Insurance Agents: New Legal Framework

The Argentine Superintendence of Insurance (“SSN”) introduced a new legal framework for insurance agents (agentes institorios) through Resolution No 38,052 (the “Resolution”).
 
We analyze below some of the most important changes which will impact on the selling of insurance.
 
A) The Situation before Resolution No 38,052
 
Insurers could sell insurance directly, through insurance brokers (productores asesores de seguros) or through insurance agents (agentes institorios).
 
Brokers are individuals or companies licensed by SSN to carry on insurance broking activities. They intermediate between insureds and insurers and in principle represent neither of them. They are expected to comply with some on-going insurance training and must comply with other requirements set forth by the SSN.
 
Insurance agents are either individuals or companies who sell insurance on insurers’ behalf. Banks and retailers usually sell insurance acting in their capacity as agents of insurance companies. Until now, these agents were subject to very little regulation in the selling of insurance products. The alleged aim of the amendments introduced by the Resolution is putting brokers and agents on a level playing field and introducing further protections for insurance customers. They are in line with requirements introduced in 2013 by the Central Bank of Argentina for the protection of financial services users (see Protection of Financial Services Users – http://www.marval.com/publicacion/?id=5964).
 
B) The New Legal Framework
 
Insurers may still sell directly, through brokers or agents. However, significant new requirements were imposed on the selling through agents.
 
(i) Registration with the SSN
 
Insurance agents will be able to market insurance products once they have obtained an authorization by the SSN and are registered with the Insurance Agents Registry (“RAI”, after its acronym in Spanish).
 
Only legal entities with no less than two years of experience in their own activity will be permitted to register with the RAI. Such legal entities will have to submit information regarding their corporate structure, organizational chart, shareholders and directors, among other things, to the SSN.
 
The request for authorization must be filed with a certified copy of the power of attorney granted by the relevant insurer. The power of attorney must meet certain requirements, such as a clause allowing the agent to: i) enter into insurance contracts; ii) agree amendments or extensions; and iii) receive notifications. The power of attorney may include the authorization to collect premiums. Information on the agent’s commission and on the insurance plans to be marketed must be included either in the power of attorney or in any other ancillary agreement executed between the insurer and its agent.
 
(ii) Obligations of the Insurance Agent
 
Agents will have to keep two registries. In one, the agent will register on a daily basis information on the insurance transactions in which he or she has intermediated. In the other, the agent will register all losses reported.
 
Agents may not obligate a person to take out an insurance protection as a condition for obtaining another product or service. However, this impediment does not apply when the insurance protection is required to cover an insurable interest of the agent itself (for instance, fire insurance on a mortgaged property required by the bank as a condition for granting a loan). In these cases, the agent will offer clients the possibility of choosing between at least three non-affiliated insurers. The insurer of choice may charge the client the same premium as that which would be charged in a direct sale. In no case may the premium exceed that of a similar transaction through an insurance broker.
 
Insurance agents must include an insurance department, headed by an experienced manager with supervisory and control functions, in their organizational chart. Agents must have, in each point of sale where insurance is marketed, an insurance customer service representative (Responsable de Atención al Cliente Asegurado), who will report to the insurance department manager. Both the insurance department manager and insurance customer service representatives will need to evidence certain training in insurance matters.
 
At each point of sale a board must be displayed in a clearly visible place, with information as to the duties and rights of the agent, the insurance department manager, the insurance customer service representative, the SSN and the Department of Guidance and Assistance to Insured, a customer service department within the SSN (see Insurance News # 5 – “New Insurance Customer Services” - http://www.marval.com.ar/publicacion/?id=8735, Insurance News # 9 – “Amendments to the Assistance to the Insured System in the Department of Guidance and Assistance to the Insured” - http://www.marval.com.ar/publicacion/?id=8825 and Insurance News # 13 – “Amendments to the Customer Services Regime of the Insurance Industry” - http://www.marval.com.ar/publicacion/?id=9060).
 
Insurance agents will have to pay an annual fee of AR$ 6,000 (approximately USD 1,000) to the SSN.
 
(iii) Provisional Measures
 
Insurance agents already in activity will have to adjust to this new regulatory framework by June 30, 2014.
 
Powers of attorney already granted to insurance agents (registered with the Public Registry of Commerce and reported to the SSN) will be valid until December 31, 2014 (unless an earlier expiration is set out in the document).
 
Powers of attorney to be granted from now on will have to be reported to the SSN from June 30, 2014. Registrations with the RAI will also commence on June 30, 2014.