Study of the Sanctions Imposed to Insurers by the Argentine Superintendence of Insurance in the Last Five Years

Article 58 of Law No 20,091 sets forth the sanctions that the SSN may impose on an insurer upon an infringement to the provisions of Law No 20,091, or to its implementing regulations, or when an insurer fails to comply with the measures imposed according to insurance regime by the SSN, and such infringement results in an “abnormal exercise of the insurance activity” or a decrease in the financial capacity of the insurer or an obstacle to the SSN’s control powers.

The penalties provided under Article 58 are as follows: a) call of attention; b) warning; c) fine; and d) suspension for up to three months to operate in one or more authorized lines of coverage or revocation of the authorization to operate as an insurer.

This study analyses the sanctions imposed by the SSN to the insurers pursuant with Article 58 of Law No 20,091 in the five year-period between June 30, 2006 and June 30, 2011. This study does not include an analysis of neither the precautionary measures authorized under Article 86 of Law No 20,091 nor of the sanctions provided for under other laws (Article 63 of Law No 20,091), nor does it contemplate the outcome of any potential appeals against any of the sanctions imposed by the SSN.

In the five year-period considered in this study, the SSN has imposed an overall of 108 sanctions, namely: 52 warnings, 32 calls of attention, 20 fines, three revocations of the authorization to operate as insurer, and one suspension. The following chart reflects the penalties imposed by the SSN, in percentage terms:

As to the behaviors giving raise to the penalties imposed by the SSN, although they vary, certain common denominators allow us to group them in the following categories: a) failure to file or late filing of the financial statements; b) use of unauthorized contractual conditions and/or rates; c) failure to submit information requested by the SSN; d) failure to pay or late payment of the benefit or compensation set forth in the insurance contract; e) operative errors in the administration of the policy; and f) others. During the five year-period, failure to file or late filing of the financial statements was the insurers’ infringement most sanctioned by the SSN (36.12%), followed by the use of unauthorized contractual conditions and/or rates (22.22 %):

By combining the key elements of the charts above (i.e., the penalties and the behaviors giving raise to the penalties), it results that the penalty most imposed by the SSN within the five year-period was the warning due to the failure to file or late filing of the financial statements (15 times). The five penalties most imposed are as follows:

Regarding the fines imposed by the SSN during the five year-period (18.52% of the overall penalties; see the first chart), they ranged from AR$ 3,750 to AR$ 95,000 (approximately US$ 900 to US$ 22,800 at the current rate of exchange), the average fine imposed being of AR$ 21,981.28 (approximately US$ 5,283.96 at the current rate of exchange). The following chart shows the amount of each of the fines imposed by the SSN:

As to periodicity, the number of penalties per semester imposed by the SSN is obtained by fractioning the five year-period under analysis in 10 semesters: