Insurance and reinsurance in Argentina: overview

A Q&A guide to insurance and reinsurance law in Argentina.

The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Argentina.

To compare answers across multiple jurisdictions visit the Insurance and reinsurance Country Q&A tool.

This Q&A is part of the global guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-guide.

Contents

Market trends and regulatory framework

1. What were the main trends in the insurance and reinsurance markets over the last 12 months?

Over the last twelve months the main trends in the insurance and reinsurance market were the growing number of lawsuits faced by labour risks insurance companies and the enhancement of the consumer protection regulation. In addition, and most importantly, there have been a number of actions aimed at the implementation of:

  • The new General Regulation of the Insurance Activity passed in November 2014.

  • The strategic plan for the insurance market (known as "PlaNeS" after its acronym in Spanish) intended to, among other things, increase the participation of the insurance industry in the Argentine gross domestic product.

As part of this strategic plan, the national administration which was then in office proposed intended to obtain Congress' approval to various bills to amend the Insurance Law 17,418 (IL), the Insurance Undertakings Law 20,091 (IUL) and Law 22,400 which governs insurance brokering activity. It should be noted that these bills were not much publicised within the insurance market.

In December 2015, however, a new national administration came into power. As opposed to the former administration, which was inspired by state-driven economic policies, the new administration is more market-driven. After a period of 12 consecutive years of a state-driven economy, this is a significant change in the business environment.

As a result, many of the policies and trends promoted by the former management of the Argentine Superintendence of Insurance (Superintendencia de Seguros de la Nación) (SSN) are likely to be discontinued by the new management.

The new management of the SSN has signalled to the market that it intends to reinforce the technical role historically played by the SSN in the surveillance of the insurance and reinsurance activity and to let go of the allegedly partisan policies of the former administration.

For a brief discussion of the main reforms expected to be carried out by the new administration, see Question 36 below.

 
2. What is the regulatory framework for insurance/reinsurance activities?

Regulatory framework

The main legislation includes:

  • Insurance Law 17,418 (IL), which regulates insurance contracts.

  • Insurance Undertakings Law 20,091 (IUL).

  • The General Regulation of Insurance Activity (RGAA), approved by the Argentine Superintendence of Insurance (SSN) (Resolution 38,708) in 2014, which establishes the main regulations for the insurance and reinsurance activity.

  • Law 22,400, which governs the insurance brokering activity.

There are also other laws with specific insurance provisions, such as:

  • Navigation Law 20,094, governing marine insurance.

  • Labour Risks Law 24,557 (amended in October 2012 by Law 26,773), governing employers' liability and entities and products covering that liability.

Regulatory bodies

The SSN is primarily responsible for regulating and supervising the insurance industry.

Insurance companies are also subject to the jurisdiction of other government authorities for various aspects of their business, such as the:

  • Public Registry of Commerce (Registro Público de Comercio), which maintains a register of all commercial entities.

  • Federal Public Income Administration (Administración Federal de Ingresos Públicos), which is responsible for federal tax matters, and provincial tax offices.

  • Consumer protection authorities, at national, provincial or municipal levels.

  • Superintendence of Labour Risks (Superintendencia de Riesgos del Trabajo) (SRT), which supervises and regulates (alongside the SSN) labour risks insurers.

  • Financial Information Unit (Unidad de Información Financiera), which is responsible for preventing money laundering and terrorist financing.

 

Regulation of insurance and reinsurance contracts

3. What is a contract of insurance for the purposes of the law and regulation? How does it differ from a contract of reinsurance?

Contract of insurance

An insurance contract is "an agreement whereby the insurer undertakes, for a premium or contribution, to indemnify a loss or to comply with the agreed-upon obligation, if the foreseen event occurs" (Article 1, Insurance Law 17,418 (IL)).

Contract of reinsurance

Reinsurance contracts are not legally defined. The Argentine Supreme Court of Justice has held that "reinsurance shares the essence and main features with insurance, from which it directly derives" (Fallos 146:49).

 
4. Are all contracts of insurance/reinsurance regulated?

Categories of insurance

The Insurance Law 17,418 (IL) classifies insurance contracts into two main categories:

  • Property insurance, including fire, agriculture, animals, civil liability, and transport insurance.

