Insurance

SYNOPSIS

A. GOVERNMENT INSURANCE REGULATION 18.101

B. INSURANCE AUTHORIZATION REQUIREMENTS 18.103

C. WINDING UP OR LIQUIDATION
     OF INSURANCE ENTITIES 18.104

D. INSURANCE BROKERS 18.109

E. TECHNICAL RESERVES 18.110

F. REINSURANCE 18.111

G. RETIREMENT AND PENSION FUNDS 18.112

H. LABOUR RISK INSURANCE 18.114

I. GUARANTY UNDERWRITING POLICY 18.117



A. GOVERNMENT INSURANCE REGULATION

18.101 Insurance in Argentina is a government regulated activity. Pursuant to Law Nº 20.091, any legal entity wishing to operate in insurance must be previously authorized to that specific purpose by the competent regulatory agency, known as the Superintendencia de Seguros de la Nación (National Insurance Superintendence).

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B. INSURANCE AUTHORIZATION REQUIREMENTS

18.102 Requests to operate in insurance are granted to corporations, cooperatives or mutual insurance companies on condition that:

1. They be submitted in favour of duly incorporated Argentine companies complying with company law and insurance law.

2. That such a company’s sole object be to act in insurance.

3. That such a company have the minimum capital requirements.

4. That such a company be incorporated for the minimum duration as required in accordance to the nature of the specific kinds of insurance it intends dealing in.

5. That such a company’s business plans satisfy specific insurance law requirements to the effect.

6. That such a company’s authorization to operate be considered convenient for the insurance market in general, this being the reason for new authorizations to operate having been turned down of late due to the insurance market being considered oversized.

18.103 There is no restriction to foreign investment in local insurance companies or to the establishment of local branches or agencies by foreign companies, cooperatives or mutual insurance companies, provided that their domicile law admits reciprocity in favour of such Argentine legal entities.

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C. WINDING UP OR LIQUIDATION OF INSURANCE ENTITIES

18.104 Insurance entities are not subject to general bankruptcy law and cannot preventively file a petition for business reorganization (chapter 11) or be the object of an adjudication of bankruptcy.

18.105 Insurance companies are subject to special winding up procedures by the government regulator brought before an ordinary competent judicial court.

18.106 When the insurance company decides its own dissolution, the liquidation proceedings shall be in charge of the entity’s governing bodies in accordance to the bylaws and under the regulator’s surveyance. The latter can nevertheless petition the court to be appointed as liquidator instead of the insurer’s own governing bodies if the insurance company does not immediately proceed to its winding up or when such an appointment is needed to protect the insured interests.

18.107 When the winding up proceedings are due to the regulator having revoked or withdrawn the insurer’s authorization to act as such, the regulator shall be in charge of the liquidation through a court appointed official.

18.108 When the insurer’s liquidation has not yet been begun notwithstanding the entity being in a state of bankruptcy, the court shall order the insurance company’s dissolution and winding up in charge of the government regulator, who shall act as a receiver and must follow the legal procedure established in the case of bankruptcy.

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D. INSURANCE BROKERS

18.109 Insurance brokerage is ruled by Law Nº 22.400 and is also controlled by the same regulatory agency, that keeps a register of authorized insurance brokers.

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E. TECHNICAL RESERVES

18.110 The regulatory agency establishes the technical and liability reserves that are required indiscriminately for all insurers. Insurers’ financial statements must evince amounts set aside to fund amortization, contingent claims and reserves established for all insurers by the regulatory agency, in addition to any amounts specifically required by the regulatory agency with respect to each insurer and in accordance to its financial situation, all of which funds must be in bonds and other government issued securities; foreign government bonds; public offered foreign notes; first priority grade mortgages or pledges; real estate in Argentina; Argentine or foreign incorporated company stock market offered shares; bond, debenture or company share guaranteed loans; or bank or finance company guaranteed financing operations, in the percentages established by the regulatory agency, that may object to any investment considered not to be up to the required liquidity, earnings, guaranty or price standards.

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F. REINSURANCE

1. The National Reinsurance Agency

18.111 Though until recently reinsurance was monopolized by a government agency, at present local operating insurance companies are free to contract their reinsurance with local or foreign reinsurers, and in this last case whether or not such reinsurance companies have an office in Argentina.

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G. RETIREMENT AND PENSION FUNDS

18.112 Retirement and pension fund managements (in the Spanish language, administradoras de fondos de jubilaciones y pensiones - A.F.J.P.) can be incorporated as limited companies or corporations, and exceptionally and to that sole effect as other companies or legal entities, and can be established by the provinces and the government of the city of Buenos Aires, in each case for the purpose of managing only one pension fund pursuant to Law Nº 24.2411, that instituted the Retirement and Pension Integrated System (Sistema Integrado de Jubilaciones y Pensiones, S.I.J.P.) to provide covering for old age, invalidity and death contingencies, including a social security system based on private individual capitalization.

18.113 Government control over retirement and pension fund managements is in the hands of a regulatory agency known as the Retirement and Pension Fund Managements Superintendence (Superintendencia de Administradoras de Fondos de Jubilaciones y Pensiones).

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H. LABOUR RISK INSURANCE

18.114 Pursuant to Law 24.557, labour liabilities originating in work performed for wages are insured by specific Labour Risk Insurers (Aseguradoras de Riesgos del Trabajo), except in authorized self insurance cases that are excluded from this legal system, must insure workers against labour accidents or diseases, establishing their degree of incapacity in accordance to predetermined points of reference to the effect of determining damages to be paid in monthly amounts. Additionally Labour Risk Insurers must pay in kind for medical assistance and drugs, orthopedic and other implanting and cure treatments, readaption for work and burial service.

18.115 Labour Risk Insurers are government authorized and controlled legal entities incorporated for the sole purpose of insuring labour accidents and deceases as described with a minimum capital outlay of three million pesos.

18.116 Labour Risk Insurers can also engage for freely agreed premiums to insure money payments provided for by labour law in cases of fortuitous accidents or deceases and the financial needs concerning legal actions brought to court because of labour accidents and deceases under previous statutory law.

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I. GUARANTY UNDERWRITING POLICY

18.117 Frequently used in business transactions, a guaranty underwriting policy (póliza de caución), though executed with insurance policy formalities, is in fact a debt performance security in favour of a third party beneficiary in case of the insured debtor’s failure. Therefore a guaranty underwriting policy is an accessory contract providing security by the insurer for the performance of the insured’s obligations toward the beneficiary under a principal contract. Insurance policy rules apply inasmuch as not in contradiction with the essential collateral nature of the contract.

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