Gaia 8 a01

Latam ReportGaia8

Insurance and Reinsurance

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IndexSummary

Argentine Primary elections: Starting over (once again)?Marcelo E. Bombau

3

New Brazilian Fund and Guarantee Management Agency ABGF??????????

5

Microinsurance in BrazilAluízio Barbosa

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Latin America Report

Argentina10Brazil14Chile19Mexico25Venezuela45

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Zurich Latin America Av. Jornalista Roberto Marinho 85 24° andar - Brooklin Novo São Paulo - SP Brasil

55 11 2313 8068 (internal) 55 11 97144 9692 (Mobile) [email protected]

José Talarico Head of Government & Industry Affairs - LATAM

Given the invitation made by Antonio Cassio, the CEO of In-

ternational Federal of Red Cross and Red Crescent Association

Latam, Mr. Xavier Castellanos, visited Zurich Head Office last

August 15, when several humanitarian themes were discussed,

such as the Flood Resilience Project of Mexico and a possible

partnership involving the Minas Gerais State (Brasil) and the

Regional and International Red Cross. The restructuring of

Red Cross in Brasil was also a topic of discussion.

On that occasion, Mr. Castellanos offered, as a way to straight-

en relationship with Zurich, the IFRC Security Trainning, with-

out any cost. Mr. Mario Orozco, the Regional of Risk Engineer-

ing, will be the person responsible for the next steps of the

training implementation.

Another subject we talked about was the creation of a stan-

dard Flood Resilience project for LatAm, the princi-

ples of which are being discussed internally.

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The once bright star that guided the last ten years of the Kirchner administration in Argentina is clearly fading away as evidenced by recent primary elections held in August.

Argentine Primary elections: Starting over (once again)?Marcelo E. Bombau

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The main consequence will be that with the

shift of political power on the horizon as a result

of these elections, the hypothesis of a constitu-

tional amendment aimed at allowing the cur-

rent president to run for a third term will have

vanished forever. This, in turn, leads to a succes-

sion issue within the governing party. Personally

speaking, and regardless of how the political

forces may realign after these elections or who

could be elected president in 2015, one can val-

idly argue that things will necessarily change in

Argentina after 2015. Though this anticipated

future change will surely have different shades

of gray, it is quite certain that Argentina will see

a more friendly and tolerant business, social and

political environment.

However the true main question these days is:

what can be expected in the near future if the

government loses the October mid-term elec-

tions considering that they will still have two

more years in office? Though having insisted

that under no circumstance will it deviate from

its road or change the “model”, some econom-

ic adjustments to the same would need to be

made. If the government will insist on its present

game plan or if it will (forced by the circumstanc-

es) make it more flexible is still a story to be told.

From a purely logical point of view some changes

would be more than advisable. However, world

history and politics have shown more than once

that nothing can really be taken for sure, espe-

cially when a government is on its way out…

The 2011 presidential election, which

re-elected current president Cristina F. de

Kirchner to her second term in office with

a 54% landslide, is long past history. Those

glory days for the Kirchner administration

are no longer around. The recent primary

elections in anticipation of the October

2013 mid-term elections for legislative offic-

es has shown a very important decrease in

the 2011 support.

Trying to explain this change in the voter´s

desires may seem a feat but the explanation

can be simplified to a certain extent when

the government insists that the “model”

will not only remain unchanged, but that –

rather – it will be strengthened. This inabil-

ity or unwillingness to read the message of

the primaries’ results, coupled up with the

insistence in not admitting nor correcting

what may need to be corrected, is the DNA

of this Argentine government. To a certain

extent, it has become its own enemy.

A highly intervened business atmosphere

accompanied by a closed market in many

senses, with inflation and insecurity on the

rise and a lack of openness and dialogue

with other political and social forces (let

alone with the rest of the world) are just

some of the reasons which could try to

explain the recent electoral outcome.

It is predicted that the October mid-term

elections will not show a drastic change in

what has come out of the primary elections.

So, what will this represent in practice?Marcelo E. BombauVice-Chair American Bar Association Section of International Law

• Article

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New Brazilian Fund and Guarantee Management Agency ABGFJosé Talarico

Through decree 7.976, published on April 1st, 2013, the Brazilian Fund and Guarantee Management

Agency “ABGF” was formally approved and is expected to begin operations by the end of 2013,

according to government officials. ABGF's stated purpose is to accept risks usually covered by

lines such as engineering, surety and credit insurance whenever the insurance market is unable

to provide coverage for such risks, either totally or partially. The ABGF can act in areas including

infrastructure projects, naval construction, the granting of credit for the aviation industry, public-

private partnerships and other programs that the Brazilian government deems to be strategic.

Two major funds will function within the ABGF managing: one for infrastructure financing (FGIE)

with resources up to R$11 billion and another for foreign trade (FGCE) with capital up to R$14

billion. The new agency, with resources from existing "surety funds" for small business, student

credits, among others, that the government is planning to cancel, will be able to offer surety to

the so called "decentralized risks" (spread over small operations) that could turn into standard

insurance policies.

Additional concern comes from article 38 of Law 12.712 that creates ABGF, which states that the

agency will not grant surety to those risks that are fully covered by the private insurance market, as

long as the market is providing it in rates and conditions compatible with those adopted by ABGF,

which could turn out to be some sort of a price control mechanism in the (re)insurance market.

00The ABGF can offer direct cover when insurers

decline to accept all or part of the risk and can offer

indirect insurance and reinsurance cover provided

that the insurers and reinsurers retain at least 20%

of the total responsibility for the operation.

ABGF administered funds may benefit major infra-

structure projects which form part of the govern-

ment’s program to accelerate economic growth

- Programa de Aceleração do Crescimento (PAC);

finance projects for naval construction; credit opera-

tions for the civil aviation sector; public-private part-

nership projects; other strategic programs defined by

the Executive; risks directly linked to the 2014 World

Cup and related events and the 2016 World Olympic

and Paralympic Games.

Operations which are of less interest to the mar-

ket and have a lower cost – such as insurance for

mortgage lending, educational credit and financing

for small business – are to have guarantee funds for

which the ABGF will be directly responsible.

The Law 12.712 brought together several govern-

ment guarantee funds under the administration

of ABGF, and also established two separate funds

specifically for the areas of infrastructure and guar-

antee of exports, respectively. The establishment of

specific funds for higher volume operations (which,

in some cases involve higher risks), avoids the risk

of exposure of the the recently created state entity

in the event of a call on the guarantees.

The ABGF may also acquire a stake in public or

private insurance or reinsurance companies and in

companies which perform complementary activities

for the sector. The stake acquired may or may not

be a controlling share hold. Private insurers al-

ready operating on the market regard these provi-

sions which authorize the ABGF to act freely on the

market as a potential threat of unfair competition

by the government.

The establishment of the ABGF may give rise to

a situation of privilege and asymmetrical rights

and obligations, which may in turn put pres-

sure on the profit margins and risk subscription

policies of private insurers. In this context, the

widely held view in the private sector is that

these measures may lead the public sector to

assume excessive risks or that the new rules will

permit the government to enter with predatory

force onto the market, distorting competition.

The National Confederation of General Insur-

ance, Private Pension and Life, Supplementary

Health and Capitalization "CNseg" and other

observers fear that the government has paved

the way for ABGF to offer capacity across all

insurance lines and not only those related to

large infrastructure projects and other special

cases, and is poised to extend state interven-

tion (already prevalent in other industries) to

the insurance sector. The law creates conditions

for the government, via ABGF, to purchase

stakes in private insurance companies.

ABGF will be regulated by the Private Insurance

Superintendence "SUSEP", but apparently it

will receive a different treatment from the rest

of the private insurance companies, since rules

that will apply to ABGF are still to be deter-

mined in the near future by SUSEP, which prob-

ably means that it will receive special regulatory

treatment over the rest of the industry.

In summary, Brazil has now established a new

state-owned player in (re)insurance, with fa-

vored treatment on the regulation and super-

vision side, creating "legal but unfair competi-

tion" with the rest of the industry.

• Article

José TalaricoHead of Government & Industry Affairs - LATAM

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Microinsurance in Brazil

After the initial moment of this growth of income, which improve the acquisition

of goods necessary for subsistence (food, medicines, etc.), this part of population

started to know a universe of possibilities that never had access before and, in

that context, microinsurance begins to have room to be developed.

The structural and economic changes experienced by Brazil in recent years allow the emergence of a part of society able to consumer goods and services, due to the growth of its income.

Aluízio Barbosa

00In 2006 was formed the IAIS-CGAP (International

Association of Insurance Supervisors - Consultative

Group to Assist the Poor) Joint Working Group on

Microinsurance (JWG-MI), with the participation of

SUSEP - Brazilian Private Insurance Commission as

a member and contributor. In October 2007, the

Chairman of SUSEP was elected president of the

JWG-MI and the IAIS Microinsurance Subgroup

Since 2011 microinsurance was regulated by

SUSEP but, until now, is not unanimity in the mar-

ket, and especially among insurers.

At this moment 12 insurers are allowed to operate

microinsurance in Brazil and collected so far, ap-

proximately, US$ 1,002,000.00 in direct premiums.

· Microinsurance legal and regulatory aspects in BrazilOn a different way of the so-called popular insurance, which insured risk has certain characteristics

(e.g. second hand automobile insurance), microinsurance is prepared for a specific part of the pop-

ulation, which has a per capita income of up to two minimum wages (approximately US$ 577.00)

and for individual microentrepreneurs ¹.

Similar to other insurance products, several factors can be used for product underwriting, such as

(i) demographic criteria, considered as those that refer to age, income, gender, family size, educa-

tion, occupation, among others; (ii) geographic criteria, considered as those that refer to specific

regions, climate zones, proximity or remoteness of the sea, among others, (iii) social criteria, con-

sidered as those that refer to social programs, among others (iv) economic criteria, considered as

those that refer to specific economic activities, among others.

Another important characteristic concerns the limits of insured sums for microinsurance products.

The regulation has established the following coverage limits (approximate values based on recent

average dollar exchange rate in Brazil):

The majority of microinsurance products

currently commercialized are personal

microinsurance with covers to (i) Death; (ii)

Accidental Death; (iii) Reimbursement of Fu-

neral Expenses; (iv) Total Permanent Disabili-

ty by Accident; (v), Medical, Hospital and/or

Dental expenses arising from personal injury;

(vi) Hospitalization daily rates; (vi) Daily Rate

by Temporary Disability; (vii) Unemployment

and (viii) Critical Illness.

Nowadays there is only one property and ca-

sualty microinsurance product registered in

SUSEP, with coverage for fire, lightning and

explosion to homes throughout the country.

• Article

US$ 10,200.00

US$ 10,200.00

US$ 1,700.00

US$ 10,200.00

US$ 1,150.00

US$ 10,200.00

Death

Accidental Death

Reimbursement of Funeral Expenses

Total Permanent Disability by Accident

Medical and Hospital Expenses

Loan Protection Insurance

¹ According to the Brazilian law, individual micro-entrepreneur is the entrepreneur who executes

certain activities allowed by law and whose annual gross income does not exceed US$ 25,530.00.

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· Underwriting and commercializationIn the same way that others insurance products,

microinsurance can be commercialized directly

by an authorized insurer or through an insur-

ance broker.

However, it should be highlighted an innovation

introduced by the regulation of microinsurance,

with the beginning of correspondent microin-

surance, as well as commercialization through

remote devices, methods that are not applicable

Thus, due to the amounts involved, it is clear that microinsurance was created for the low-

income population.

Educational

Hospitalization daily rates

Daily Rate by Temporary Disability

Unemployment

Critical Illness

Travel

death on travel

total permanent disability by accident on travel

cancelation of travel

loss of luggage

medical/dental expenses on travel

transfer of body

Dwelling real estate

Dwelling real estate with professional activities

Real estate only with professional activity

Equipments

Civil Liability - Dwelling

Civil Liability - Entrepreneur Dwelling

Vessel

US$ 10,200.00

US$ 21.00

US$ 21.00 (it can be demanded a 15 days deductible)

monthly income of US$ 425.50

US$ 10,200.00

US$ 10,200.00

US$ 10,200.00

US$ 850.00 for domestic travels US$ 2,120.00 for international travels

US$ 425.00

US$ 1,150.00

US$ 127.00 with an additional value of US$ 1.00 per Km outside city

US$ 12,700.00

US$ 17,000.00

US$ 25,530.00

US$ 4,250.00

US$ 4,250.00

US$ 4,250.00

US$ 8,500.00

for traditional insurance. It also should be

mentioned that the commercialization of

traditional insurance by remote devices was

placed on a Public Hearing by SUSEP but, at

this moment, there is any regulation re-

garding this to the other types of insurance,

except microinsurance.

The concept is obviously to expand forms of

commercialization, allowing insurance to have

a good penetration in all layers of society.