  • Life insurance, including life, personal accidents, and group life insurance.

Forms of insurance that are regulated by other laws are:

  • Marine insurance, which is governed by the IL only to the extent that its provisions are not modified by Navigation Law 20,094 (which sets out a specific regime for marine risks such as hull and machinery insurance, cargo insurance, freight insurance, and marine liability insurance).

  • Environmental insurance (mandatory for some activities), which provides for the repair of the environment (Article 22, Law 25,675).

  • Labour risks insurance, which employers must take out to indemnify damages arising from labour risks (Law 24, 557, as amended).

  • Mandatory group life insurance, which employers must take out on the lives of employees for the benefit of their heirs (Decree 1567/74).

Although not expressly regulated, there are other insurance products available in the market (for example, technical insurance, commercial property insurance, homeowners' insurance, theft insurance, automated teller machine (ATM) insurance, bankers' blanket bonds, and surety insurance).

Non-insurance contracts

Some contracts are similar to insurance, but they are not considered to be insurance, for example:

  • Private health contracts (contratos de medicina prepaga), which cover potential medical expenses or treatments, are specifically governed by Law 26,682 and fall beyond the reach of the Argentine Superintendence of Insurance (SSN).

  • Travel assistance contracts, which cover travel risks such as death and health costs while travelling, loss of luggage and flight cancellations, provide ancillary services to the extent that insurance covers are provided by a licensed insurer (the service provider typically acting as a policyholder).

 

Corporate structure

5. What form of corporate organisation can insurers take?

Insurance activities can only be performed by one of the following types of entities, with the Argentine Superintendence of Insurance's (SSN) prior approval (Article 2, Insurance Undertakings Law 20,091 (IUL)):

  • Corporations, co-operatives and mutual societies.

  • Branches or agencies of foreign insurance companies, co-operatives and mutual societies.

  • State-owned entities, whether national, provincial or municipal.

 

Regulation of insurers and reinsurers

6. Are all insurers and reinsurers regulated? Are they all regulated in the same way?

Insurers are generally regulated in the same way, with some differences based on either:

There are two types of reinsurers with whom Argentine cedants are allowed to place their risks:

  • Local reinsurers, which include:

    • Argentine reinsurance companies;

    • Argentine subsidiaries or branches of foreign companies established in Argentina and licensed by the Argentine Superintendence of Insurance (SSN) with local capital; and

    • local insurance companies licensed to write direct insurance business.

  • Admitted reinsurers, that is, foreign reinsurers acting from their home offices and registered with the SSN. Admitted reinsurers can only enter into reinsurance contracts with Argentine cedants (insurers) when there is no local capacity due to the importance and type of risk to be ceded and subject to the SSN's prior approval, which is granted on a case-by-case basis. No prior approval is needed to reinsure with admitted reinsurers risks exceeding US$50 million, but only for the amount of the risk exceeding that figure. 

 
7. Can insurers and reinsurers carry on non-insurance business? Are there any restrictions on their business activities?

Insurers and reinsurers cannot carry on any business other than their insurance or reinsurance business. Certain activities are specifically restricted, including (Article 29, Insurance Undertakings Law 20,091 (IUL)):

  • Holding property jointly with another person or entity without the Argentine Superintendence of Insurance's (SSN) prior authorisation.

  • Guaranteeing obligations of third parties, unless those guarantees amount to insurance.

  • The following activities, unless an applicable exception applies:

    • investing in non-listed shares or other companies;

    • creating certain liens on their property;

    • entering into bank loans.

 
8. Are there any statutory limits or other restrictions on, or requirements relating to, the transfer of risk by insurance or reinsurance companies?

Insurers

Retained risk. Insurers can fix their own rates of retained risk (Article 32, Insurance Undertakings Law 20,091 (IUL)). However, the Argentine Superintendence of Insurance (SSN) can object to retention of risk that exceeds certain limits (Article 32, General Regulation of Insurance Activity (RGAA)). These limits result from different formulae (in some cases, actuarial formulae).

Reinsurance. Insurers can cede risks to local reinsurers without restriction and, in some cases, to admitted reinsurers (see Question 6).

