to the pensions fund (3.8%) with respect to the first semester of
2012 and of an increase in the payment of pensions of the IMSS (7.6%), ISSSTE 28 (4.3%)
and CFE 29 (9.8%) with respect to the referred period.
Negative: Social security burdens are increasing. A legal reform for this subject matter may
be necessary in the following years.
Possible Actions: Monitor the publications in the DOF to identify social security reforms
affecting retirement fund administrators and insurance institutions.
Bill to improve IMSS’ finances 30
The Democratic Revolution Party (PRD) filed a bill to amend the Social Security Law
to confront the financial crisis of the IMSS and to guaranty the viability of its services.
The Vicecoordinator of the PRD in the Chamber of Deputies indicated that if the IMSS
continues consuming its reserves, its resources will only last until 2015. The reform aims to
rebalance premiums of invalidity and life, in benefit of the disease and maternity insurance.
Labor quotas may increase to cover benefits of the insured regarding diseases and
maternity. The Health Insurance for Families lacks finances, considering its operation costs
surpass its income.
Positive/Negative: Bills to improve IMSS’s finances are necessary; however, the terms of
the proposed initiative deserve a complete analysis.
Possible Action: Monitor the final version of this amendment in the DOF, to identify if
insurance institutions and/or retirement fund administrators are affected.
IMSS elective insurance 31
Independent workers or those that concluded a prior employment may benefit from social
security services of the IMSS by acquiring elective insurance, which requires anticipated
yearly payments (quotas). For people that have never contributed to the IMSS a Family
Health Insurance (Seguro de Salud para la Familia) is available. This Health Insurance allows
its beneficiaries to receive health services and medications through a yearly payment that
varies according to the age of the insured.
Some restrictions are applicable regarding the elective insurance, e.g. people with diabetes,
• Latin America Report - Mexico
59liver and/or kidney disease and aids are not candidates for this coverage.
Positive: Access to social security benefits is being reinforced. A large
part of this sector may not have access to private insurance. Elective
insurance may increase contributions to social security.
Possible Actions: Evaluate how “social” insurance might impact and to
what extent, if any, Zurich products.
Personal Retirement Plans 32
For workers providing contribution for their retirement through their
employer, but interested in supplementing the amount for their pension,
Personal Retirement Plans, offered by insurers and investment funds
administrators are available. These products allow persons to set a
savings goal for their retirement, and these contributions are deductible
for tax purposes.
Positive: The news is promoting private saving, which may benefit insur-
ers and retirement fund administrators.
Possible Action: Share this news to promote retirement saving plans.
30 Notimex, Presentan iniciativa para fortalecer finanzas del IMSS, EL Financiero, July 27, 2013.31 Notimex, Tienen mexicanos opción con seguro voluntario de IMSS, Yahoo! México Noticias, July 21, 2013.32 Santa Rita, Ilse, Obtenga la pensión más alta del IMSS con o sin empleo, ¿Qué pasa si yo cotizo a través de un patrón?, El Economista, July 16, 2013
60Venezuela Report
61
62 Venezuela Report
Statistical report of the Venezuelan insurance sector - Second quarter of year 2013.
It is a pleasure for us to present to you this article, published by
Globadir: Statistical report of the Venezuelan insurance sector, for the second quarter of year 2013.
Article structurePreliminary, this article contains an historical analysis of the Venezuelan
insurance market, in which the trends of the main indicators between
year 2001 and year 2012 may be observed. Then, an analysis is
made of the performance of each company for each quarter of the
current year, through a group of financial indicators classified by line
of business. For comparative purposes, the format of the reports
permits to follow up the results obtained for each company in each of
the semesters in an independent manner. In addition, said indicators
are presented on an accumulated basis as of June 30, 2013 and
are compared to the figures of the same period of year 2012. The
following section contains a section of reinsurance net indicators.
Finally, a glossary, the form used for the calculations, and the translation
of terms into English are presented.
The calculation of the indexes made throughout the report is made
on the basis of both premiums received net and earned premiums.
Likewise, the order in which the different companies are presented
in the report is based on the place of each of them according to the
premiums received net and it remains the same in all the report so
that the company or group of companies may be easily found in the
different charts.
This report contains by way of reference some statistics denominated in
Dollars of the United States of America. For making the conversion into
this foreign currency, the rates of exchange indicated below were used.
They correspond to the official year-end rate of exchange of each year
published by the Venezuelan Central Bank: •
Año
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Bs./US$
1,920.00
2,150.00
2,150.00
2,150.00
2,150.00
2,150.00
(*) 2.15
(*) 2.60
(*) 4.30
(*) 6.30
(*): Bs.F
• Latin America Report - Venezuela
63Following is an analysis of the main indicators presented as of June 30, 2013:
Premiums receivedIn the first 6 months of the year, an amount of Bs. 37,355 MM was collected;
earned premiums totaled Bs. 27,042 MM for this period. Reinsurance net premiums
totaled Bs. 30.333 MM, cessions to reinsurance companies represented 18.80%.