• Article

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Regarding correspondent microinsurance, should be

noted that these are divided in general and financial

correspondents and, both of them, may not have, as

main activity, the insurance commercialization, thus

allowing the most distinctive shops to commercialize

microinsurance (e.g. coffee shops, beauty salons,

bakeries, restaurants, etc.).

The correspondents, which should be contracted by

insurers, could execute the following activities:

I. offer and promotion of microinsurance products, including by remote devices, on behalf of the insurance company;

II. receive proposals for microinsurance plans on behalf of the insurance company;

III. collection and delivery, to the insurance company, of registration data and documentation of insured participants and applicants;

IV. collection of microinsurance premiums on behalf of the insurance company;

V. receiving notices of claims on behalf of the insurance company;

VI. payment of compensation or benefit on behalf of the insur-ance company;

VII. assistance to insured and their beneficiaries, including by remote devices, on behalf of the insurance company;

VIII. logistical and administrative support to the insurance com-pany, intending the microinsurance contracts maintenance; and

IX. other control services, including control and data processing operations on behalf of the insurance company.

Regarding correspondent microinsurance, should be

noted that the financial correspondents have joint

several liability in relation to the insurer, which does

not occur with the general correspondent, where the

insurer shall be fully liable for correspondent acts and

damages caused to third parties.

Surely this is a point of concern, since that the vast

majority of general correspondents are simple estab-

lishments, that are not used to sell insurance, which

therefore will require a large investment in training by

insurers that opt for this commercialization model.

Regarding commercialization through remote devices,

it should be mentioned that it must be done through

a system with personal login and password, but only

by the insured, once that it won't be allowed

the participation of the insurance broker in

this specific process.

It should also be pointed out that contracting

through remote devices can be done even

through the correspondent's website, and not

only on the insurer's website.

When contracting through remote devic-

es, it should be provided to the insured all

protocols that prove the effectiveness of the

contract. Besides that, it should be send elec-

tronic messages to the insured reporting on

the due date of the insurance installment with

at least 2 days in advance, as well as sending

messages about the end of the term with 2

days in advance, to coverage periods less than

1 year, and 30 days in advance, to coverage

periods longer than 1 year.

· The future of microinsurance in BrazilNaturally questions as contracts by remote de-

vices and through correspondents, with insur-

er sole liability, still generate further distrust

of the various players in the insurance market

(insurers and insurance brokers, mostly).

Anyway, it should be noted that the outlook

on the potential consumer market for micro-

insurance in Brazil is encouraging: data from

FGV - Getulio Vargas Foundation, one of the

most renowned Brazilian centers of economic

studies, estimate a consumer market of 100

million microinsurance customers to 2020, 40

million by 2016, which are extremely positive

numbers.

Certainly during this process some regulatory

adjustments may be necessary but, in any

case, the basis for the growth of this market

is already sowed.

Aluízio BarbosaPartner – Pellon & Associados Law FirmProfessor – FGV – Getulio Vargas FoundationProfessor – FUNENSEG – Brazilian National Insurance School

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Reinsurance in Mexico:Recent Developments in a Dynamic Legal FrameworkJoaquín Rodríguez

With a strong international presence where more than half of the insurance companies

have foreign capital, Mexico is domicile to the main global insurance players, but national

companies also have strong market participation and leadership. The enormous potential

for growth, as stated by current low insurance penetration of close to 2 percent or around

30 percent of the OECD countries’ average, remains to be exploited.

The Mexican insurance market is second only to Brazil in terms of assets and premium in Latin America.

1 Source: International Monetary Fund, Country Report No. 12/67, Mexico: Detailed Assessment of Observance of International Association of Insurance Supervisors (IAIS) Insurance Core Principles, March 2012, page 8, available at: http://www.imf.org/external/pubs/ft/scr/2012/cr1267.pdf. 2 Lloyd’s, through its Global CEO, Mr. John Nelson, confirmed that the combination of factors present in Mexico gives relevance to the risk transfer services they offer and reaffirmed the company’s interest in Mexico. For additional reference see: Torres, Yuridia, “Mexico has turned appealing to Lloyd’s”, El Economista, April 23, 2013. Lloyd’s is currently integrated by 90 insurance companies.

00companies are adapting to new models to estimate

capital and reserves (Solvency II provisions were incor-

porated), which will be revised by risk raters, will have

to strengthen their corporate governance rules and

increase transparency of their operations.

The new regulation explicitly clarifies aspects of the

Insurance Institutions Law, e.g. those regarding the

participation of insurance institutions or Foreign

Reinsurers with respect to the reinsurance contract.

The reinsurance contract is defined as “the contract

through which an insurance institution, a Foreign

Reinsurer or foreign reinsurer entity agrees to assume:

i) all or part of a risk covered by an Insurance Institu-

tion or the ii) outstanding damage with respect to an

insured amount”.

In coordination with the new framework, a draft of a

new Unified Insurance Circular is being revised by the

Ministry of Finance. The Ministry estimates that once

the review and proposals of the draft are concluded,

the regulation may be ready to be published in Sep-

tember-October 2014.

Initiatives to promote financial culture, the use of fi-

nancial products and services have been submitted to

the Congress and will be discussed during the follow-

ing months . The incipient penetration of the insurance

industry in Mexico, along with its sustained growth

and industrialization, the revised legal framework and

promotion of the financial culture will surely represent

an area of opportunity for insurance and reinsurance

institutions in Mexico during the years to come.

3 Discussions regarding the Energy Reform will initiate in the following Session’s Period of the Congress (i.e. September 2013). The Telecommunications Reforms are about to be implemented by the Executive Branch, and the Financial Reform, among others, are still pending of discussion and analysis. 4 Executive branch changed on December 1st, 2012.5 Those foreign reinsurers or rebonding institutions registered with the General Registry of Foreign Reinsurers. Such registration is necessary in terms of article 107 of the new law, in order for such entities to be able to enter into reinsurance or rebonding agreements with local insurance institutions or mutualistic companies.

The reinsurance market has also a promising growth

potential considering the political stability of the

country, its conservative, yet savvy managed economy

and its growth promoting government. These charac-

teristics are blended with three main factors: Mexico’s

industrial development represents industrial risks; plus

the country’s vulnerability to natural catastrophes and

its developing energy sector, all will generate interest

for reinsurers in Mexico.

The Mexican government has been actively promoting

the modernization and development for the insurance

and reinsurance industry, as can be shown by the

recent amendments to its legal framework.

Reinsurance was mainly regulated by the General

Law for Insurance Institutions and Mutualistic Com-

panies (“Insurance Institutions Law”) and by the

Law for the Insurance Contract, both enacted back

in 1935. As part of a dynamic set of legal reforms

led by the current administration (which have not

yet concluded), on October 25, 2012 the President

presented to the Senate an initiative of law regarding

insurance and bonds, namely the Law for Insurance

and Bonds Institutions.

The new Law for Insurance and Bonds Institutions

was approved by the Congress and subsequently pub-

lished on April 4, 2013 in the Federal Official Gazette.

Pursuant to this new Law, the Law for the Insurance

Contract was also amended.

The new Law for the Insurance and Bonds Institu-

tions will become effective as of April 2015. When

in force, it will replace the Insurance Institutions Law

and the Federal Law for Bonding Institutions. With

this dynamic framework, insurance and reinsurance Joaquín RodriguezPartner at Chacón & Rodríguez, S.C.

• Article

00Argentina Report

00 Argentina ReportARGENTINA: RULES AND REGULATIONS – JULY AND AUGUST 2013

NIA = National Insurance Agency (Superintendencia de Seguros de la Nación).

LRA = Labor Risk Agency (Superintendencia de Riesgos del Trabajo).

• Latin America Report

1 · Communications NIA 3651 and 3696. Investments. Admissible Investments. July 16th and August 5th.

In line with the new investment regime set forth by Treasury Department

Resolutions Nº 620/12 and 365/12 and NIA Resolution Nº 37,163, both

of which amended the General Regulation of the Insurance Activities, these communications establish certain investment instruments which

are considered “productive” and, hence, eligible for being applied to the

referred mandatory investment regime.

Link: http://portal.ssn.gov.ar/Storage/files/circulares/8238.pdf

Comments

Zurich Argentina S.A. should consider these new applicable investment

instruments and should asses if their current investment regime is in line

with the new regime established by NIA Resolution 37.163.

2 · Communication NIA 3662. Exchange Rates for Foreign Currency and Stock Values. July 18th, 2013.

This communication provides a list with the foreign currency exchange rates

and stock values that must be considered by insurance and reinsurance

companies when preparing their financial reports as of June 30th, 2013

Link: http://portal.ssn.gov.ar/Storage/files/circulares/8254.pdf

Comments

Zurich Argentina S.A. must consider this list in order to prepare its

financial reports as of June 30th, 2013 and should also control that their

auditors do so.

http://portal.ssn.gov.ar/Storage/files/circulares/8238.pdf

http://portal.ssn.gov.ar/Storage/files/circulares/8254.pdf

00

3 · Communication “A” 5460, Central Bank. July. 19th.

This communication further enhances the protection for consumers of financial

services, so it is mainly aimed at banks and financial institutions.

However, new regulations regarding insurance activities were also implemented.

As from the enactment of this communication, when insurance services are

an accessory to the financial services being offered, financial institutions must

now (i) provide at least three different insurance options (from three different

companies), and (ii) the insurance price offered by the financial institution cannot

be higher than the price offered directly by the insurance company.

Link: http://www.bcra.gov.ar/pdfs/comytexord/A5460.pdf

Comments

As noted above, this communication is mainly directed to financial institutions.

However, Zurich Argentina should asses that financial institutions offering Zurich’s

services follow its provisions.

4 · Resolution Nº 37,652 of the NIA. Withdrawal of authorization. July 24th, 2013.

This resolution cancels the registration of Zurich Versicherung, withdrawing its

authorization to operate on the insurance market.

Link: http://www.infoleg.gob.ar/infolegInternet/verNorma.

do;jsessionid=0BABA94A4BF85015CBFD4DE219DCE492?id=217713

Comments

This resolution implies that Zurich Versicherung is no longer registered before the

NIA, and cannot longer operate on the insurance market.

http://www.bcra.gov.ar/pdfs/comytexord/A5460.pdf

http://www.infoleg.gob.ar/infolegInternet/verNorma.do%3Bjsessionid%3D0BABA94A4BF85015CBFD4DE219DCE492%3Fid%3D217713

http://www.infoleg.gob.ar/infolegInternet/verNorma.do%3Bjsessionid%3D0BABA94A4BF85015CBFD4DE219DCE492%3Fid%3D217713

00


5 · Communication NIA 3686. Information Requested to Reinsurance Companies. August 2nd, 2013.

This Communication establishes the obligation for reinsurance companies

to submit, before September 16th, 2013, all the information related

to active reinsurance agreements whose inception date is between

January 1st and July 31st, 2013, and their link, if applicable, with the

correspondent retrocession agreement.

Link: http://www.cycweb.com.ar/pdf/8273.pdf

Comments

In case Zurich Argentina S.A. or one of its affiliates or subsidiaries entered

into reinsurance agreements on the above referred dates, it should provide

to the NIA the related information before September 16th.

6 · Resolution 1214/13 LRA. Amendments to the LRA’s organizational structure. August 15th, 2013.

This resolution creates a new organizational structure for the LRA.

Link: http://www.infoleg.gob.ar/infolegInternet/

anexos/215000-219999/218575/norma.htm

Comments

Please find attached, as Annex A, the new organizational chart of the LRA.

Argentina ReportARGENTINA: RULES AND REGULATIONS – JULY AND AUGUST 2013

NIA = National Insurance Agency (Superintendencia de Seguros de la Nación).

LRA = Labor Risk Agency (Superintendencia de Riesgos del Trabajo).

http://www.cycweb.com.ar/pdf/8273.pdf

http://www.infoleg.gob.ar/infolegInternet/anexos/215000-219999/218575/norma.htm%20

http://www.infoleg.gob.ar/infolegInternet/anexos/215000-219999/218575/norma.htm%20

00

General Manager

Planning, Strategic Information and Quality Control Management

Institutional Communication and Training Management

Superintendence

Prevention Management

IT Managemnent

Medical Management

Entities Control Management

Press Management

OperationsManagement

Legal AffairsManagement

Public Assintance Management

Cabinet of Advisors

Internal AuditUnit

• Annex A

Argentine Labor Risk Agency (“LRA”)

00Brazil Report

00 Brazil Report


Normative Acts

SUSEP and CNSP

Circular 470/13 – Oil Risks Policies

It should be highlighted:

• It is covered by this type of insurance, including civil liability coverage, based on the

occurrence or claims made type, and financial losses related to events or activities:

(I) - drilling units and production units, (II) - storage units in the production field on

onshore and offshore pipelines; (III) - maintenance, upkeep and construction of units

from types OU (operating units), PU (production units), SU (storage units) and other

subsea structures, including offshore pipelines, related to oil or gas production or

exploitation; (IV) - oil and / or gas stored at the production and / or offshore

storage unit;

• The insurance companies must request, until January 1st 2014, the filing of cases

involving insurance plans delivered to SUSEP prior to the effective date of this Circular,

whether standardized or not standardized, without any interruption to the insurance

policies in force. However, the absence of this request will represent the interruption of

commercialization;

• The policies in force should be adapted to this new Circular on their renewals, if the

end of their terms of effectiveness occur after January 1st 2014.