Retrocession

Retention of risk. Local reinsurers cannot retain for an individual risk more than 15%, and for an accumulation of risks more than 25% of their capital, calculated as of the closing date of their latest financial statements (SSN Resolution 38,708).

Until 20 June 2016, they had to retain at least 15% of written premiums, calculated annually on the basis of their total portfolio. After this date, and until 30 June 2017, the minimum percentage of premiums to be retained must amount to 65% in personal lines (including life, personal accidents, funeral, retirement and health insurance) and 15% in other coverages. From 1 July 2017, this minimum will increase to 75% in personal lines and 25% in other coverages.

Retrocession. Local reinsurers can retrocede risks that they have assumed to other local reinsurers or to admitted reinsurers (although retrocession is not permitted for group life or burial coverage). However, local reinsurers cannot retrocede more than 40% of premiums for each financial period to affiliated companies or companies of the same group located outside Argentina (the SSN can grant exceptions) (SSN Resolution 38,708).

Local insurance companies acting as local reinsurers can only retrocede to local reinsurers, but not to admitted reinsurers (SSN Resolution 38, 708).

 

Operating restrictions

Authorisation or licensing

9. Does the entity or person have to be authorised or licensed?

Insurance/reinsurance providers

Persons, goods and any other insurable interest of Argentine jurisdiction can only be insured with insurers licensed by the Argentine Superintendence of Insurance (SSN).

To obtain an insurance or reinsurance licence from the SSN, among other requirements, a company must:

  • Have insurance or reinsurance activity as its exclusive corporate purpose.

  • Comply with minimum capital requirements.

  • Be registered with the Public Registry of Commerce.

  • File information on:

    • the proposed management;

    • organisational chart;

    • main policies;

    • guidelines for the attention of insureds;

    • risk management policies;

    • risk control systems;

    • anti-money laundering; and

    • financing of terrorism policies;

    • the software and hardware to be used.

  • If part of a corporate group, provide a chart with the group structure, identifying all affiliates. The company must also provide information regarding transactions with related companies, and links between the companies that are members of the group.

  • Present a feasibility report and business plan.

The SSN will also look into the integrity, experience and solvency of the applicant's shareholders and managers when deciding on the application for a licence (see Question 11, Insurance/reinsurance providers).

Finally, insurers must have their insurance plans (for example, proposal forms, questionnaires, policy wording, bases for the premiums, reserves) approved by the SSN before marketing such products.

Insurance/reinsurance intermediaries

Insurance agents (agentes institorios). Insurers can appoint agents to sell insurance on the insurers' behalf. Insurance agents must be authorised by the SSN and are registered with the Insurance Agents Registry (RAI). Only legal entities with at least two years of experience in their own activity may be registered with the RAI.

Insurance brokers (productores asesores de seguros). Only individuals and companies that the SSN has licensed as insurance brokers can carry on insurance brokering activities.

To obtain an insurance brokering licence, the applicant must meet the following requirements:

  • Be domiciled in Argentina.

  • Not fall under any disqualifying conditions.

  • Pass the relevant qualification exam.

  • Pay an annual fee.

To obtain a licence for an insurance brokering firm, an application must be filed with the SSN attaching:

  • Documentary evidence of its incorporation.

  • A copy of its bye-laws.

  • Basic information concerning the individual brokers who are its shareholders or partners.

Reinsurance brokers. Any Argentine company or branch of a foreign company can act as a reinsurance broker, provided it is licensed by the SSN. To obtain this licence, certain requirements must be met, such as:

  • A minimum capital of ARS1 million (about US$69,000 as at the time of writing).

  • Errors and omissions insurance covering activities in Argentina, with a limit not lower US$3 million..

  • An undertaking to place all operations with reinsurance companies authorised under the reinsurance framework in force (see Question 6, Regulation of insurers and reinsurers).

Other providers of insurance/reinsurance-related activities

Loss adjusters must be registered with the SSN. To obtain this registration, the applicant must comply with certain conditions, such as to:

  • Be an individual aged 18 (or over).

  • Be domiciled in Argentina and register a legal domicile with the SSN.

  • Not fall under any disqualifying conditions.

