Insurance regulator prepares ground for changes to law
In October 2012 the president and the minister of economy announced the 2012-2020 Insurance Plan (for further details please see "Government launches 2012-2020 Insurance Plan"). Under the plan, a percentage of the investment portfolios of insurance companies will be redirected to mid-term and long-term productive and infrastructure projects, whereby:
- risk-at-work insurers or workers' compensation insurers must invest at least 5% of their portfolios, up to a maximum of 20%;
- insurance companies engaged in general insurance must invest between 10% and 20%; and
- life and pensions and retirement insurance companies must invest between 12% and 30%.
In addition, an eligibility committee will be organised within the Ministries of Economy and Industry, which will be entrusted with defining the sectors and/or products where such investment will be favoured.
In this context, and following this strategy, the insurance regulator recently stated that:
- redirection of insurers' investments in the real economy is just one of the plan's goals;
- the market is expected to attain this first goal by March 31 2013 - it has focused its investments on notes for YPF (the national oil and gas company recently nationalised by the government);
- regulatory amendments to the insurance system will aim to safeguard the rights of citizens, specifically consumers;
- changes will be made to the Insurance Law regarding the treatment of 'damaged third parties' - judicialisation must be attacked with pragmatism, realism and values;
- the reinsurance market and its new regulatory framework are extremely important for the Argentine market and consequently a specific reinsurance law is needed;
- solvency and management of risks will also be included in the new legislation; and
- forthcoming discussion must include the role of insurance agents (eg, banks and financial institutions) and the existence of premiums not subject to commission, among other issues.
Consequently, the insurance and reinsurance market should prepare itself for new regulation later in 2013.
For further information on this topic please contact Martín G. Argañaraz Luque