The Insurance & Bonding Legislation and the Insurance Contract Act Amendment were issued on April 4th on the Official Federation Journal, with the objective of strengthening of the organization, operation, and functioning of the Insurance & Bonding Institutions, as well as Mutual Insurance Institutions, for the benefit of policyholders and all stakeholders.
The Insurance & Bonding Legislation
The Legislation shall take effect in the next 730 calendar days after the day of issuance in the Official Federation Journal. The National Commission of Insurance & Bonding will establish through General Regulations, the deadlines and measures that the Insurance & Bonding Institutions will have to adopt in order to gradually adhere to the coverage regime of the solvency capital requirement starting from the coming into force of this Legislation.
The new Legislation is integrated by the following 13 Titles:
Title I On the preliminary dispositions
Title II On the Institutions
Title III On the organizations and the corporate government of the institutions
Title IV On the other stakeholders of the Insurance & Bonding systems
Title V On the performance, operation and prudential standards
Title VI On the procedures
Title VII On the prohibitions to Institutions
Title VIII On the accounting and the information of the Institutions
Title IX On the preventive and corrective measures, the intervention and the revocation
Title X On the Mutual Insurance Institutions
Title XI On the National Commission of Insurance & Bonding
Title XII On the liquidation and commercial insolvency
Title XIII On the notifications, coercive measures and sanctions
Among the main changes incorporated to the new Legislation are the dispositions by which institutions must adopt a regime of solvency according to the standards and best international practices, establishing that it is the direct responsibility of the Board of Directors to generate a series of adjustments to the structure of the institution's Corporate Government with the purpose of ensuring the correct determinations of technical reserves and solvency capital requirement, as well as to ascertain the eligibility of the assets and funds that cover those requirements, in order to make prudent and responsible decisions.
Moreover, Institutions must adapt their information systems in order to revel their risk profile, and their level of solvency towards the market, providing with transparency and elements to improve competitions.
Adapting process- April, 2015
Insurance Contract Act
The Act Amendment will enter into force on the day following its publication on the Official Federation Journal, except as provided in the amendment of Article 111 and the addition of Chapter VI concerning the provisions of the new legal form of Surety Bond which shall take effect 730 calendar days following its publication.
Mazars remains at your disposal to expand the relevant points of these laws and to answer any question they deem necessary.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.