  • Demonstrate certain professional knowledge requirements set out by the SSN.

 
10. What are the main exemptions or exclusions from authorisation or licensing?

Insurance/reinsurance providers

There are no exemptions.

Insurance/reinsurance intermediaries

There are no exemptions.

Other providers of insurance/reinsurance-related activities

There are no exemptions.

 

Restrictions on ownership or control

11. Are there any restrictions on the ownership or control of insurance-related entities?

Insurance/reinsurance providers

In addition to certain general restrictions applicable to any corporation under general corporate law, the following cannot be shareholders of insurance/reinsurance companies (Insurance Undertakings Law 20,091 (IUL)):

  • Persons who have been shareholders or members of the board of directors or supervisory committee of an insurance company that is or was forced into liquidation.

  • Persons convicted of certain crimes.

  • Persons undergoing reorganisation or bankruptcy proceedings or defaulting debtors of the relevant company.

  • Persons disqualified from using bank accounts and issuing cheques.

  • Persons who have been:

    • convicted as principals, administrators or managers of a bankrupt company;

    • declared responsible for the liquidation of an insurance entity; or

    • disqualified under insurance regulations.

Foreign companies can hold an equity interest in an Argentine insurance or reinsurance provider on registration with the relevant Public Registry of Commerce. The Argentine Superintendence of Insurance (SSN) will also look into the integrity, experience and solvency of the applicant's shareholders and managers when deciding on the application for a licence (see Question 9, Insurance/reinsurance providers).

Insurance/reinsurance intermediaries

Insurance brokering companies must be composed of individual brokers. Companies can also be shareholders of insurance brokering companies provided at least four individual brokers hold an equity interest, one of whom must also be a director or manager of the company.

Other providers of insurance/reinsurance-related activities

There are no specific restrictions for loss adjusters.

 
12. Must owners or controllers be approved by or notified to the relevant authorities before taking, increasing or reducing their control or ownership of the entity?

Insurance/reinsurance providers

The Argentine Superintendence of Insurance's (SSN) prior approval is required for any share transfer of insurers or local reinsurers. Until the SSN has issued its authorisation, the share transfer cannot take place. For all companies (not just insurance or reinsurance companies), local anti-trust rules can also apply and require notification and filings with the Argentine Anti-trust Commission.

Insurance/reinsurance intermediaries

There are no approval or notification requirements, other than those concerning anti-trust matters (see above, Insurance/reinsurance providers).

Other providers of insurance/reinsurance-related activities

There are no approval or notification requirements for loss adjusters, other than those concerning anti-trust matters (see above, Insurance/reinsurance providers).

 

Ongoing requirements for the authorised or licensed entity

13. What are the key ongoing requirements with which the authorised or licensed entity must comply?

Insurance/reinsurance providers

Insurance and reinsurance companies must comply with a number of ongoing requirements, including:

  • Keeping accounting books and records.

  • Producing financial, accounting and other reports on a regular basis.

  • Notifying or requiring approval for certain corporate actions (for example, shareholders' meetings, and amendments to bye-laws).

  • Maintaining the required level of reserves and capital.

  • Reporting suspicious activities under anti-money laundering regulations.

Insurance/reinsurance intermediaries

Insurance and reinsurance brokers must comply with a number of ongoing requirements, including:

  • Keeping accounting books and records.

  • Filing accounting reports on a regular basis.

  • Reporting suspicious activities under anti-money laundering regulations.

Insurance brokers must also pay an annual fee to the Argentine Superintendence of Insurance (SSN).

Reinsurance brokers must observe additional requirements, such as:

  • Maintaining a net worth of at least ARS1 million (about US$69,000 at the time of writing).

  • Maintaining errors and omission insurance with a limit not lower than US$3 million or 10% of premiums brokered during the previous year, whichever is higher.

  • Filing certain information periodically with the SSN.

  • Maintaining at their offices complete and up-to-date files of each placement.

Other providers of insurance/reinsurance-related activities

Other providers of insurance/reinsurance-related activities must comply with a number of ongoing requirements, including:

  • Keeping accounting books and records.

  • Filing accounting reports on a regular basis.

