New Regulations on Environmental Insurance

1. Decree No. 447/2019

 

On July 1, 2019, Decree No. 447/2019 (the "Decree") was published in the Official Gazette. The Decree provides that in order to comply with Section 22 of Law No. 25,675, individuals or legal persons, public or private, that carry out activities that pose a risk to the environment, ecosystems and their constituent elements must take out:

 

1. Surety Insurance Policy for Environmental Damages with a Collective Impact,

 

2. Insurance Policies with Risk Transfer, or

 

3. Other financial instruments or insurance plans approved by the State Secretariat of Environment and Sustainable Development ("SGAyDS", after its Spanish acronym) and the National Insurance Superintendence ("SSN", after its Spanish acronym).

 

Moreover, the Decree empowers the SGAyDS and the SSN to issue regulations promoting the development of coverage complementary to those provided for in the Decree. According to the Recitals of the Decree, this is in response to a generalized demand of the industrial sector tending to incorporate new insurance coverage into the market.

 

The Decree also abrogates Decree No. 1638 of 2012, which at that time had established a new regime for environmental insurance that was then challenged in court by various actors (File No. 78/2012, Lower Federal Court No. 2 from the City of Formosa, “N.G.N. Asesores De Seguros S.A. C/ Secretaria De Ambiente y Desarrollo Sustentable y otros S/ Acción Declarativa De Certeza (incidente de medida cautelar)", and Federal Court No. 9 in Administrative Matters, “Fundación Medio Ambiente c/ E.N. - P.E.N. - DTO. 1638/12 - SSN Resol. 37.160 S/ Medida Cautelar (Autónoma)", File No. 56432/2012).

 

The Decree will become effective 90 days after its publication.

 

2. SGAyDS Resolution No. 238/2019

 

Furthermore, on July 3, 2019 Resolution No. 238/2019 of the SGAyDS (the "Resolution") was published in the Official Gazette. It creates the Comprehensive Environmental Guarantee Management System ("SIGGA", after its Spanish acronym) as a mandatory tool for insurance companies that sell environmental insurance policies within the framework of Section 22 of Law No. 25,675, to achieve proper management, administration and control of the policies.

 

According to the Resolution, the SIGGA will consist of a unified system of information for the registration of environmental guarantees that will allow, among other functions, to gather information, administer exemptions, keep a registry of insurance companies and generate predetermined notifications automatically. Insurance companies authorized to commercialize environmental insurance will be obliged to adopt this system.

 

The Resolution also orders the progressive adoption of a regime called "Electronic Policy" for the submission, constitution, substitution, modification and / or expansion of environmental insurance, within the framework of Section 25.3 of the General Regulation of Insurance Activity approved by Resolution No. 38.708/2014 of SSN.

 

Insurance companies will be responsible for the electronic transmission of data, which includes uploading the relevant data and the valid document of the issued policy into the system, as well as the remission of the policies through SIGGA, once the insurance conditions have been agreed with the respective policyholders.