The following chart compares the composition of the premium portfolio for June
2012 and 2013. It may be noted that the proportion of the personal insurance
portfolio represented 52.12%. General insurance represented 46.73% and
insurance accepted represented 1.15%.
The 10 biggest insurance companies, as a whole, collected net premiums in
the amount of Bs. 26,153 MM, which represents 70.01% of the total market,
versus 69.99% as of June 30, 2012. This represents an increase in the market
concentration of 0.2 percentage points in 12 months. The following chart contains
a summary of the collection of the first 10 companies of the market:
Personal Insurance
General
Accepted Reinsur
52.12% 52.96% -0.84%
2.10%
-1.27%
46.73% 44.62%
1.15% 2.42%
Jun. 2013 Jun. 2012 Var,
Caracas, Seguros (Liberty)
Mercantil, Seguros
Horizonte, Seguros
Occidental, Seguros La
Mapfre, La Seguridad
Previsora, Seguros La
Altamira, Seguros
Federal C.A. Seguros
Multinacional de Seguros
Estar, Seguros
Others
Sub-total first 10
TOTALS
5,012,362,862
4,472,374,496
3,648,872,645
3,091,949,102
2,852,393,607
1,879,029,248
1,715,689,798
1,218,563,115
1,155,942,092
1,106,186,244
26,153,363,209
11,201,506,673
37,354,869,882
13.42
11.97
9.77
8.28
7.64
5.03
4.59
3.26
3.09
2.96
70.01
29.99
100.00
1
2
3
4
5
6
7
8
9
10
-
-
Premiums Jun. 2013 (Bs.)
Particip.2013 - %Company Rk
64
An analysis by insurance group shows that the total collected premiums of Multinacional
de Seguros Group, which includes Multinacional de Seguros, Adriática de Seguros, Seguros
Guayana, and Seguros Interbank, amounts to a total of premiums received of Bs. 1,345
MM, which represents a market share of 3.60% and maintains it in the ninth position of the
10 biggest companies of the market.
Claims incurredThe accumulated claims incurred as of June 2013 were 60.22%. For March 2012, the
claims incurred resulted in 59.33%, which represents an improvement in this index of 1.48
percentage points in the period.
The accumulated claims paid as of March of this year were 49.90%. For June 2012, this
index was 51.72%. This represents a decrease of 1.81 percentage points.
The days of pending claims were 106 versus 109 for June 2012.
The improvement in claims incurred may be explained because of the better controls applied
to the components that affect the costs associated with the risks insured.
The outstanding claims amounted to Bs. 12,270 MM as of June 2013.
Administration costsThe administration costs accumulated as of June 2013 were Bs. 5,927 MM. The index
of administration costs in premiums received for June 2013 resulted in 15.87%. For the
same period of the preceding year, this index resulted in 16.73%. Also, the index of
administration costs with respect to earned premiums was 16.83% for the 6 months ended
in June. For the same period of the preceding year, this index resulted in17.63%.
Acquisition costsThe accumulated acquisition costs as of June 2013 were Bs. 4,571 MM. The index of
acquisition costs in premiums received resulted in 12.24%. For the same period of the
preceding year, this index resulted in 11.94%. Also, the index of acquisition costs with
respect to earned premiums was 12.98% for the 6 months ended in June. For the same
period of year 2012, this index resulted in 12.58%.
Combined indexAs a result, the combined index for premiums received was 76.01% and it was 89.14% for
earned premiums. For June 2012, these indexes were 80.40% and 91.03% respectively.
• Latin America Report - Venezuela
65
ProfitThe (estimated) technical profit (utilidad técnica) as of June 2013 was of
Bs. 1,043 MM. The technical profit/earned premium index was 2.96%.
For the first 6 months of 2012, this index resulted in 4.34%. The
general market performance for June 2013 resulted in Bs. 1,463MM.
With respect to net profit, the insurance market earned Bs. 2,506 MM
as of June 2013. The net profit with respect to earned premiums was
7.12% versus 7.55% for the same period of year 2012.
Coverage and Solvency MarginThe solvency margin indexes for June 2013 are not available yet. The
index of market reserve coverage was 1.43 for June 2013, which was an
improvement with respect to June 2012 when the index was 1.28.
ConclusionsThe analysis of the results of the sector as of June 2013 shows that
the total premiums were of Bs. 37,355 MM. This represents a 38.14%
increase with respect to the first 6 months of the preceding year.
A 30.97% growth occurred in administration costs, 7.17 percentage
points lower than the growth of the premiums. The acquisition costs
increased by 41.53%, that is, 3.40 percentage points in excess of the
growth of the premiums. In a combined form, there was an increase in
administration and acquisition costs of 2.77 percentage points below
the growth of premiums. There was a slight decrease in the claims
incurred with respect to the first 6 months of last year, resulting in
59.33%, which represented a decrease of 1.48 percentage points with
respect to the same period of the preceding year. As to the cession to
reinsurance companies, this year the companies ceded 18.80% versus
15.24% of the preceding year, that is, 3.55 percentage points more.