  • Reporting suspicious activities under anti-money laundering regulations.

  • Maintaining at their offices complete and up-to-date files of each loss adjustment and report.

 

Penalties for non-compliance with legal and regulatory requirements

14. What are the possible consequences of an entity failing to comply with applicable legal and regulatory requirements? What recourse do policyholders have if they have done business with a non-approved entity?

Insurance/reinsurance providers

Insurers and local reinsurers are subject to sanctions from the Argentine Superintendence of Insurance (SSN) for failure to comply with applicable legal and regulatory requirements, including:

  • Warnings.

  • Fines.

  • Suspensions.

  • Revocation of the licence.

Those who directly or indirectly advertise an insurance business without the proper licence can be punished with fines. Insurance contracts taken out with such entities will be considered void. This will not affect any liability incurred by the insurer towards the policyholders.

The SSN can suspend or cancel the registration of an admitted reinsurer when it fails to comply with the relevant regulatory requirements.

Insurance/reinsurance intermediaries

Insurance agents can be subject to sanctions from the SSN for failure to comply, including:

  • Warnings.

  • Fines.

  • Disqualification.

Insurance brokers can also be subject to revocation of the licence. Reinsurance brokers can be suspended or have their licence revoked.

Other providers of insurance/reinsurance-related activities

Loss adjusters can be subject to sanctions from the SSN for failure to comply, including:

  • Warnings.

  • Fines.

  • Disqualification.

 

Restrictions on persons to whom services can be marketed or sold

15. Are there any restrictions on the persons to whom insurance/reinsurance services and contracts can be marketed or sold?

General principles of contract law apply, including those concerning the legal capacity of individuals to enter into binding agreements. With some exceptions, persons are considered capable of entering into a contract after they have reached the age of 18.

Local reinsurers cannot cede to affiliated companies or companies belonging to the same group, which are located outside Argentina, more than 40% of the premiums of each fiscal year, unless the prior approval of the Argentine Superintendence of Insurance (SSN) is obtained (SSN resolution 38,708). Local insurance companies acting as local reinsurers cannot retrocede to admitted reinsurers (SSN Resolution 38,708) (see Question 6, Regulation of insurers and reinsurers).

 

Reinsurance monitoring and disclosure requirements

16. To what extent can/must a reinsurance company monitor the claims, settlements and underwriting of the cedant company?

The cedant is directly responsible for claims, settlements and underwriting. Whether the reinsurance company will get involved in those matters depends on the terms of the reinsurance contract, particularly the claims control clause. Reinsurance companies and cedants can agree on the right of reinsurance companies to monitor claims, settlements and underwriting activities, provided this does not breach any mandatory legal provision or public policy.

 
17. What disclosure/notification obligations does the cedant company have to the reinsurance company?

The Insurance Law 17,418 (IL) does not provide any mandatory disclosure or notification requirements for reinsurance contracts. The parties can freely agree disclosure or notification requirements. The duty of good faith applies to reinsurance contracts and reinsurers must obtain all relevant information from the cedant.

 

Insurance and reinsurance policies

Content requirements and commonly found clauses

18. What are the main general form and content requirements for insurance policies? What are the most commonly found clauses?

Form and content requirements

The Argentine Superintendence of Insurance (SSN) must previously approve the wording and conditions of all policies.

Insurers must provide policyholders with policies that are signed, clearly written and easy to read, and which contain the following (Article 11, 2nd paragraph, Insurance Law 17,418 (IL)):

  • Name and domicile of the parties.

  • Interest or life insured.

  • Risks underwritten by the insurer.

  • Inception date.

  • Term for which risks are covered.

  • Premium.

  • Sum insured.

  • General conditions (the policy can, and usually does, also contain special conditions).

All exclusions must be written in prominent and clear writing and contained in a so-called "Annex I" to the policy.

Policies must be written in Spanish, except for marine insurance policies, which can be written in a foreign language (Article 25, Insurance Undertakings Law 20,091 (IUL)).

Policies must indicate the SSN's resolution that approved the relevant insurance plan (Article 25, IUL).

Commonly found clauses

Depending on the type of insurance contract, commonly found clauses generally include, among other things:

  • Risk covered.