Link: http://www2.susep.gov.br/bibliotecaweb/docOriginal.

aspx?tipo=1&codigo=31124

Circular 471/13 – Civil Liability Insurance of Road Transport Operator on International Travel

The insured amounts and limits of liability per vehicle and per event, for vehicles that

travel in Bolivia, Chile, Paraguay, and Peru are the following:

1) For damages to third parties not transported:

a) Death and/or personal injury: US$ 20,000.00 per person.

b) Damage: US$ 15,000.00 per asset.

http://www2.susep.gov.br/bibliotecaweb/docOriginal.aspx%3Ftipo%3D1%26codigo%3D31124


00

Having multiple complaints related to the same event, the Insurance Company's

liability is limited to US$ 120,000.00

2) For damages to passengers:


b) Damage: US$ 500.00 per person.

Having multiple complaints related to the same event, the liability of the Insurance

Company shall be limited to:

a) Death and/or personal injury: US$ 200,000.00

b) Damage: US$ 10,000.00

The insured amounts and limits of liability per vehicle and per event, for vehicles that

travel in Argentina, Brazil and Uruguay, from July 1, 2013 on are:

1) For damages to third parties not transported:


b) Damage: US$ 30,000.00 per asset.

Having multiple complaints related to the same event the Insurance Company's liability

is limited to US$ 200,000.00.

2) For damage to passengers:


b) Damage: US$ 1,000.00 per person.

Having multiple complaints related to the same event, the Insurance Company's

liability shall be limited to:

a) Death and/or personal injury: US$ 240,000.00

b) Damage: US$ 10,000.00

Notwithstanding the standard values mentioned above, it may be agreed between

the Insured and the Insurer, higher insured amounts limits, i.e., not less, by particular

clause to be included in the policy, which will be the maximum responsibility assumed

by the Insurer per vehicle and per event.

Link: http://www2.susep.gov.br/bibliotecaweb/docOriginal.aspx?tipo=1&codigo=31125


00

• Brazil Report

Resolution 288/13 – Directors and Executives Election

The election procedure will be changed on the following basis:

• SUSEP’s approval won’t be necessary on situations that the nomination of Directors

or Executives is made by the Federal Government;

• Besides the above mentioned, the appointment acts, on the situations that must

be made by the Federal Government, must be reported to SUSEP during the first 30

days period after its occurrence, and the Executive or Director of this type of insurance

company, won’t be obliged to publish an Intention Statement.

Links:

http://www2.susep.gov.br/bibliotecaweb/docOriginal.aspx?tipo=1&codigo=19665

http://www2.susep.gov.br/bibliotecaweb/docOriginal.aspx?tipo=1&codigo=31257

Laws

DECREE 8051/13 – CHANGES DE COMPOSITION OF CRSNSP – BRAZILIAN APPEALS COUNCIL OF PRIVATE INSURANCE SYSTEM

The mains changes introduced by this Decree are the following:

• three representatives appointed by the public sector of which two of the Ministry of

Finance, and SUSEP;

• three representatives nominated in a triple list, by request of the Minister of Finance,

by associations of entities from insurance, open private pension, capitalization,

reinsurance and insurance brokerage markets;

• The President will be one of the representatives of the Ministry of Finance and the

Vice-President will be the representative of SUSEP;

• On the Council it won't act anymore only a solely Attorney of the National Treasury,

but, a number of them that should be necessary to analyze the appeals.

• Executive Order of the Minister of Finance may create an Extraordinary Council,

temporarily, to reduce the number of appeals pending judgment or to accelerate their

judgment in the Council.

Link: http://www.planalto.gov.br/CCIVIL_03/decreto/D2824.htm#anexo



http://www.planalto.gov.br/CCIVIL_03/decreto/D2824.htm%23anexo

00

DECREE 8052/13 – CHANGES RULES REGARDING EXPORT CREDIT INSURANCE

The mains changes introduced by this Decree are the following:

• The Export Credit Insurance can be used by exporters, financial institutions and export

credit agencies to finance, refinance or guarantee the production of goods and services for

Brazilian exportations and Brazilian exportations of goods and services. It is established that

operations related to the aeronautics industry, where risk analysis occurs on a legal entity

other than the operation's debtor of export credit, the insurance can cover commercial,

political and extraordinary risks related thereto;

• It will be considered as a situation to characterize the insolvency of the debtor, the

declaration of bankruptcy or deferral of processing of bankruptcy of the debtor or other act

of equivalent effect, in accordance with the legislation of the country of the debtor;

• The default of the debtor for a period exceeding 180 days from the due date of the first

unpaid installment, shall not be deemed liable to characterize the situation of the debtor's

insolvency in transactions for aviation industry;

• Besides that, on the aviation industry, the insolvency inherent to (i) insufficient assets

or insusceptible of seizure or attachment, and (ii) declaration of bankruptcy or deferral of

processing of bankruptcy of the debtor or other act of equivalent effect, According to the

legislation of the country of the debtor, may be applied to the legal entity that has been the

subject of risk analysis, even if it is liable for the guaranteed contract, since responsible for

ensuring the flow of funds for the payment of the contract. It should be highlighted that

such entity may be a lessee or sublessee airline, leasing company, a company that acts as a

guarantor of the above or other entity that participates in the operation;

• Regarding the role of political and extraordinary risks regarding the operations of the airline

industry, the situations of (i) general moratorium decreed by the authorities of the country of

the debtor or another country through which payment is to be made and (ii) inability to make

the payment by the debtor by decision of the Brazilian government, foreign governments or

international organizations, the subsequent contracts may be applied to the legal entity that

has been the subject of risk analysis, although it is not liable for the guaranteed contract,

since responsible for ensuring the flow of funds for the payment of the contract. It should be

observed that such entity may be a lessee or sublessee airline, leasing company, a company

that acts as a guarantor of the above or other entity that participates in the operation.

Link: http://www.planalto.gov.br/CCIVIL_03/decreto/D2824.htm#anexo

http://www.planalto.gov.br/CCIVIL_03/decreto/D2824.htm%23anexo

00

LAW 12.846/13 – BRAZILIAN ANTICORRUPTION LAW

This act, which will be in force on February, 2014, establishes the objective civil and

administrative liability to the legal entities which practice acts against the Public

Administration, the brazilian or a foreign one. It should be highlighted:

1) There are considered, for the purposes of this law, harmful acts to the Public

Administration:

• to promise, offer or give, directly or indirectly, any undue advantage to a civil servant

or a third person related to him;

• on a proven way, to finance, fund, sponsor or otherwise subsidize the practice of

unlawful acts mentioned on in this Law;

• on a proven way, to make use of a third party or entity to hide or disguise their real

interests or the identity of the beneficiaries of the actions taken;

• regarding bids and contracts celebrated to the Public Administration are considered

unlawful practices:

a) to frustrate or defraud, by an adjust, agreement or any other way, the competitive

nature of the public bidding procedure;

b) to prevent, hinder or defraud the execution of any act regarding public

bidding procedure;

c) to keep away or try to keep away the other competitors, by fraud or due to the

offer of advantage of any kind;

d) defrauding public bid or the public contract celebrated;

e) create, on a fraudulently or irregular way, legal entity to participate on a public

bidding or enter into administrative contracts;

f) obtain improper advantage or benefit, on a fraudulently way, due to ammendments

or renewals of contracts with the government, without any kind of authorization by

law, on the public bid or in the contract, or

g) manipulate or defraud the economical and financial balance of the contracts with

the public administration;

• to hinder surveillance activity of any public agency or body, including regulatory

agencies and supervisory bodies of the financial system.

2) On the administrative level will be applied to legal entities held liable for the

• Brazil Report

00

harmful acts the following penalties:

• fine in the amount of 0.1% (one tenth percent) to 20% (twenty percent) of the gross

revenues of the last year prior to the initiation of administrative proceedings, excluding taxes,

which will never be less than the benefit received, in the cases that this estimation be possible

or, if not possible, the fine will vary on a range between approximately US$ 2,550.00 and

US$ 25,550,000.00;

• forfeiture of property, rights or securities representing advantage or profit directly or

indirectly obtained from the unlawful practice, subject to the right of the third party in

good faith;

• partial suspension or interdiction;

• compulsory winding up of the corporation;

• prohibition on receiving incentives, subsidies, grants, donations or loans from agencies

or public entities and public financial institutions or controlled by the government for a

minimum period of 1 and maximum of 5 years.

3) The determination of these liabilities will occur through administrative proceedings initiated

by the highest authority of the body concerned, which may offer a Leniency Agreement if:

a) the legal entity is the first to state about its interest to cooperate in the investigation of the

illegal act;

b) the legal entity ceases their involvement in the offense investigated from the date of

entering into the agreement;

c) the legal entity admits its participation on the unlawful practices and fully cooperates

with the investigations and administrative proceedings and, at its own expenses, attends,

whenever requested, all procedural acts, until its closure.

4) The leniency agreement will exempt the legal entity from the penalty regarding the

prohibition to receive public incentives, and will reduce by 2/3 (two thirds) the value of the

applicable fine.

5) It is created, under the federal government, the National Registry of Penalized Legal

Entities - CNEP which will bring together and give publicity to the penalties imposed

by agencies or entities of the Executive, Legislative and Judicial branches of all levels of

government based on this Law;

6) The prescriptive period of claims under this Law is 5 years.

Link: http://www.planalto.gov.br/ccivil_03/_Ato2011-2014/2013/Lei/L12846.htm

http://www.planalto.gov.br/ccivil_03/_Ato2011-2014/2013/Lei/L12846.htm

00Chile Report

00 Chile ReportA. July and August, 2013 Insurance Regulatory Overview.

B. July and August, 2013 Main Insurance Normative Acts.

C. Bill currently in Congress.


A · July and August 2013, Insurance Regulatory Overview.

From an insurance company standpoint, General Rule Nr. 349, and

Circulars Nr. 2114 and Nr. 2115 were the most relevant regulations

enacted during July and August, 2013. Both provide instructions

regarding the SVS’ Policy Deposit, payment of unearned premiums, and

the delivery of judicial resolutions to the SVS in compliance with the New

Insurance Agreement Act which will enter in force on December 1, 2013.

B · July and August, 2013, Main Insurance Normative Acts.

We have selected the main insurance regulatory provisions issued during

July and August, 2013. Please find below a summary of such regulations,

including their issue date, type and number of regulation, identification of

the regulatory agency issuing them and a link to the original regulation.

We have further included a Bill currently being discussed in Congress.

SVS Securities and Insurance Superintendence, Superintendencia de Valores y Seguros.

DS Nr. 1,055 Regulation concerning Insurance Brokers and Loss Adjustment Process, Nuevo Reglamento de Auxiliares del Comercio de Seguros y Procedimiento de Liquidación de Siniestros.

NIAA Act Nr. 20,667 New Insurance Agreement Act, Ley 20.667 que Regula el Contrato de Seguro.

SEIL SVS Online Reporting System, Sistema de Envío de Información

en Línea.

SP Pensions Superintendence, Superintendencia de Pensiones.

Definitions

00

This General Rule modifies Title II, of the Third Book of the General Pension System Regulations

(Compendio de Normas del Sistema de Pensiones) and General Rule Nr. 218. General Rule Nr. 348

provides that life insurance companies commercializing life annuities must inform the SP and SVS

of any technological changes made to their electronic system or platform which may impact its

operation or continuity. Likewise, life insurance companies must submit their technological services

agreements to the SVS.

Among other issues, this General Rule provides that life annuities insureds, who continue working

as dependants after retirement, may transfer once a year their social security funds collected after

retirement to the life insurance company that is paying their life annuities. Commissions paid by said

insureds to sales agents or pension consultants for said funds’ transfer, shall be considered unearned

commissions (comisiones consumidas).

Most provisions of this General Rule entered into force on July 3, 2013. However, certain provisions

shall enter into force on January 1, 2014.

Link: http://www.svs.cl/normativa/ncg_348_2013.pdf

Issue date: July 3, 2013 Issued by: SVS/SP Regulation ID: General Rule Nr. 348

This Official Form Letter sets the discount rate (tasa de descuento) applicable for valuation of

insurance liabilities (pasivos de seguros) corresponding to the month of June 2013 at 2.45%.