All of these factors had an impact on the estimated technical profit
as of June 2013, which resulted in Bs 1,043 MM. As to the general
performance of the company, the result was Bs 1,463 MM. As a result,
the Net Profit totaled Bs. 2,506 MM. The net profit index in relation to
earned premiums resulted in 7.12% versus 7.55% of the preceding year.
66 Following are two charts that contain comparative information for
the periods ended June 2013 and June 2012:
This report was prepared and disclosed with public information
obtained through the Superintendence of the Insurance Activity and
taken from the preliminary unaudited financial statements of the
companies that they deliver to the Superintendence. This information
has not been audited or processed by said Superintendence and is
therefore subject to changes that may occur as a consequence of
Claims paid
Claims incurred
Administ. costs / Premiums received
Administ costs. / Earned premiums
Acquisit costs / Premiums received
Acquisit costs. / Earned premiums
Coverage of reserves
Combined index (/ premiums received)
Combined index (/ earned premiums)
Technical profit / Premiums received
Technical profit / Premiums received
49.90
59.33
15.87
16.83
12.24
12.98
1.41
78.01
89.14
2.96
7.12
51.72
60.81
16.73
17.63
11.94
12.58
1.28
80.40
91.03
4.34
7.55
Jun. 2013
Comparative market indexes (%)
Jun. 2012
Net premiums
Earned premiums
Claims paid
Claims incurred
Administration costs
Acquisition costs
Technical profit
General performance
Net Profit
37,355 27,042 38.14%
37.20%
33.29%
33.86%
30.97%
41.53%
-6.29%
77.36%
29.32%
35,215 25,667
18,642
20,892
5,927
4,571
1,043.1
1,463.4
2,506.5
13,986
15,608
4,525
3,230
1,113
825
1,938
Jun. 2013 Jun. 2012 Var,
Comparative market chart (Million Bolívares Fuertes)
• Latin America Report - Venezuela
67future audits by said authorities. Likewise, some statistical information was obtained
from the Statistics Yearbooks published by the Venezuelan Chamber of Insurance
Companies. Therefore, Globadir nor Travieso Evans Arria Rengel & Paz are able to
guarantee the accuracy of the information contained in this report.
The purpose of this report is to provide a general idea about the Venezuelan insurance
market and it should not be used as a base for making commercial decisions to which
end, a detailed and specific study of the operation should be made.
Faithful Performance Bond to guarantee to the Superintendence of Electronic Certification Services the compliance of the Law on Data Messages and Electronic Signatures
The Superintendence of the Insurance Activity issued Ruling No. FSAA-2-3-002186,
published in Official Gazette No. 40.229, dated August 15 2013, which approves,
with a general character, the Particular Conditions of the text of the Faithful
Performance Bond that has to be used by insurance companies when taking out
contracts with natural or legal persons, in order to guarantee to the Superintendence
of Electronic Certification Services (“SUSCERTE”) that these companies will comply
with the requirements established in article 32 of the Law on Data Messages and
Electronic Signatures and article 11 of the Partial Regulations to said Law. Faithful
Performance Bond will be governed by the General Conditions of the Bond
Agreement with State agencies published in Official Gazette No. 39.941, dated June
1, 2012. The guarantee must be issued by a bank or insurance entity authorized to
operate in the country, it must cover all contractual and extra contractual damages
of the parties executing the same and of bona fide third parties arising from willful
misconduct, negligence or omissions attributable to managers, legal representatives,
or employees of the certification services supplier.
The insurance companies must:
• Indicate the data of the relevant administrative act at the bottom of the bond.
• Identify the amount of the bond and its period of validity. It will be valid for one
year and may be renewed for equal periods of time.
• Fully identify the company and the bonded party (corporate information), as well
as the representative or person authorized to grant the bond (data of the corporate
instrument that qualifies him/her to act as representative or authorized person).
The Ruling became into force on August 15, 2013.
http://www.badellgrau.com/upl/2013_agosto_g.o_40.229.pdf
The entire content of this Gaia Latam Report edition is subject to copyright with all rigths reserved. The information may be used for private or internal purposes, provided that any copyright or other proprietary notices are not removed.
Reproduction in whole or in part or use for any public purpose is permitted only with the approval of Zurich Latin America.The information provided is for informational purposes only and no way constitutes Zurich Latin America position. In no event shall Zurich Latin America be liable for any loss or damage arising in connection with the use of this information.
© 2013 ∙ Zurich Latin America ∙ All rights reserved
Produced by Zurich Latin America
José TalaricoHead of Government &
Industry Affairs - LATAM
July / August 2013
LatAm ReportGaia8
Insurance and Reinsurance