  • Exclusions.

  • Reporting requirements.

  • Premium payment requirements.

  • Misrepresentation and non-disclosure.

  • Aggravation of risks (that is, that the policyholder must report the aggravation of the risk insured within certain periods).

 
19. Is facultative or treaty reinsurance more common? What are the most commonly found clauses in reinsurance policies?

Facultative/treaty reinsurance

Both facultative and treaty reinsurance are commonly found in the Argentine market.

Commonly found clauses

Clauses concerning the following subjects are common:

  • Claims control clause.

  • Follow the fortune (that is, reinsurers should follow the decision by the cedant company to make a payment to the original policyholder, by paying the cedant company in accordance with the contract).

  • Applicable law (see Question 34).

  • Termination.

  • Arbitration (see Question 35).

In some cases, simultaneous payment and cut-through clauses have been used, although the validity and enforceability of these clauses under certain circumstances is debatable (see Question 26).

There are certain clauses that are mandatory in reinsurance contracts, such as clauses providing that:

  • The contract is governed by Argentine law and that disputes will be held within Argentine jurisdiction (see Questions 34 and 35).

  • The reinsurer will pay any balance due directly to the liquidator in the event of the cedant's forced or voluntary liquidation (whether or not the cedant has complied with its obligations to the insured and regardless of the stage of the insolvency proceedings).

All brokerage commissions and expenses agreed in each operation must be specified both in the cover notes and in the reinsurance contracts. The Argentine Superintendence of Insurance (SSN) will object to any brokerage commissions in excess of (SSN Resolution 38,708):

  • 20% in facultative reinsurance.

  • 5% in proportional treaties.

  • 15% in non-proportional treaties.

 

Implied terms

20. Are there any terms that are implied by law or regulation (even if not included in the insurance or reinsurance contract)?

Insurance contract

The Insurance Law 17,418 (IL) includes a number of terms that are implied into the insurance contract, which can be divided into three categories (Article 158):

  • Mandatory terms. These are terms that, due to their wording, nature or legal provision are mandatory, for example, terms concerning:

    • misrepresentation and non-disclosure;

    • the effect of a bad faith misrepresentation with regard to the premium;

    • the insured's readjustment right for risk reduction; and

    • the insured's duty to notify an aggravation of risk.

  • Implied terms. Terms that can only be modified to the insured's benefit. These include, for example, terms concerning:

    • the possibility of mitigating the effects of misrepresentation in the absence of bad faith;

    • the rules for objecting to a policy issued in terms different from those of the proposal;

    • notices and statements to be submitted to the insured under the insurance contract;

    • the date of inception and end of coverage;

    • implied extension of coverage;

    • the place of payment of the insurance premium;

    • conventional conditions whereby the insured may lose his indemnification right under a policy for breach of a conventional condition;

    • the definition and effects of an aggravation of risk;

    • the term within which the insured must report a loss to the insurer and the information that may be required from the insured to verify and appraise the loss;

    • the term within which to pay the indemnification or benefit agreed in the policy;

    • anticipatory payments on account of the indemnification or benefit to be paid;

    • the termination of the policy in the event of a partial loss;

    • the change of owner of the insurable interest; and

    • other provisions for certain lines of business.

  • Terms that can be freely modified by the parties. That is, any other terms that do not qualify under any of the categories described above.

All contracts must be made, interpreted and performed in good faith. The contracts mandate not only on what is formally expressed, but also on all the consequences that may be deemed to be covered, within the scope that parties acting with care and diligence would have reasonably obligated themselves to (Article 961, Civil and Commercial Code). Argentine case law has held this to be particularly strong in the context of insurance contracts, where both the insured and the insurer are deemed subject to the duty of the utmost good faith. This duty requires from both parties clear and honest conduct and a prompt readiness to fulfil their respective obligations (see, for example, Sacco, Jorge c La Agrícola Cía de Seguros SA, CNCom, Sala B, July 30, 1979 - ED 86-477).

Reinsurance contract

Other than certain specific mandatory clauses (see Question 19), reinsurance contracts are freely negotiated between the parties. However, the duty of good faith applies (see above, Insurance contract).