Link: http://www.svs.cl/normativa/ofc_795_2013.pdf

Issue date: July 5, 2013 Issued by: SVS Regulation ID: Official Form Letter Nr. 795

This Circular provides instructions regarding the information that must be included in communications

that insurance companies and loss adjustors must send to the insureds or beneficiaries in case of

extension of the term for issuing a report. Circular Nr. 2110 only applies to direct settlements or

settlements performed by loss adjustors. Communications must be sent to insured or beneficiaries

per each claim and shall include, among others matters, information regarding the relevant

claim, number and date of term extension, reasons for the extension, etc. Additionally, the same

information must be submitted to the SVS via SEIL and a copy of the communications sent to the

insureds or beneficiaries must be forwarded to the SVS.

This Circular entered into force on July 5, 2013, and applies to claims settlement’s term extensions as

of June 1, 2013.

Link: http://www.svs.cl/normativa/cir_2110_2013.pdf

Issue date: July 5, 2013 Issued by: SVS Regulation ID: Circular Nr. 2110

http://www.svs.cl/normativa/ncg_348_2013.pdf%20

http://www.svs.cl/normativa/ofc_795_2013.pdf

http://www.svs.cl/normativa/cir_2110_2013.pdf

00

This Official Form Letter sets the monthly indexed insurance unit of August, 2013 to CLP 168.14.

This shall be applicable to life, personal or personal injury risks insurance companies (i.e. second

group insurance companies).



This Circular sets the amount to be charged to each first group insurance company (i.e. physical/

material and financial risks insurance companies) according to Decree Law Nr. 1,757 and Act Nr.

19,798 with respect to the amounts the SVS must provide firemen to finance their accidents and

diseases, corresponding to the July, 2013 period.



This General Rule replaces General Rule Nr. 124 by providing instructions regarding registration of

model policies and clauses in the SVS’ Policy Deposit, and their requirements, in accordance with

the NIAA provisions. This General Rule maintains most provisions set forth on General Rule Nr. 124.

However, it replaces/introduces the following matters:

i. Policies’ general conditions. It is expressly stated that policies general conditions models may be

used by any insurance company of the same group the relevant conditions refers to. Additionally,

it is provided that general conditions models shall: (i) Have names related to the nature of their

covered risk and may not include references to any insurance company; (ii) Include certain

minimum provisions which was not mandatory before this General Rule (i.e. regulation applicable

to the agreement, risks aggravation or alteration conditions, insured statements, premium and

nonpayment of premium effects, claims reporting process, termination and communication

between parties); (iii) Include a mandatory reference to regulation applicable to the insurance

agreement, expressly stating that provisions of Section VIII of the Second Book of the Commerce

Code shall be mandatory except for provisions thereof that benefits better the insured;

Issue date: July 26, 2013 Issued by: SVS Regulation ID: General Rule Nr. 349

This Official Form Letter fixes the indexed interest rate applicable to capital/equity financing

pension payments of losses (death, first and/or second disability declaration) occurring during

August 2013 to 3.04% annually. This provision is applicable to life, personal or personal injury risks

insurance companies (i.e. second group insurance companies).



• Chile Report

http://www.svs.cl/normativa/ofc_797_2013.pdf%20

http://www.svs.cl/normativa/cir_2111_2013.pdf%20


00

This Circular replaces Circular Nr. 1762 of 2005 and Official Form Letter Nr. 778 of 2013 and, as per

new provisions of the NIAA, introduces instructions regarding reimbursement of unearned premiums

refund in case of early termination of an insurance policy. Insurance companies shall refund unearned

premiums to the insured or policy holder (whomever paid the relevant premium) within 10 days as of

the insurance company takes knowledge of the termination. Unearned premiums shall be calculated

proportionally as per the remaining time period, without deducting any amounts paid in relation to

the insurance agreement, except if expressly stated by law. Premiums expressed in indexed units, shall

be calculated as per their value as of the date of payment.

This Circular will enter into force on December 1, 2013.



This Circular provides instructions regarding the obligation of insurance companies to submit to

the SVS judicial resolutions related to insurance matters regulated at the Commerce Code, which

were dictated in processes in which an insurance company was part of. These judgments must be

submitted no later than the last business day of the subsequent month as from the month they were

pronounced via SEIL system.

This Circular will enter into force on December 1, 2013, and shall be applicable only to judicial

resolutions notified to an insurance company as of that date.



(iv) Multiple risks general conditions must detail separately each coverage and their conditions; etc.

ii. Policies special conditions. The General Rule limits circumstances on which general conditions

may be modified by special conditions only to the case the latest benefits better the insured, and no

exclusions may be added.

iii. Consumers’ rights. General or special conditions must include Consumers’ Rights Act provisions

regarding minimum conditions that must be specified on commercial standard-form agreements

(Section 17-b of Consumers’ Rights Act) and other consumers’ rights provisions thereof that may be

applicable to the insurance agreement.

This regulation will enter into force on December 1, 2013 and as of that date all new insurance

agreements must include general and particular conditions which do not infringe provisions of

the NIAA.




http://www.svs.cl/normativa/ncg_349_2013.pdf%20

00

This General Rule modifies General Rule Nr. 331 regarding minimum conditions and coverage

that should include individual or collective mortgage loans related insurance policy models

aiming to protect collateral or debt. Pursuant to this General Rule, the following amendments are

Issue date: August 19, 2013 Issued by: SVS Regulation ID: General Rule Nr. 350

This Official Form Letter fixes the indexed interest rate applicable to capital/equity financing

pension payments of losses (death, first and/or second disability declaration) occurring during

September, 2013 to 3.01% annually. This provision is applicable to life, personal or personal

injury risks insurance companies (i.e. second group insurance companies).


Issue date: August 13, 2013 Issued by: SVS Regulation ID: Official Form Letter Nr. 801

This Official Form Letter sets the quarterly indexed insurance unit of October, November and

December, 2013 to CLP 168.14. Additionally, sets the monthly indexed insurance unit of

September, 2013 to CLP 168.57.

This shall be applicable to life, personal or personal injury risks insurance companies (i.e. second

group insurance companies).



This Circular sets the amount to be charged to each first group insurance company (i.e. physical/

material and financial risks insurance companies) according to the Decree Law Nr. 1,575 and Act

Nr. 19,798 with respect to the amounts the SVS must provide firemen to finance their accidents

and disease, corresponding to the August, 2013 period.


Issue date: August 8, 2013 Issued by: SVS Regulation ID: Circular Nr. 2116

This Official Form Letter sets the discount rate (tasa de descuento) applicable to valuation of

insurance liabilities (pasivos de seguros) corresponding to the month of July 2013 at 2.36%.



• Chile Report


http://www.svs.cl/normativa/ofc_800_2013.pdf%20

http://www.svs.cl/normativa/cir_2116_2013.pdf


00

included, among others:

i. Common conditions related to policies associated to such loans must indicate as insureds both

the owner of the mortgage property and the leaseholder thereof, in case of lease agreements

including a promise to purchase. In addition, the General Rule eliminates provisions by means of

which it was mandatory to express that amendments to these insurance policies required consent

of both the insured and the mortgage creditor.

ii. Fire and complementary insurance policies: it broadness minimum coverage that must be

included in fire policies that are additional to mortgage loans related insurance policies. Likewise,

this General Rule states that a separate insured amount must be determined for demolition

expenses, and provides that coverage of collective insurance policies’ additional clauses, must

cover the mortgage property; etc.

iii. Incontrovertibility of collective insurance policies: as per the Commercial Code provisions (that

will enter into force on December 1, 2013), after 2 years of coverage, the insurer may not invoke

reluctance or inaccuracy of any insured statements that may have determined risks value. This

General Rule provides that said 2 year term shall consider uninterrupted coverage under one or

more bided insurance policies, even if they were hired with different insurance companies.

This General Rule will enter in force on December 1, 2013.


C · Bill currently in Congress. ¹

Bill Name: Sets a Risk Based Regulation System for Insurance Companies

(Establece un sistema de supervisión basado en riesgo para las compañías de seguro).

Bill ID Number (boletín): 7958-05.

Status: Bill has been approved by the House of Representatives and its approval

is being discussed by the Senate. Second Constitutional Stage / Senate.

Last relevant landmark: Bill classified with extreme urgency since August

14, 2013.

Next stage: Congress Finance Commission Report to be reviewed by Senate.

Notes: Bill classified with extreme urgency.

¹ http://www.senado.cl/appsenado/templates/tramitacion/index.php

Please note the Bill progress may be followed up at the official government site (above) by inserting

the corresponding Bill ID number, which is included in this report.

http://www.svs.cl/normativa/ncg_350_2013.pdf

http://www.senado.cl/appsenado/templates/tramitacion/index.php

00Mexico Report

00 Mexico Report


1 · NORMATIVE ACTS ²

The following normative acts regarding insurance and pensions have been pub-

lished in the Federal Official Gazette (DOF) during July-August, 2013:

Ministry of Finance and Public Credit (SHCP)

Amendments to the CUS 32/13, 33/13, 35/13, 36/13, 37/13 and 39/13

These Amendments modify reference rates used for pension insurances (Annex

18.7.9 of the CUS). For easier reference please refer to the following Table:

Positive: Since the reference rates are updated.

Possible Action: As the reference rates for pension insurance are dynamic, it is

advisable to inform the responsible areas to monitor their modifications.

Amendment to the CUS 29/13

Institutions authorized to provide pension insurances monthly contribute to the

mandatory Special Fund set forth in article 52 Bis 1 of the Law for Insurance

Institutions and Mutualistic Companies; this amendment was necessary to provide

Pensiones Sura, S.A. de C.V. (“Sura”) with an ID number to comply with its contri-

butions to the aforementioned fund.

Possible Action: Since the amendment relates to a third party (Sura), no further

action is recommended. However, Zurich may want to review if it is complying

with the monthly contributions to the Special Fund on pension insurance.

July - August Report ¹

32/13

33/13

35/13

36/13

37/13

39/13

Amendment to the CUS

July 5, 2013

July 12, 2013

July 26, 2013

August 9, 2013

August 16, 2013

August 23, 2013

Publication Date (DOF)

July 8, 2013

July 15, 2013

July 29, 2013

August 12, 2013

August 19, 2013

August 26, 2013

Effective Date

http://dof.gob.mx/nota_detalle.php%3Fcodigo%3D5305742%26fecha%3D05/07/2013







00Amendment to the CUS 34/13

This Amendment provides institutions authorized to grant financial guaranty insurance,

with the credit risks adjustment factors necessary to determine capital requirements for

the corresponding operation (second quarter of 2013). This modification to Annex 9.7.1

(“Adjustment Factors for Credit Risks”) of the CUS is already effective.

Positive: Adjustment factors are provided, favoring certainty to insurance calculations.

Possible Action: In case Zurich provides financial guaranty insurance, inform the corre-

sponding area.

Regulations for the Federal Law for the Prevention and Detection of Operations Funded with Unlawful Resources (FLUR)

On October 17, 2012 the FLUR was published in the DOF and became effective in July 17,

2013. Subsequently, its Regulations were published on August 16, 2013 and will become

effective as of September 1st, 2013 (with some exceptions for specific provisions).

The FLUR and its Regulations are applicable to “financial entities” in terms of the referred

law, which include insurance institutions and retirement fund administrators. The FLUR

establishes two main obligations: i) reporting Activities Susceptible to Participation of

Unlawful Resources (“Vulnerable Activities”) to the SHCP, no later than on the 17th day

of each month following the month when the services or operation occurred and ii) a

prohibition to settle payments as well as to collect cash or precious metals equivalent or

exceeding Approx. USD $16K ($14K Swiss Francs).

Sanctions for the nonfulfillment of the foregoing obligations include fines ranging from

Approx. USD $1k to USD $330K ($926 to $305K Swiss Francs), provided that in cases of

providing false information or alteration of the information accompanying the reports a

criminal liability may well arise.

Obligations of filing reports, as well as the cash restrictions, will become effective as of

November 1st, 2013, but must comprise services and transactions occurred as of Septem-

ber 1st 2013 (i.e. date when the Regulations will enter into force).

The Regulations set forth terms for compliance of obligations determined in the FLUR and

vest agencies with attributions on this subject matter.

On August 23, 2013, General Provisions with regards of the FLUR were published in

the DOF, which will become effective as of September 1st, 2013 and will be commented

in the following report.

Positive/Negative: The aforementioned Regulations will reinforce and facilitate compli-

ance to the FLUR and prevention of such operations. Compliance of this law may result

¹ Updated as at August 22, 2013.

² Links to the official publication of the normative acts are provided by clicking in of each of the titles of the Report.





00 somehow cumbersome, and will require special attention to identify, monitor and report

vulnerable activities pursuant to the FLUR and its Regulations.

Possible Action: Inform the corresponding areas of these Regulations to implement con-

trols and checks with clients as regards operations that might be subject to this FLUR and

its Regulations.

