Insurance Broking Companies - Sanctions

In the file that derived in the case of “Superintendencia de Seguros de la Nación c/Díaz Aráoz S.R.L. s/presunta violación normativa vigente”, the Argentine Superintendent of Insurance had imposed a disqualification to an insurance broking company and to all its members on the basis that the insurance broking company had paid to an insurer the premiums collected from certain insureds beyond the term set by Resolution SSN No 24,828 thus enabling the insurer to decline cover for some claims.

The sanction imposed by the Superintendencia de Seguros de la Nación was challenged both by the insurance broking company and by one of its members, on the basis that on the one hand premiums had been paid to the insurer within the term “orally” agreed with the insurer.On the other hand one of the members of the insurance broking company argued that she had not taken part in the facts that resulted in the sanction and was consequently not liable.

Tribunal E of the Commercial Court of Appeals of the City of Buenos Aires recently decided on the challenge lodged by the insurance broking company and its member. The Court held that even if the appellants had proved that the “oral” agreement with the insurer existed, such an agreement would violate Resolution No 24,828, whereby insurance brokers authorised by an insurer to collect premiums must deliver them to the insurer every 15 days, on day 15 and on the last day of each month (art. 10.1.1).The Court found that there is no party autonomy in this because late payment of the premiums to the insurer may negatively affect the insurer’s economy and finances, therefore affecting the public interest present in the insurance activity.An insurer and an insurance broker may not agree on a term beyond those set by the applicable regulations.

The Court also confirmed that the sanction must extend to all the members of the insurance broking company. Pursuant to article 22 of Law No 22,400, sanctions to an insurance broking company must be extended to all its members.The Court held that if a member wants to avoid this legal presumption (whereby liability extends to all the members of the broking company), he must prove that the violation is exclusively attributable to the other members.And this had not occurred in the case.

In consequence, the Court confirmed the sanction imposed by the Superintendent of Insurance, although it reduced the duration of the disqualification.