Amendments to General Regulation of Insurance Activity: New Requirements in the Authorization of Insurance Lines and Products
Resolution No. 475/2019 established new proceedings for the Authorization of Insurance Lines and Products, and requirements of policies and certificates of coverage.
In the context of simplification and modernization pursued by the Argentine Superintendence of Insurance (“SSN”), and within the framework of the Modernization of the State Plan (Decree 434/2016), the SSN modified the requirements and proceedings of authorization to operate in the different lines of insurance and insurance plans (point 23 of the General Regulation of Insurance Activity “RGAA”). It also modified the minimum requirements of the policy conditions and the certificates of coverage (point 25 of the RGAA).
We will describe the highlights of the main amendment introduced by the Resolution No. 475/2019 to the RGAA (the “Resolution”).
Authorization of lines of insurance and insurance products (Section 23 of the RGAA)
i. Formal admissibility requirements for the approval of the applications
The Resolution added point 23.1 and established that the submissions must be signed by persons who have registered their signature with the SSN, in accordance with the proceedings of Section 7.5 of the RGAA. Likewise, it added requirements to respond to the observations made by the SSN, which include the following:
- All the observations must be responded in their entirety.
- Responses must specifically identity the file number in which the approval application has been initiated, the number of the administrative act that is being responded, the line of insurance and the name of the insurance plan.
- The responses, with the requirements mentioned, must be presented within a deadline (30 business days since the communication of the SSN informing that the request is on hold).
ii. New requirements for the approval of applications of insurance products
There are four types of authorization of products (including technical and contractual elements) that have not been modified for the Resolution (the RGAA also establishes other types of authorization of insurance products that have not been modified by the Resolution, i.e. “microinsurance regime” regulated in point 23.8 of the RGAA), and these are the following:
a) Approvals of a particular nature;
b) Approvals of a particular nature in accordance with the System of Minimum Guidelines;
c) Adherence to approvals of a particular nature (not applicable to the cases of subsection b);
d) General approvals.
After the Resolution new requirements have been established for the filing of the approval applications under each one of the aforementioned types.
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REQUIREMENTS |
TYPE OF AUTHORIZATION |
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Approvals of a particular nature |
Adherence to approvals of a particular nature [1] |
Approvals of a particular nature in accordance with the System of Minimum Guidelines [2] |
General approvals |
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WHAT HAS NOT CHANGED |
The technical and contractual elements can only be used by insurers with prior approval of the SSN, or once 90 days have passed from the submission without objections of the SSN. (tacit approval). |
After 90 days of the approval of the technical and contractual elements of a particular nature by the SSN, any insurer authorized to operate can use them, prior request of authorization to the SSN. Or once 30 days have passed from the submission without objections of the SSN. (tacit approval) The request of adherence must be for all of the contractual conditions authorized in the plan. |
The technical-contractual elements can be automatically used by insurers, if the submission complies with the formal requirements, without prior authorization from the SSN. |
Duly authorized insurance entities can use the clauses and technical and contractual elements generally approved by the SSN. |
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Attach to the submission a note in which the approval of technical and contractual elements will be required. |
Attach to the submission a note (the request of adherence must be for all of the contractual conditions authorized in the plan) in which the adherence to contractual conditions, and a form which includes the data of the contractual conditions to be used, will be required. |
Attach a presentation note in which the approval of conditions according to this system will be required. |
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Attach a copy of minutes of the meeting of the administration body with evidence of the resolution adopted or of the legal representative’s decision.
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Attach a copy of minutes of the meeting of the administration body with evidence of the resolution adopted or of the legal representative’s decision. |
Attach a copy of minutes of the meeting of the administration body with evidence of the resolution adopted or of the legal representative’s decision. |
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Attach contractual conditions, form of loss report and health questionnaire, when applicable. |
Affidavit signed by the chairman and two members of the administrative body, recording that the contractual conditions and premiums are in compliance with the regulations, among other. |
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Attach the underwriting and risk retention policies (according to the point 24.1 of the RGAA). |
Attach the underwriting and risk retention policies (according to the point 24.1 of the RGAA). |
Affidavit signed by an independent lawyer, declaring that the contractual conditions are all in compliance with the regulations, among other. |
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Attach actuarial and legal opinions. Both requirements had already been included before the Resolution, but the Resolution added that:
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When including premium guidelines, attach affidavit of independent actuary, proving that the premiums comply with the established System of Minimum Guidelines. |
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NEW |
Attach technical conditions and premium spreadsheet. This note must include some new requirements. |
The adherences, as a type of authorization may only proceed with regard to products that have been previously approved by the SSN’s express approval.
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Attach the form of loss report and health questionnaire, if applicable.
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Mandatory group life insurance is specifically excluded.
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Attach technical conditions and premium spreadsheet. |
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Only for life insurance: attach actuarial opinion regarding some elements of the premiums. The opinion must include the signor’s personal data (name, surname, registration number with the SSN, phone number, e-mail address, etc.) |
Attach technical conditions and premium spreadsheet. |
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Affidavit signed by the chairman and two members of the administrative body, in which it declares that: (i) the contents of the particular conditions, certificate of coverage, insurance applications form and other forms[3] are in accordance with the regulations and (ii) an Annex I to the policy will reproduce the authorized exclusions of the contractual conditions. Violations will be deemed irregular exercise of the insurance activity and will be sanctioned under Section 58 of the Law No. 20,091. |
Affidavit signed by the chairman and two members of the administrative body, in which it declares that: (i) the contents of the particular conditions, certificate of coverage, insurance application form and other forms are in accordance with the regulation and (ii) an Annex I to the policy will reproduce the authorized exclusions of the contractual conditions. Violations will be deemed irregular exercise of the insurance activity and will be sanctioned under Section 58 of the Law No. 20,091. |
Attach the underwriting and risk retention policies (according to the point 24.1 of the RGAA).
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The Resolution has also updated the minimum amount for a risk to be considered a “large risk”. The “large risk” regime allows the issuance of policies without prior authorization of the SSN and allows the immediate use of their contractual conditions when the requirements established in point 23.5 of the RGAA are met.
In accordance with the amendments introduced by the Resolution, “large risks” would be those which have, among other conditions, sums insured higher than ARS 250,000,000 (at present, approximately USD 5.6 million) or their equivalent in foreign currency. For these “large risks” requirements and formalities were established for the legal opinion and the actuarial report (new point 23.5.2) that must be submitted to the SSN.
Policy conditions and certificates of coverage (Section 25 of the RGAA)
i. The Resolution also substituted the subsections “f”, “l” and “n” and added subsection “q” in the point 25.1.1 of the RGAA. Point 25 of the RGAA establishes the minimum elements that policy conditions and the certificates of coverage issued under group insurance policies must contain.
Probably the most important amendment has been made in subsection “f” of this point 25.1.1 of the RGAA, which now establishes the following:
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Changes introduced by the Resolution |
Wording before to the Resolution |
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f. “Gross premium, with a breakdown of administration and acquisition charges, surcharges and other elements, in accordance with point 26.1.6 of the RGAA.”[4] |
f. “Gross premium with a breakdown of the net premium and other elements, in accordance with point 26.1.6 of the RGAA.” |
ii. Furthermore, the Resolution substituted subsection “l” of the point 25.1.2.1 of the RGAA regarding the data which must be included in the certificates of coverage under group policies.
As a general rule, certificates of coverage must not disaggregate administration and acquisition expenses. New subsection “I” adds this requirement for the case of group life insurances. It establishes: “In the event of group life insurance policies, it must detail administration and acquisition expenses, financing charges and other sorts of charges that make up the premium, in accordance with point 26.1.6 of the RGAA.”
iii. It added the point 25.2.3 to the RGAA, establishing minimum standards that insurers must comply with for the drafting of insurance application forms.
The insurance application forms must include the following: (i) the required information for the commercialization of contractual conditions regarding each particular contract; (ii) place and date of issuance; (iii) dates of beginning and end of the coverage, (iv) name, tax ID, personal ID and domicile of the contracting parties; (v) risks covered, etc.
[1] Those plans authorized to entities in a liquidation process (voluntary or forced) or entities to which the SSN has canceled their authorization to operate are excluded from this type of authorization.
[2] To request the approval of contractual conditions or premiums through this type of authorization, the resolution that includes the Minimum System Guidelines for the insurance line or coverage whose approval has been required must be in force. The following are excluded from this type of authorization: mandatory insurances, surety insurances and those that have uniform contractual conditions of mandatory use.
[3]The Resolution eliminated the obligation to file the policy front page, certificate of coverage (in the case of group insurance), the application form and the Annex I of exclusions
[4] Point 26.1.6 establishes that, except in individual life and annuities where the premium must be distinguished from other components, the front of the policy must include a breakdown of (i) the net premium, this being the risk premium plus administration and acquisition expenses, without detailing these technical components separately and (ii) the other components of the premium, such as taxes, financing charges or other sorts of charges.
This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.