Amendment modifying i) the Official Standard Template to Report Relevant, Unusual and Concerning Operations set forth in diverse provisions (including the Law for Insurance Institutions and Mutualistic Companies and the Law for the Retirement Savings System), ii) the Manual to comply with such Official Standard Template (December 2004) and, iii) its prior Amendment (June 2012).

The Amendment modifies required information regarding Nationality, Amount and Type

of Monetary Instrument set forth in the Official Standard Template in order to prevent

money laundry operations and terrorism financing. These modifications aim for the SHCP

to obtain the information in an orderly manner, for its analysis with the Financial Intelli-

gence Unit. The Amendment was published in the DOF on August 1st, 2013 and will be

effective 60 calendar days after its publication (i.e. October 1st, 2013).

Positive: The reports rendered by insurance institutions and retirement fund administra-

tors have been reinforced to prevent money laundry and terrorism financing.

Possible Action: Inform the responsible areas regarding reports to the SHCP.

Amendment to the General Provisions Applicable to Brokerage Firms and Credit Institutions regarding Investment Services (General Provisions).

Even if though this Amendment is not addressed to insurance institutions, it is worth no-

ticing that this modification repealed such General Provisions since July 15, 2013. A new

draft of General Provisions is being analyzed by COFEMER, please see Section 3 of this

report for additional information in this regard.

Resolution to issue the Official Standard Template to report International Funds Transfers, in terms of the General Provisions referred to in article 115 of the Law for Credit Institutions.

Even though this Amendment is not addressed to insurance institutions, it may be relevant

to remark that recently the SHCP has issued resolutions to homologate reports required to

diverse entities of the financial system. Therefore, a similar provision may subsequently be

issued and result applicable to insurance institutions and retirement fund administrators.

Possible Action: Monitor the DOF for a similar provision that may become applicable to

insurance institutions and/or retirement funds administrators.











00Ministry for Social Development

Amendment of the Operation Rules of the Pension for the Elderly Program for the fiscal year 2013

The amendment of the Operation Rules of the Program intends to mitigate the vulnerability of

people of 65+ years of age that have no retirement pension, through economic support and social

protection. The Operation Rules for the Program set forth relevant guidelines for providing such

support. At first glance only banks participate in this Program, considering bank accounts are

necessary to receive the economic support.

Positive/negative/Possible Action: If this is of interest, a revision of the Program and its Operation

Rules may prove helpful to further identify its scope.

Federal Commission for Regulatory Improvement (COFEMER)

List of Revised Documents during the months of June and July, 2013. ³

As informed in the previous report, some relevant insurance regulations were revised in June 2013,

e.g. Amendments to the CUS with reference numbers 28/13, 30/13, 31/13 were published in June in

the DOF and Amendment to the CUS 32/13 was published in July (commented in this report).

In addition, during July Cofemer revised the following relevant insurance regulations: e.g. Amendments

to the CUS with reference numbers 33/13, 34/13 and 35/13; please see Section 1 of this report.

The revised documents were commented throughout the May-June report and in Section 1 of

this document.

National Commission for the Protection of Users of Financial Services (CONDUSEF)

Amendment to General Provisions setting forth the Investment Regime for Investment Corporations Specialized in Retirement Funds (SIEFORES)

The amendment has three main purposes: i) to expand to 45 Countries Eligible for Investment

Purposes (Peru and Colombia were included), ii) to maintain investment safety with respect to

international markets and iii) to increase profitability of the investments considering the possible

growth potential. The draft amendment received a favorable opinion from the Bank of Mexico

(Banxico), the National Banking and Securities Commission (CNBV), and from the Advisory Committee

and Governance Board, both of the National Commission for the Retirement Savings System

(CONSAR). The amendment is already effective.

Positive: SIEFORES have more options to invest considering the new countries admitted for

investment purposes.

Possible Action: Inform the corresponding areas, since this Amendment is effective as of July 25.

³ COFEMER’s lists of revised documents are published during the first half of the month following such revision (i.e. the list of documents revised in June is published in the DOF in July).









00 2 · LAWS

During July-August, 2013 no relevant specific insurance laws were published in the DOF.

However, please note that:

i) On July 17, 2013 the Federal Law for the Prevention and Detection of Operations Fund-

ed with Unlawfully Obtained Resources (FLUR) became effective. The FLUR was published

in the DOF in October 17, 2012.

ii) On August 16, 2013, the Regulations corresponding to the FLUR were published in the

DOF (see Section 1 of this report).

iii) On August 23, 2013, General Provisions with regards of the FLUR were published in

the DOF (which will be commented in the following report).

3 · PUBLIC HEARINGS - REGULATIONS

COFEMER

Draft Amendments to the CUS 32/13, 33/13, 35/13, 36/13, 37/13 and 39/13.

The drafts of the amendments were authorized without regulatory impact assessment

(MIR), since no additional costs are required for the applicable sector to comply with its

provisions. Each of the draft amendments modifies reference rates used for pension insur-

ances (Annex 18.7.9 of the CUS). For reference regarding these Amendments, please see

Section 1 of this Report.

Draft Amendment to the CUS 34/13

COFEMER received no comments to this draft regulation and therefore authorized its

publication in the DOF. This modification to Annex 9.7.1 (“Adjustment Factors for Credit

Risks”) was published in August 5, 2013, and is already effective. Please see Section 1 of

this Report for additional reference.

Draft of Amendments the CUS 38/13

The draft aims to amend Annexes 17.4.2 y 17.4.3 of the CUS regarding the Registration

of Foreign Reinsurers authorized to perform Reinsurance and Rebonding Operations in

Mexico. These amendments update information regarding: i) granting and cancelation of

records with the Registry, ii) change of corporate name and modification of operations of

registered reinsurers and iii) authorized agents representing foreign institutions in reinsur-

ance and rebonding operations. The draft is pending of authorization from COFEMER.

Positive: The registration of authorized foreign reinsurers and of companies authorized to

http://207.248.177.30/mir/uploadtests/29526.131.59.1.Circular%20Modificatoria%2032_13%20CUS%20%28Anexo%2018.7.9.%29.doc

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http://207.248.177.30/mir/uploadtests/29594.177.59.0.Circular%20Modificatoria%20%2034_13%20CUS%20%28Anexo%209.7.1%29.docx

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00perform operations as their representatives provide legal certainty to these operations.

Possible Action: Inform responsible areas concluding operations with foreign reinsurers.

Draft rules for the Registration of Users

According to the Law for the Protection of Users of Financial Services, CONDUSEF must maintain a

Public Registration of Users that have indicated their refusal for the use of their information for mar-

keting and advertising purposes. This Registration aims to protect such registered users from receiving

offers of financial services providers. The draft rules are still being revised by COFEMER.

Positive: Currently the operation of the Registration of Users is set forth in Condusef’s Internal

Guidelines and therefore, did not had the scope to set forth general obligations regarding privacy of

the users. The Rules may result beneficial by way of promoting privacy protection of such users.

Possible Action: When published in the DOF, inform the corresponding areas to avoid sending com-

mercial communication to registered users, if any.

Draft Amendment to General Provisions setting forth the Investment Regime for Investment Corporations Specialized in Retirement Funds (SIEFORES)

The draft amendment was authorized without regulatory impact assessment (MIR), since no addition-

al costs are required for the applicable sector to comply with its provisions. This amendment was pub-

lished in the DOF in July 24, 2013, please see Section 1 for additional reference regarding its content.

Draft Regulations for the Federal Law for the Prevention and Detection of Operations Funded with Unlawful Resources

These Regulations are applicable to “financial entities” in terms of the referred law, which include

insurance institutions and retirement fund administrators, among others. Please see Section 1 for

additional reference.

Draft Amendment to General Provisions applicable to Credit Institutions and others regarding Investment Services.

The General Provisions aim to protect the public at large in its investment operations considering the

population does not regularly receive financial education. In some cases, entities may benefit from

being treated as “any other client”. This Amendment will prevent some entities to be treated as “any

other client” since they are regarded as financial experts, including insurance institutions and retire-

ment funds administrations.

The MIR corresponding to this Draft Amendment is being revised by COFEMER.

Negative: Insurance institutions and retirement fund administrations will not be able to benefit from

being treated as a “regular client” by credit institutions and other entities.

Possible Action: If convenient, the interested areas may submit to COFEMER observations to this

Draft Amendment.

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http://207.248.177.30/mir/uploadtests/29503.131.59.1.MODIFICACIONES%20a%20las%20Disposiciones%20de%20car%25c3%25a1cter%20general%20que%20establecen%20el%20r%25c3%25a9gimen%20de%20inversi%25c3%25b3n%2026%2006%2013.doc

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00 Draft Amendment to the Rules setting forth Minimum Capital Requirements for Operation of the Bonding Institutions.

Public contracts are generally secured with bonds. To foster the participation of

micro and SMB (small and medium businesses) in public contracts, the guaranties

that bonding institutions may accept are being modified. Development banks will

assume a percentage of the compliance risk of the administrative bonds granted.

This amendment is relevant considering authorized foreign reinsurers may perform

rebonding operations.

Positive: The Amendment may increase the participation of micro and SMBs as

suppliers of the Federal Government, which may contribute to economic growth.

Possible Action: If Zurich is performing bonding operations, inform the corre-

sponding areas.

Draft Amendment modifying i) the Official Standard Template to Report Relevant, Unusual and Concerning Operations set forth in diverse provi-sions (including the Law for Mutualist Insurance Institutions), ii) the Manu-al to comply with such Official Standard Template (December 2004) and iii) its prior Amendment (June 2012).

This Amendment aims to prevent money laundering operation and terrorism

financing and is applicable to insurance institutions and retirement fund admin-

istrations, specifically regarding their reports to the SHCP. The Amendment was

published in the DOF in August 1st, 2013; please see Section 1 for additional

information.

4 · BILLS

CHAMBER OF DEPUTIES

In accordance with provisions of the Mexican Federal Constitution, the sessions’

period of the Congress ended on April 30, 2013. The Permanent Commission may

still receive initiatives, which will be analyzed until the following period of sessions

(starting on September 1st, 2013).

Bill to Amend the Federal Constitution (articles 74 and 123)

The initiative aims to transfer the authority to determine minimum wages to the

Chamber of Deputies (currently minimum wages are calculated by a specialized

agency CONASAMI). Even though this amendment is not directly related to insur-

ance or pensions, we consider it may impact the referred matters, considering

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http://gaceta.diputados.gob.mx/Gaceta/62/2013/jul/20130715.html%23Iniciativa4

00minimum wages are used to calculate indemnities. Some penalties applicable to in-

surance institutions and retirement fund administrators may also increase, as they are

calculated based on the minimum effective wage. The bill was filed by the Movimien-

to Ciudadano Party and was sent to the Commission of Constitutional Studies.

Negative: We consider that the calculation of the minimum wages is best pondered

by the specialized agency of the Executive Branch, than by the Chamber of Deputies.

Possible Action: Monitor if the discussion of this Amendment is passed (it was not

filed by any of the three main political parties in Mexico).

Bill to issue the new Law for the Institute for the Promotion of Financial Edu-

cation and Integration

The bill creates the Institute for the Promotion of Financial Education and Integration

(“Instituto de Fomento a la Educación e Inclusión Financiera”), coordinated by the

Ministry of Finance. This Institute will i) promote financial education in Mexico and will

ii) provide inputs for public policies and actions to educate the public at large regard-

ing the use of financial products and services. This Law considers insurance institutions

and retirement fund administrators as part of the Mexican financial entities. The bill

was assigned to the Finance and Public Credit Commission

Positive: If the bill is passed, financial education will be more available for the public

at large, thus benefitting both the population and financial entities.

Possible Action: Monitor if this Amendment is passed.

Bill to Amend the Social Security Law to balance invalidity and life insurance

premiums with respect to disease and maternity insurance (articles 25, 147

and 242)

The bill aims to modify insurance premiums of the Mexican Institute of Social Security

(IMSS) to mitigate the deficit of the “disease” and “maternity” insurance, with respect

to the “life” and “invalidity” insurance. For this purpose, one percent of the contribu-

tions will be transferred through modifications of quotas of employers and employees.

In addition, the Family Health Insurance is amended for policy subscribers to contrib-

ute according to its age group (to prevent an increment in its operation deficit).

Positive: According to its statement of purpose, this strategy was part of those set

forth in the “Official Financial Report for 2012-2013” of the IMSS addressed to the

Executive Branch and to the Congress.

Possible Action: Monitor if the discussion of this Amendment is passed. Insurance

institutions and retirement fund administrators acting as employers, will have to adjust

their contributions for social security with respect to their workers.

http://gaceta.diputados.gob.mx/Gaceta/62/2013/ago/20130816.html%23Iniciativa4





00 Bill to Amend articles 20 and 62 of the Federal Transportation Law (FTL)

This initiative sets forth damage liabilities for providers of auxiliary services in terms of article 52

(including toll and rescue services) of the FTL caused to their users and their assets. Therefore, if

passed, this bill may benefit insurance institutions providing insurance against damages. The bill was

filed with the Senate and re-sent to the Transportation Commission of the Chamber of Deputies.

Positive: This damage liability may benefit users of the auxiliary services and insurance institutions.

Possible Action: Monitor if this bill is passed.

Bill to Amend the Social Security Law

The bill modifies, among other provisions the definition of Reference Wage for Social Contribution

Purposes (“Salario Base de Cotización”) and sets forth specific provisions for season workers (“tra-

bajadores estacionales”). The bill was assigned to the Social Security Commission of the Chamber

of Deputies.

Positive/Negative/Possible Action: If passed, inform the corresponding areas to identify if social

security contributions of insurance institutions and retirement fund administrators need adjust-

ments.

SENATE

In accordance with the provisions of the Mexican Federal Constitution, the sessions’ period of the Congress ended on April 30, 2013. The Permanent Commission may still receive initiatives, which will be analyzed until the following period of sessions (starting on Sep-tember 1st, 2013).

Bill to Amend the Social Security Law and the Law for the Retirement Savings Systems, among others.

The bill sets forth, among other obligations of the National Commission for the Retirement Savings Systems (CONSAR), the obligation to render a specific report to the Congress in case of capital losses “minusvalías” affecting the savings of workers invested by Invest-ment Companies Specialized in Retirement Funds (SIEFORES). These obligations may affect retirement fund administrators and SIEFORES; considering preparation of the CONSAR’s reports. The bill was sent to the Joint Commissions of Social Security and Legislative Stud-ies of the Senate.

Positive: The obligation to render reports may promote a responsible supervision on behalf of CONSAR.

Negative: It is unclear if the Congress may have a “concrete beneficial influence” arising from these reports.

Possible Action: Monitor if this bill is passed; if approved, CONSAR’s oversight will be reinforced.



http://www.senado.gob.mx/%3Fver%3Dsp%26mn%3D2%26sm%3D2%26id%3D43057


00Bill to Amend the Law for the Protection and Defense of Users of Financial Services (LUFS) and the Law for the Transparency and Control of Financial Services.

The Bill incorporated authorities to CONDUSEF regarding “Financial institutions” in terms of the LUFS, which include insurance institutions and retirement funds adminis-trators, specifically regarding i) commissions directed to their users, ii) non-competition practices, and iii) suspension of information deceiving users of financial services or that does not comply with General Provisions applicable, among others. The bill was as-signed to the Joint Commissions of Finance and Public Credit and Legislative Studies (II) of the Senate.

Positive: The bill may promote transparency and compliance to the law, in favor of users of financial services.

Possible Action: Even if this initiative focuses on banks, it may be convenient to review this bill.

Bill issuing the new Law for the Protection, Information, Counseling and Defense for the Consumer (sic) of Financial Services.

This bill claims to provide a new updated Law with respect to the current effective Law for the Protection and Defense of Users of Financial Services. If passed, it may be applica-ble to insurance institutions and pension administrators. This draft Law may require fur-ther analysis to identify modifications and its possible impact to the current framework. The bill was filed by one of the main political parties, the National Action Party (PAN) and was sent to the Finance and Public Credit Commission of the Chamber of Deputies.

Positive/Negative/Possible Action: If interested, further analysis of this draft law is rec-ommended.

Bill to Amend the Social Security Law (article 178) and the Law for the Retirement Savings Systems (article 74).

The bill clarifies the right, in both Laws, for workers to request “at any time” the retire-ment fund administrator to transfer the funds to a different fund administrator, pro-vided some requirements are met. The bill was sent to the Joint Commissions of Social Security and Legislative Studies of the Senate.

Positive/Negative: The amendment is positive considering it will promote competition in the pension administration sector, which should favor workers. This possibility of transfers may require additional recalculations and reports to the authorities on behalf of retirement funds’ administrators.

Possible Action: Monitor if this amendment is passed and inform retirement funds’ administrators.







00 Other Bills

In addition to the aforementioned initiatives, three bills filed with the Senate were sent to the

Chamber of Deputies (and therefore were commented in the prior Section):

i) Bill to Amend the Social Security Law. The bill was assigned to the Social Security Commis-

sion of the Chamber of Deputies.

ii) Bill to Amend articles 20 and 62 of the Federal Transportation Law (FTL). The bill was

sent to the Transportation Commission of the Chamber of Deputies.

iii) Bill to Amend the Social Security Law (articles 25, 147 and 242). The bill was sent to the

Social Security Commission of the Chamber of Deputies.

NEWS 4

Insurance

Population density and middle class represent potential for Zurich 5

The CEO of Global Life of Grupo Zurich, Kevin Hogan, indicated that Mexico represents one of the

larger platforms for the insurance and pensions business in Latin America, considering its numerous

population and its vast and young middle class. Mr. Hogan also referred that even the incipient pen-

etration of the insurance industry in Mexico represents an opportunity to promote the business and

that Mexico is applying various reforms that may promote a stable, sustainable and greater growth.

Zurich CEO confirmed that in Mexico, the strategy consists of promoting growth in diverse sectors:

life, investment funds, savings protection. The strategic alliance with Banco Santander will buttress

the bank insurance business (“bancaseguros”).

Positive: According to the analysis of the population dynamics, Zurich may benefit from its opera-

tions in Mexico in the medium and long terms.

Possible Action: As the analysis has concluded, no further action is recommended.

Zurich released data protection insurance 6

Zurich released in Mexico a new data protection insurance, the first in its type to operate in the

country. The product aims to protect companies from theft, unauthorized trade or misuse of the

information they maintain, in accordance to provisions of the Federal Data Protection Law and its

Regulations and Rulings. The product is named Data Protect and offers risk management for abuse

or crimes regarding data bases. According to Tim Stapleton, Deputy Director of Professional Civil

Liability of Grupo Zurich, “a filtration of data may represent an immeasurable damage to a compa-

ny’s reputation…therefore we aim to provide insurance and risk management solutions for breaches

in companies databases and systems”.

4 Links to each of the news are provided in the corresponding headlines.5 Morales, Yolanda, Densidad de población y clase media, potencial para Zurich, El Economista, July 28, 2013.6 Redacción, Zurich lanza póliza de protección de datos, El Economista, July 11, 2013.




http://eleconomista.com.mx/sistema-financiero/2013/07/28/densidad-poblacion-clase-media-potencial-zurich

http://eleconomista.com.mx/sistema-financiero/2013/07/11/zurich-lanza-poliza-proteccion-datos

00

7 Data Protection Law was published in the DOF in July 5, 2010, its Regulations were published in December 21, 2011.8 Reyes, José, Llega Zurich Seguros a Saltillo, primera en Coahuila, Vanguardia, July 26, 2013.9 Agencias, G-20 discutirá sobre grandes aseguradoras, El Economista, July 17, 2013.

10 Business News Americas, Seguros crecen 10.7% en México el primer semestre y fianzas bajan 10.8%, August 2, 2013

Positive: This new product may provide coverage for a large number of companies that manage

personal data or even sensitive personal data (i.e. hospitals), as has no current competitor. It also assists

companies to comply with obligations arising from the relatively new Federal Data Protection Law. 7

Possible Action: Monitor the reception of this product in Mexico and share the information

with other Zurich offices abroad for them to evaluate if a similar product may be included in their

portfolios.

Zurich sets its first office in Coahuila 8

As part of its aggressive expansion plans for 2016 in Mexico, Grupo Zurich, initiated activities in Saltillo,

indicated José Luis Ortíz, commercial responsible for the networking of offices in Mexico. “Currently

the company has 37 offices, and aims to reach more than 100 offices set for the year 2016. This is the

first office in Coahuila and we will continue growing according to demand and requirements. We offer

automobile, home and damages insurances for SMBs”.

Positive: Zurich is expanding its offices to assist in covering local insurance needs.

Possible Action: Inform the corresponding areas regarding risk and insurance statistics to identify

other convenient locations for Zurich offices to comply with the goal set for 2016.

G-20 will discuss regarding macro insurers 9

The members of the G-20 will meet in Moscow to discuss the problems related to macro insurers and

the risks they represent for global financial stability. Such insurers shall be revised “like we did with

banking institutions”, referred an officer of the German Government.

Positive/Negative/Possible Action: Subject matters discussed in the G-20 have not yet

represented modifications affecting insurance institutions in Mexico, therefore, no effect and

possible action are suggested.

Insurances grew 10.7% in the first half of 2013, bonds receded 10.8% 10

Premiums of the insurance sector summed USD $14.200mn ($13.129mn Swiss Francs) in for the

first half of 2013; direct premiums augmented 10.7% according to the report from the National

Commission for Insurance and Bonds (CNSF). Property insurances (which includes vehicle insurance)

represent 40.8% of the premiums, followed by life insurances representing 39.2% of the premiums.

Accidents and health insurances represent 14.0% and pensions represented 6% of the premiums.

However, pension insurances, represented the larger growth rate (+22.6%).)

Positive: Insurance culture is augmenting, especially pension insurance. This represents benefits for the

insured persons, for the industry and even for the government (e.g. by way of complementing per se

limited pension expenses).

Possible Action: Share the news with the corresponding areas as it provides an analysis of the sector.

http://www.vanguardia.com.mx/llegazurichsegurosasaltilloprimeraencoahuila-1794461.html

http://eleconomista.com.mx/sistema-financiero/2013/07/17/g-20-discutira-sobre-grandes-aseguradoras

http://www.bnamericas.com/news/seguros/seguros-crecen-107-en-mexico-el-primer-semestre-y-fianzas-bajan-108

00 93% of Mexican nationals lack medical expenses insurance 11

According to an study performed by AXA, in Mexico, 104 millions of Mexicans lack

of a major medical expenses insurance. It is perceived as an unnecessary luxury,

even considering an average of 7 million 300 thousand families may acquire a policy

against a serious medical emergency. Affiliates to public health systems consider such

insurances unnecessary.

Positive: This may represent an area of opportunity for Zurich to cover insurance needs

of the population, currently unattended.

Possible Action: Inform the responsible areas for further analysis.

Health insurance advances 12

During the first half of 2013, health insurance policies reported the largest growth of

the past four years, according to data from the Mexican Association of Insurance Insti-

tutions (AMIS). According to the Executive Manager of the AMIS, Recaredo Arias, the

growth is related to new products released by the insurance institutions.

The Commercial Director of Medi Acces, Juan Romeu, commented that in their case,

growth is related to collective insurance contracts signed with governmental agen-

cies. According to Mr. Romeu, this company represents 48.37% of the total health

insurance market.

Positive: Insurance culture is advancing and there is an ample scope for growth on this

type of insurance.

Possible Action: Inform the responsible areas for further analysis.

AXA releases customized medical insurance 13

This new product may be acquired with the specific coverages that the public at large

are interested on acquiring and can afford. According to Hector Rode, Vicepresident

of Life and Health of AXA, there are 104 millions of Mexicans lacking private health

services, which represents growth potential for the insurance sector in the medical in-

surance area. The product is named Flex Plus and is addressed to families with monthly

income varying from USD $1,083.00 to USD $2,916.00 Approx. ($1001.34 to $2696.13

Swiss Francs) ; categorized as the intermediate segment of the population.

Positive: This product favors the comprehension of medical insurance products, which

has represented and obstacle to increase the insurance growth in Mexico, according to

the referred news.

Possible Actions: Identify if Zurich may benefit by offering a similar “flexible product”.

11 Zaragoza, Yazmin, 93% de los mexicanos no cuentan con seguro de gastos médicos mayores, OEM, El Sol de México, August 19, 2013.12 Torres, Yuridia, Crece venta de seguros de salud, El Economista, August 14, 2013.13 Torres, Yuridia, Axa lanza seguro médico a la medida, El Economista, August 15, 2013.

http://www.oem.com.mx/eloccidental/notas/n3093789.htm

http://eleconomista.com.mx/sistema-financiero/2013/08/14/crece-venta-seguros-salud

http://eleconomista.com.mx/sistema-financiero/2013/08/15/axa-lanza-seguro-medico-medida

00Automobile insurances premiums rose 8.6% in the first half of 2013 14

Premiums corresponding to automobile insurance summed USD $2.610mn

for the first half of the year, which represent an increase of 8.6% with

respect to the past year, according to the report of Qualitas, the main ve-

hicle insurer of the country. The increase in automobile insurance followed

that of new automobile sales, which augmented 8.4% with respect to the

same period.

Positive: Insurance culture may be advancing with regards to vehicle

insurance. Considering Zurich is providing vehicle insurance this may

represent additional area of opportunity for the company.

Possible Action: Considering the data referred to in the news relates to

the first half of 2013, responsible area can work out subsequent forecasts

of this tendency.

Only 5.0% of the SMB’s is insured 15

In Mexico only 5% of the small and medium businesses are insured, notwith-

standing at least 50% of such businesses are vulnerable to damages in their

facilities, remarked GNP Seguros.