 

Customer protections

21. How do customer protections in the general law affect insurance contracts? What customer protections are generally included in insurance policies to supplement this?

The Argentine Superintendence of Insurance (SSN) closely reviews policy terms and conditions to confirm that they comply with all applicable policy requirements. Insurance products can only be marketed once they are approved by the SSN.

Regardless of the SSN's approval, the courts can still nullify clauses that they consider abusive.

The Civil and Commercial Code establishes that adhesion contracts are those where one party adheres to general and standard terms drafted by the other. In principle, insurance contracts qualify as such under the new legislation. Adhesion contracts must be clearly written, with terms that can be easily understood. Clauses that refer to another text, that is not provided before or while the contract is being executed, are not valid. Unclear terms are interpreted contrary to the interests of the party who drafted them. The law will deem abusive and invalid those clauses that distort the essence of the obligations of the party who drafted them, that amount to a limitation of the rights of the adherent party or that could not have been reasonably expected.

The Civil and Commercial Code contains other protective measures for consumers, including:

  • Contracts must be interpreted in the most beneficial way to the consumer.

  • Consumers must receive true and detailed information on the essential characteristics of the products or services being sold, as well as on every other aspect relevant to the contract.

  • Practices that limit the freedom to contract or where the consumer is forced to purchase an additional product will not be admitted.

For additional protections, see Question 33.

 

Standard policies or terms

22. What are the main standard policies or terms produced by trade associations or relevant authorities?

The Argentine Superintendence of Insurance (SSN) has issued standard policy terms through general resolutions for certain covers in various lines of business. Insurance companies licensed to operate on any of those lines can use these policy terms, which are published by the SSN and the Official Gazette. These lines of business include, among others:

  • Certain types of civil liability covers.

  • Surety.

  • Fire.

  • Cargo insurance.

  • Marine hull.

  • Machinery covers

  • Aeronautical covers.

All workers employed in the private sector (as well as certain other employees) are generally protected on standard policy terms under Law 24,557 and its implementing regulations. This is through labour risks insurers, which are supervised by the SSN and the Superintendence of Labour Risks (see Question 2, Regulatory bodies).

Decree 1597/74 of the Federal Executive Power, implemented by several resolutions of the SSN (currently, Resolution 35,333, as modified), established a standard policy for mandatory group life insurance for employees (see Question 4).

The SSN has also issued uniform policy terms to be used by all insurance companies licensed to operate in the following lines:

  • Motor insurance (Point 25.1.5 of Resolution 38,708).

  • Environmental insurance (Resolution 37,160).

  • Burial insurance (Resolution 37,072).

 

Insurance and reinsurance policy claims

Establishing an insurance claim

23. What must be established to trigger a claim under an insurance policy?

Notice of a loss

The insured must give notice of the loss within three days after the loss has come to the insured's knowledge. This time limit can be extended but not shortened by the insurance policy.

Late reporting entitles an insurer to avoid coverage without the need of establishing prejudice on the basis of late notice.

Appointing an adjuster

A loss adjuster will typically be appointed on receiving notice of a loss, unless the insurer is entitled to reject the claim or to avoid the contract.

By appointing a loss adjuster, an insurer is deemed to have waived any defence it may have had against the insured's claim that the insurer knew of before it appointed the loss adjuster.

The adjuster should require from the insured:

  • All the information relevant to ascertaining the causes and the extent of the loss.

  • Whether there exists any circumstance that may discharge the insurer's liability.

Rejection of claims

An insurer must take a decision concerning the right of the insured to be indemnified within 30 days from receiving notice of the loss. If the insurer does not reject the claim in a timely manner, it is deemed to have accepted the loss unless the insurer requests complementary information (see below, Complementary information).

Complementary information

If the insurer needs more information about the loss before it can take a decision, the insurer must request from the insured the relevant information required to reach its decision.

This request must be made within 30 days of the loss being reported. The beginning of the 30-day period within which the insurer must decide on whether to accept or reject a claim is then postponed until either:

  • The insurer has received relevant information to reject the claim.

  • The insured has provided all the information requested by the insurer.

