Group Credit-Life Insurance Regime

Resolution No 35,308, enacted on August 27, 2010 by the Argentine Superintendence of Insurance (“ASI”), had established the legal framework applicable to group credit-life insurance. Successive extensions(implemented by resolutions No 35,520 and 35,634) established that Resolution No 35,308 would come into force on April 1, 2011. However, before that date, the ASI enacted Resolution No 35,678 (the “Resolution”), which –among other things– expressly repealed resolution No 35,308.

Resolution No 35,308 had basically divided this insurance coverage between: i) mandatory insurance (i.e., credit-life insurance associated to mortgage or pledge loans); and ii) voluntary insurance. The Resolution makes no distinction between mandatory and voluntary insurance; their provisions are therefore applicable to any group credit-life insurance.

The Resolution sets forth that life cover must always be provided under any credit life-insurance, with the option for the policy holder to add permanent and total disability coverage. Unlike the previous resolution, the Resolution allows insurers to offer additional benefits covering temporary and total disability or involuntary unemployment. These additional benefits will be optional for insureds.

In addition, the Resolution keeps the obligation for agents to transfer to the insureds the actual premium charged by the insurers, without adding expenses or commission. The Resolution also keeps a prohibition whereby policy holders cannot simultaneously act as agents to the insurer.

The Resolution sets forth that, in the event of change of insurance company, this change cannot derive in a limitation of the insurance coverage or in a change that prejudices the insureds, with the exception of changes in the rates to be applied by the new insurance company.

It also establishes that, from its coming in force, technical plans that do not conform to the new Resolution will no longer be valid.

In addition, it states that insurers must operate with only one group credit-life insurance plan. These plans shall be automatically approved by the ASI if insurers comply with certain requirements and submit to the ASI the plans they are to use by May 2, 2011.

The Resolution also establishes that from its coming into force, insurance policies that do not adjust to the Resolution shall not be renewed. The Resolution will come into force on May 2, 2011 for group insurance covering debts originated in mortgage and pledge loans, and on August 1, 2011 for other insurances.

Nevertheless, the Resolution sets forth that insurance that covers credits that expire after the date when the Resolution comes into force will expire on the expiration date of the credit agreement. If the insurance covers revolving credits, the insurance will expire on the expiration date agreed between the policy holder and the insurer or on April 30, 2012, whatever happens first.