Positive: This lack of insurance represents an area of opportunity for Zurich.

Possible Actions: Inform the responsible areas to evaluate if new products

or marketing campaigns addressed to such companies are advisable.

Verify your coverage for civil liability 16

Until the past year, a death arising from damages to third parties could be

indemnified with an amount of USD$50,000 Approx. ($46,229.97 Swiss

Francs). However, amendments to the Federal Labor Law increased civil

liability to USD$308,333 Approx. ($285084.50 Swiss Francs) When the

incident occurs, and the insured sum is not sufficient, assets of the liable

person may be targeted to cover the outstanding amount. If the latter as

well results insufficient, persons respond with their future assets to cover for

the caused damages.

Positive: The referred news may promote financial awareness of the risks

and benefit insurance contracting.

Possible Action: Share the news to promote financial awareness of the civil

liability risks.

14 Business News Americas, Primas de seguros automotores suben 8.6% en México el primer semestre, Business News Americas, August 13, 2013.15 Notimex, Sólo el 5.0% de las pymes mexicanas cuenta con seguro, Yahoo! Noticias, August 7, 201316 Cruz Domínguez, Alejandro, Verifique su cobertura de responsabilidad civil, El Economista, July 29, 2013.

http://www.bnamericas.com/news/seguros/primas-de-seguros-automotores-suben-86-en-mexico-el-primer-semestre

http://es-us.noticias.yahoo.com/5-0-pymes-mexicanas-seguro-173140279.html

http://eleconomista.com.mx/finanzas-personales/2013/07/29/verifique-su-cobertura-responsabilidad-civil

00 Avoid neglecting your life insurance 17

If a person thinks it might be beneficiary of a life insurance of a deceased family member, it is

entitled to have a response from insurers on the subject matter, through the gratuitous service of

the CONDUSEF. It is necessary to accompany the corresponding request with a copy of the death

certificate of the corresponding family member, among other requirements. This procedure prevents

insured amounts to be abandoned, permitting the beneficiary to perceive such indemnity.

Positive: This procedure reinforces fulfilment of the purpose of the life insurance; therefore, it

may increase reliability in this instrument and increase insurance contracting. Insurance institutions

will only receive requests for information in case of death of a relative and prior compliance of

CONDUSEF’s requirements.

Negative: With this new procedure, less abandoned indemnities will remain with insurance institutions.

Possible Action: As part of a regular procedure, monitor compliance of Zurich regarding these

information requests and release of indemnities to beneficiaries.

Deceptions regarding life insurance 18

Life insurance has recently been used by some financial institutions to monthly charge the public at

large for a service which terms are ignored by such users. The National Commission for the Protec-

tion of Users of Financial Services (CONDUSEF) published an article “Protect your money” to inform

of strategies to stress/force bank users to accept these charges. E.g. “informing” the user that he

has won a life insurance in a drawing, to obtain his information and then charge for this service, or

contracting insurance through a simple “Yes” (that may be accidental) in regular operation of ATM

machines. If the institution does not provide a satisfactory response to a claim in this subject matter,

users may file a complaint with CONDUSEF.

Positive: Users of financial services are being alerted of non-quite ethical marketing strategies of

financial institutions.

Possible Actions: Inform the corresponding areas to identify these actions, to prevent complaints

filed by users with CONDUSEF.

GNP Seguros, the largest multibranch insurer in Mexico 19

GNP guarantees the coverage of damages of its clients through its association with to the most solid

reinsurers in the global market: Swiss Re, Munich Re, Gen Re, Hannover, Mapfre, Lloyd’s and Patria

Re. In this context, GNP Seguros received the Reaction Award as the best insurer in Mexico. The

Reaction Awards grant two acknowledgements per year since 2008, one for the UK and one for the

global market; from this year on, an additional acknowledgement will be granted for Latam.

Positive/Negative/Possible Action: As the news mainly concerns about GNP, no further action

is suggested.

17 Notimex, Infórmese y no pierda su seguro de vida, Yahoo! Noticias, July 31, 2013.18 Notimex, Seguro de vida, necesario, pero sin omisiones o engaños, Yahoo! México Finanzas, July 30, 2013.19 Terra, GNP Seguros, La Aseguradora multiramo más grande de México, Terra Economía, August 15, 2013.

http://es-us.noticias.yahoo.com/inf%25C3%25B3rmese-pierda-seguro-vida-233637373.html

http://eleconomista.com.mx/finanzas-publicas/2013/07/31/gasto-pensiones-sube-52-real-junio

http://economia.terra.com.mx/noticias/noticia.aspx%3FidNoticia%3D201308151656_AGE_82423239

00Mapfre releases new insurance for dogs. 20

Mapfre announce this new insurance product specialized in dogs, with aims to

cover a market of 5.4 million of canines with home in the country. This product

will cover medical or veterinarian expenses for the pet and total protection against

attacks, theft of loss of the animal. Insured canines are home pets and assistance

dogs (for blind persons and epilepsy detectors). The coverage is available in Mexico,

with insurance amounts varying from USD $125.00 to USD $2,916.00 Approx. (from

$115.57 to 2696.13 Swiss Francs) depending on coverage.

Positive: This new insurance may cover some frequent risks in Mexico and does not

directly compete with Zurich’s products.

Possible Action: Inform the corresponding areas to identify if a similar insurance

product may be added to portfolio.

Education Insurance as an option. 21

CONDUSEF informed that education insurance aims to guaranty higher education

(middle school and further studies), even in case of lack of the parents or tutors or

in case they become unable to use such resources due to invalidity. Education insur-

ance is honored and provided even if the funds were not totally provided. This dif-

ference is relevant is considering to save in a regular bank account for such purpose.

Positive: Education insurance is being promoted, and this may increase sales of the

product and completion of studies as a consequence.

Possible Action: Share this information to enhance contracting of this product and

promote insurance culture in Mexico.

School insurance 22

In Mexico, only the States of Mexico, Chihuahua, Tamaulipas, Nuevo León, Quin-

tana Roo, Baja California and the Federal District include scholar insurance in their

governmental programs. Seguros S remarked that parents, when choosing the

best school for their children, may inquire regarding if this insurance is provided or

acquire one on their own. Medical scholar insurance only covers accidents occurring

during school hours and transportation to the institution (during the scholar cy-

cle). According to Seguros S, the most common accidents within schools are minor

scratches and cuts, accidents during the breaks, and related to stairs, windows and

laboratories.

Negative: This type of insurance culture has not been incorporated by most of the

educative institutions.

20 Notimex, Mapfre lanza seguro para perros con hogar, El Economista, August 12, 2013.21 Redacción, El seguro educativo como opción, El Economista, August 11, 2013.22 Seguro Escolar, una ventaja.

http://eleconomista.com.mx/finanzas-personales/2013/08/12/mapfre-lanza-seguro-perros-hogar

http://eleconomista.com.mx/finanzas-personales/2013/08/11/seguro-educativo-como-opcion

http://www.elsiglodetorreon.com.mx/noticia/902841.seguro-escolar-una-ventaja.html

00

Positive: Uninsured educative institutions may represent a market opportunity for

insurance institutions.

Possible Action: Inform the corresponding areas to identify if this uninsured sector

may represent an area of opportunity.

Insurers’ abuse in Ciudad Victoria 23

In the last three months, insurers in Ciudad Victoria, registered 637 complaints with

the National Commission for the Protection of Users of Financial Services

(CONDUSEF). According to Maribel Almendariz, officer from CONDUSEF, “at first

glance, the majority of the claims are not concerning non-acknowledged charges, but

regarding account cancellation”.

Ms. Almendariz remarked that banks and insurers receive most of CONDUSEF’s claims;

however, banks conciliate rapidly and insurance institutions require documents to be pro-

duced. According to CONDUSEF’s website, during the first half of 2013, the insurance in-

stitutions with most claims regarding vehicle damages was GNP (17%) of the complaints.

Negative: A high level of claims may negatively affect reliance on in insurance institutions.

Possible Actions: Monitor the claims filed against Zurich Santander to analyze how

they can be mitigated.

Pensions

Chile and Mexico will work jointly regarding pension systems 24

CONSAR and the Chilean Superintendence for Pensions signed a memorandum of

understanding for the exchange of information regarding entities participating in pen-

sion systems in both countries. Main aspects of this exchange of information are those

regarding authorization or licenses of cross border institutions (“CBIS”), supervision

activities, information of the management and shareholders of CBIS and information

regarding operation of the such institutions, among others.

Positive: Both countries may benefit from this exchange of information.

Possible Action: Identify if this new regulation of CBIS may be applicable and/or

benefit Zurich Latam.

23 Valadez, Salvador, Aumentan abusos de aseguradoras de Victoria, Conexióntotal.mx, August 9, 2013.24 Redacción, México y Chile trabajarán juntos en sistemas de pensiones, El Economista, July 22, 2013.

http://www.elsiglodetorreon.com.mx/noticia/902841.seguro-escolar-una-ventaja.html

http://eleconomista.com.mx/sistema-financiero/2013/07/22/mexico-chile-trabajaran-juntos-sistemas-pensiones

00

25 Torres, Yuridia, Afores tienen que explicar minusvalías a trabajadores, El Economista, July 8, 2013.26 Martínez María del Pilar et al, Pensiones quemarán reserva para enfermedades, El Economista, July 3, 2013.

Afores must explain capital loss (“minusvalías”) to workers 25

It is necessary for the National Commission for the Retirement Savings Sys-

tems (CONSAR) to explain workers that, even considering capital loss, retire-

ment fund administrators (afores) grant nominal profits of 11% in 50 months

plans. It is important for workers to understand that it is not moment to

withdraw funds. In addition, CONSAR must research if afores are properly

investing or if they must modify some aspects of their investment portfolio.

Negative: Afores suffered capital losses during the past two months.

Positive: The news is encouraging CONSAR to participate and determine

how future capital losses can be prevented.

Possible Action: Considering the capital losses of the afores, re-examine

the investment portfolio of Zurich’s retirement fund administrators (if appli-

cable), to prevent future losses.

Pensions will consume social security reserves 26

The Mexican Social Security Institute (IMSS) has started to use a second

reserve fund to comply with its financial obligations. Its administrative and

labor regime and the amount of the labor debt of the Retirement and Pen-

sions Regime of its own workers, afflicts its finances. Contributions of IMSS’

workers have not been saved or transferred to a fund; they have been used

to afford a portion of the pensions of the retired and pensioned workers.

To reinforce its finances the IMSS will set forth diverse strategies, including a

new supervision model regarding incorporation and compliance to the social

security system.

Negative: Social security burdens are increasing and the funds may be

insufficient. A legal reform on this subject matter may be necessary in the

following years.

Possible Actions: Monitor the publications in the DOF to identify social

security reforms affecting retirement fund administrators and insur-

ance institutions.

http://eleconomista.com.mx/sistema-financiero/2013/07/08/afores-tienen-que-explicar-minusvalias-trabajadores

http://eleconomista.com.mx/industrias/2013/07/03/pensiones-quemaran-reserva-enfermedades

00

27 Flores, Leonor, Gasto para pensiones sube 5.2% real a junio, El Economista, July 31, 2013.28 The Institute for Social Security and Services for State Workers.29 The state owned company named the “Federal Commission for Electricity”.

Expenses related to pensions increased 5.2% in June 27

Pensions payments of the public sector increased 5.2% during the first half of

2013, according to the report of public finances and debt. This increase is the result

of a decrease of PEMEX’s contributions to the pensions fund (3.8%) with respect

to the first semester of 2012 and of an increase in the payment of pensions of the

IMSS (7.6%), ISSSTE 28 (4.3%) and CFE 29 (9.8%) with respect to the referred period.

Negative: Social security burdens are increasing. A legal reform for this subject

matter may be necessary in the following years.

Possible Actions: Monitor the publications in the DOF to identify social security

reforms affecting retirement fund administrators and insurance institutions.

Bill to improve IMSS’ finances 30

The Democratic Revolution Party (PRD) filed a bill to amend the Social Security

Law to confront the financial crisis of the IMSS and to guaranty the viability of its

services. The Vicecoordinator of the PRD in the Chamber of Deputies indicated

that if the IMSS continues consuming its reserves, its resources will only last until

2015. The reform aims to rebalance premiums of invalidity and life, in benefit of the

disease and maternity insurance. Labor quotas may increase to cover benefits of the

insured regarding diseases and maternity. The Health Insurance for Families lacks

finances, considering its operation costs surpass its income.

Positive/Negative: Bills to improve IMSS’s finances are necessary; however, the

terms of the proposed initiative deserve a complete analysis.

Possible Action: Monitor the final version of this amendment in the DOF, to iden-

tify if insurance institutions and/or retirement fund administrators are affected.

http://eleconomista.com.mx/finanzas-publicas/2013/07/31/gasto-pensiones-sube-52-real-junio

http://www.elfinanciero.com.mx/component/content/article/47/25300.html

00

IMSS elective insurance 31

Independent workers or those that concluded a prior employment may benefit from social

security services of the IMSS by acquiring elective insurance, which requires anticipated

yearly payments (quotas). For people that have never contributed to the IMSS a Family Health

Insurance (Seguro de Salud para la Familia) is available. This Health Insurance allows its

beneficiaries to receive health services and medications through a yearly payment that varies

according to the age of the insured.

Some restrictions are applicable regarding the elective insurance, e.g. people with diabetes,

liver and/or kidney disease and aids are not candidates for this coverage.

Positive: Access to social security benefits is being reinforced. A large part of this sector

may not have access to private insurance. Elective insurance may increase contributions to

social security.

Possible Actions: Evaluate how “social” insurance might impact and to what extent, if any,

Zurich products.

Personal Retirement Plans 32

For workers providing contribution for their retirement through their employer, but interested

in supplementing the amount for their pension, Personal Retirement Plans, offered by insurers

and investment funds administrators are available. These products allow persons to set a

savings goal for their retirement, and these contributions are deductible for tax purposes.

Positive: The news is promoting private saving, which may benefit insurers and retirement

fund administrators.

Possible Action: Share this news to promote retirement saving plans.

30 Notimex, Presentan iniciativa para fortalecer finanzas del IMSS, EL Financiero, July 27, 2013.31 Notimex, Tienen mexicanos opción con seguro voluntario de IMSS, Yahoo! México Noticias, July 21, 2013.32 Santa Rita, Ilse, Obtenga la pensión más alta del IMSS con o sin empleo, ¿Qué pasa si yo cotizo a través de un patrón?, El Economista, July 16, 2013

http://mx.noticias.yahoo.com/mexicanos-opci%25C3%25B3n-seguro-voluntario-imss-143132218.html

http://eleconomista.com.mx/finanzas-personales/2013/07/16/obtenga-pension-mas-alta-imss-o-sin-empleo

00Venezuela Report

00 Venezuela Report


Statistical report of the Venezuelan insurance sector - Second quarter of year 2013.

It is a pleasure for us to present to you this article, published by

Globadir: Statistical report of the Venezuelan insurance sector, for the second quarter of year 2013.

Article structurePreliminary, this article contains an historical analysis of the Venezuelan

insurance market, in which the trends of the main indicators between

year 2001 and year 2012 may be observed. Then, an analysis is

made of the performance of each company for each quarter of the

current year, through a group of financial indicators classified by line

of business. For comparative purposes, the format of the reports

permits to follow up the results obtained for each company in each of

the semesters in an independent manner. In addition, said indicators

are presented on an accumulated basis as of June 30, 2013 and

are compared to the figures of the same period of year 2012. The

following section contains a section of reinsurance net indicators.

Finally, a glossary, the form used for the calculations, and the translation

of terms into English are presented.

The calculation of the indexes made throughout the report is made

on the basis of both premiums received net and earned premiums.

Likewise, the order in which the different companies are presented

in the report is based on the place of each of them according to the

premiums received net and it remains the same in all the report so

that the company or group of companies may be easily found in the

different charts.

This report contains by way of reference some statistics denominated in

Dollars of the United States of America. For making the conversion into

this foreign currency, the rates of exchange indicated below were used.

They correspond to the official year-end rate of exchange of each year

published by the Venezuelan Central Bank: •

Año

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Bs./US$

1,920.00

2,150.00

2,150.00

2,150.00

2,150.00

2,150.00

(*) 2.15

(*) 2.60

(*) 4.30

(*) 6.30

(*): Bs.F

00Following is an analysis of the main indicators presented as of June 30, 2013:

Premiums receivedIn the first 6 months of the year, an amount of Bs. 37,355 MM was collected;

earned premiums totaled Bs. 27,042 MM for this period. Reinsurance net premiums

totaled Bs. 30.333 MM, cessions to reinsurance companies represented 18.80%.

The following chart compares the composition of the premium portfolio for June

2012 and 2013. It may be noted that the proportion of the personal insurance

portfolio represented 52.12%. General insurance represented 46.73% and

insurance accepted represented 1.15%.

The 10 biggest insurance companies, as a whole, collected net premiums in

the amount of Bs. 26,153 MM, which represents 70.01% of the total market,

versus 69.99% as of June 30, 2012. This represents an increase in the market

concentration of 0.2 percentage points in 12 months. The following chart contains

a summary of the collection of the first 10 companies of the market:

Personal Insurance

General

Accepted Reinsur

52.12% 52.96% -0.84%

2.10%

-1.27%

46.73% 44.62%

1.15% 2.42%

Jun. 2013 Jun. 2012 Var,

Caracas, Seguros (Liberty)

Mercantil, Seguros

Horizonte, Seguros

Occidental, Seguros La

Mapfre, La Seguridad

Previsora, Seguros La

Altamira, Seguros

Federal C.A. Seguros

Multinacional de Seguros

Estar, Seguros

Others

Sub-total first 10

TOTALS

5,012,362,862

4,472,374,496

3,648,872,645

3,091,949,102

2,852,393,607

1,879,029,248

1,715,689,798

1,218,563,115

1,155,942,092

1,106,186,244

26,153,363,209

11,201,506,673

37,354,869,882

13.42

11.97

9.77

8.28

7.64

5.03

4.59

3.26

3.09

2.96

70.01

29.99

100.00

1

2

3

4

5

6

7

8

9

10

-

-

Premiums Jun. 2013 (Bs.)

Particip.2013 - %Company Rk

00

• Venezuela Report

An analysis by insurance group shows that the total collected premiums of Multinacional

de Seguros Group, which includes Multinacional de Seguros, Adriática de Seguros, Seguros

Guayana, and Seguros Interbank, amounts to a total of premiums received of Bs. 1,345

MM, which represents a market share of 3.60% and maintains it in the ninth position of the

10 biggest companies of the market.

Claims incurredThe accumulated claims incurred as of June 2013 were 60.22%. For March 2012, the

claims incurred resulted in 59.33%, which represents an improvement in this index of 1.48

percentage points in the period.

The accumulated claims paid as of March of this year were 49.90%. For June 2012, this

index was 51.72%. This represents a decrease of 1.81 percentage points.

The days of pending claims were 106 versus 109 for June 2012.

The improvement in claims incurred may be explained because of the better controls applied

to the components that affect the costs associated with the risks insured.

The outstanding claims amounted to Bs. 12,270 MM as of June 2013.

Administration costsThe administration costs accumulated as of June 2013 were Bs. 5,927 MM. The index

of administration costs in premiums received for June 2013 resulted in 15.87%. For the

same period of the preceding year, this index resulted in 16.73%. Also, the index of

administration costs with respect to earned premiums was 16.83% for the 6 months ended

in June. For the same period of the preceding year, this index resulted in17.63%.

Acquisition costsThe accumulated acquisition costs as of June 2013 were Bs. 4,571 MM. The index of

acquisition costs in premiums received resulted in 12.24%. For the same period of the

preceding year, this index resulted in 11.94%. Also, the index of acquisition costs with

respect to earned premiums was 12.98% for the 6 months ended in June. For the same

period of year 2012, this index resulted in 12.58%.

Combined indexAs a result, the combined index for premiums received was 76.01% and it was 89.14% for

earned premiums. For June 2012, these indexes were 80.40% and 91.03% respectively.

00

ProfitThe (estimated) technical profit (utilidad técnica) as of June 2013 was of

Bs. 1,043 MM. The technical profit/earned premium index was 2.96%.

For the first 6 months of 2012, this index resulted in 4.34%. The

general market performance for June 2013 resulted in Bs. 1,463MM.

With respect to net profit, the insurance market earned Bs. 2,506 MM

as of June 2013. The net profit with respect to earned premiums was

7.12% versus 7.55% for the same period of year 2012.

Coverage and Solvency MarginThe solvency margin indexes for June 2013 are not available yet. The

index of market reserve coverage was 1.43 for June 2013, which was an

improvement with respect to June 2012 when the index was 1.28.

ConclusionsThe analysis of the results of the sector as of June 2013 shows that

the total premiums were of Bs. 37,355 MM. This represents a 38.14%

increase with respect to the first 6 months of the preceding year.

A 30.97% growth occurred in administration costs, 7.17 percentage

points lower than the growth of the premiums. The acquisition costs

increased by 41.53%, that is, 3.40 percentage points in excess of the

growth of the premiums. In a combined form, there was an increase in

administration and acquisition costs of 2.77 percentage points below

the growth of premiums. There was a slight decrease in the claims

incurred with respect to the first 6 months of last year, resulting in

59.33%, which represented a decrease of 1.48 percentage points with

respect to the same period of the preceding year. As to the cession to

reinsurance companies, this year the companies ceded 18.80% versus

15.24% of the preceding year, that is, 3.55 percentage points more.

All of these factors had an impact on the estimated technical profit

as of June 2013, which resulted in Bs 1,043 MM. As to the general

performance of the company, the result was Bs 1,463 MM. As a result,

the Net Profit totaled Bs. 2,506 MM. The net profit index in relation to

earned premiums resulted in 7.12% versus 7.55% of the preceding year.

00 Following are two charts that contain comparative information for

the periods ended June 2013 and June 2012:

This report was prepared and disclosed with public information

obtained through the Superintendence of the Insurance Activity and

taken from the preliminary unaudited financial statements of the

companies that they deliver to the Superintendence. This information

has not been audited or processed by said Superintendence and is

therefore subject to changes that may occur as a consequence of

• Venezuela Report

Claims paid

Claims incurred

Administ. costs / Premiums received

Administ costs. / Earned premiums

Acquisit costs / Premiums received

Acquisit costs. / Earned premiums

Coverage of reserves

Combined index (/ premiums received)

Combined index (/ earned premiums)

Technical profit / Premiums received

Technical profit / Premiums received

49.90

59.33

15.87

16.83

12.24

12.98

1.41

78.01

89.14

2.96

7.12

51.72

60.81

16.73

17.63

11.94

12.58

1.28

80.40

91.03

4.34

7.55

Jun. 2013

Comparative market indexes (%)

Jun. 2012

Net premiums

Earned premiums

Claims paid

Claims incurred

Administration costs

Acquisition costs

Technical profit

General performance

Net Profit

37,355 27,042 38.14%

37.20%

33.29%

33.86%

30.97%

41.53%

-6.29%

77.36%

29.32%

35,215 25,667

18,642

20,892

5,927

4,571

1,043.1

1,463.4

2,506.5

13,986

15,608

4,525

3,230

1,113

825

1,938

Jun. 2013 Jun. 2012 Var,

Comparative market chart (Million Bolívares Fuertes)

00future audits by said authorities. Likewise, some statistical information was obtained

from the Statistics Yearbooks published by the Venezuelan Chamber of Insurance

Companies. Therefore, Globadir nor Travieso Evans Arria Rengel & Paz are able to

guarantee the accuracy of the information contained in this report.

The purpose of this report is to provide a general idea about the Venezuelan insurance

market and it should not be used as a base for making commercial decisions to which

end, a detailed and specific study of the operation should be made.

Faithful Performance Bond to guarantee to the Superintendence of Electronic Certification Services the compliance of the Law on Data Messages and Electronic Signatures

The Superintendence of the Insurance Activity issued Ruling No. FSAA-2-3-002186,

published in Official Gazette No. 40.229, dated August 15 2013, which approves,

with a general character, the Particular Conditions of the text of the Faithful

Performance Bond that has to be used by insurance companies when taking out

contracts with natural or legal persons, in order to guarantee to the Superintendence

of Electronic Certification Services (“SUSCERTE”) that these companies will comply

with the requirements established in article 32 of the Law on Data Messages and

Electronic Signatures and article 11 of the Partial Regulations to said Law. Faithful

Performance Bond will be governed by the General Conditions of the Bond

Agreement with State agencies published in Official Gazette No. 39.941, dated June

1, 2012. The guarantee must be issued by a bank or insurance entity authorized to

operate in the country, it must cover all contractual and extra contractual damages

of the parties executing the same and of bona fide third parties arising from willful

misconduct, negligence or omissions attributable to managers, legal representatives,

or employees of the certification services supplier.

The insurance companies must:

• Indicate the data of the relevant administrative act at the bottom of the bond.

• Identify the amount of the bond and its period of validity. It will be valid for one

year and may be renewed for equal periods of time.

• Fully identify the company and the bonded party (corporate information), as well

as the representative or person authorized to grant the bond (data of the corporate

instrument that qualifies him/her to act as representative or authorized person).

The Ruling became into force on August 15, 2013.

http://www.badellgrau.com/upl/2013_agosto_g.o_40.229.pdf

http://www.badellgrau.com/upl/2013_agosto_g.o_40.229.pdf

Gaia 8 a01

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