However, the start of the 30-day period is only postponed if the information that the insurer requests is relevant to the insurer's decision. All the relevant questions must be put to the insured at the same time. However, after the insurer has received answers to the set of questions put to the insured, the insurer may realise that further complementary information is required. The new questions must have arisen as a consequence of the information the insurer obtained after it had asked for complementary information.

Once the relevant complementary information has been received, the insurer must report to the insured its decision as to coverage within 30 days of receiving the relevant information, otherwise it will have been deemed to accept the loss.

Different terms apply in life and personal accident insurance.

 

Third party insurance claims

24. What are the circumstances in which third parties can claim under an insurance policy?

A non-life insurance contract can be made for the benefit of a third party. To enforce the contract, the third party will be required to produce the insurance policy (otherwise, the policyholder's consent is required to enforce any right under the policy).

The beneficiary of a life insurance contract can be designated in the policy or determined once the event occurs.

In civil liability insurance, the victim of a tort is entitled to join the insurer to the lawsuit against the insured (citar en garantía). Any defence the insurer has against its insured, arising after the loss (for example, late notice), cannot be used against the victim by the insurer.

In surety insurance the beneficiary is entitled to claim payment from the insurer if the principal (typically the policyholder) fails to comply with its obligations under an underlying contract agreed between the principal and the beneficiary.

 

Time limits

25. Is there a time limit outside of which the insured/reinsured is barred from making a claim?

General limitation period

The limitation period for claims brought under an insurance contract is one year from the date the relevant obligation becomes payable (Article 58, Insurance Law 17,418 (IL)). However, different specific rules can apply in certain circumstances (see below).

Life insurance

In life insurance, the one-year limitation period starts from the date the beneficiary becomes aware that he is to benefit from insurance on the deceased person. However, this limitation period can never be extended until after three years from the date of death of the deceased person (Article 58, IL).

Loss adjustment

The limitation period is interrupted while the proceedings for adjusting a loss are under way (Article 58, IL).

Labour risks

The limitation period for claims brought under the Labour Risks Law is two years from the date when the benefit should have been paid or provided up to a maximum of two years from termination of the employment (Article 44.1, Law 24,557).

Reinsurance contracts

There is no express legal provision concerning limitation periods in reinsurance contracts. The courts have generally applied one year limitation periods, equating reinsurance to insurance. In the absence of a specific rule, the general limitation period if five years (Article 2560, Civil and Commercial Code).

 

Enforcement

26. Can the original policyholder or other third party enforce the reinsurance contract against a reinsurer?

In principle, the policyholder, the insured or any other third party cannot enforce the reinsurance contract against the reinsurer (Article 160, Insurance Law 17,418 (IL)). In the event of voluntary or forced liquidation of the cedant company, all of the insureds will have a special privilege over the balance due to the insurer in the account between the insurer and the reinsurer.

If a cut-through clause is included in insurance and reinsurance contracts, the policyholder (or the insured or other third party) can be granted a direct action against the reinsurer. A cut-through clause cannot affect public policy or third party rights (for example, the cut-through clause must not operate to the prejudice of other insureds if a cedant company is liquidated).

Whether or not cut-through clauses are included in the insurance and reinsurance contracts, the policyholder (the insured) will always have an action against the insurer, as will some third parties, for example:

  • The beneficiary of life insurance.

  • The victim of a tort under citación en garantía (see Question 24).

  • The beneficiary of surety insurance (see Question 24).

See also Question 29.

Remedies

 
27. What remedies are available for breach of an insurance policy?

Breach of an insurance policy by an insurer enables the insured to claim on the basis of ordinary contractual liability. Liability can also extend to foreseeable indirect damages (consecuencias mediatas previsibles) (Article 1726, Civil and Commercial Code).

Punitive damages can be awarded to a consumer whenever the Consumer Protection Law (CPL) is violated. The maximum amount that can be awarded to a consumer is ARS5 million (about US$345,000 at the time of writing) (Article 52 bis, CPL).

 

Punitive damage claims

28. Are punitive damages insurable? Can punitive damages be reinsured if they are covered by an underlying policy?

There is no specific regulation regarding the insurability of punitive damages.

 

Insolvency of insurance and reinsurance providers

29. What is the regulatory framework for dealing with distressed or insolvent insurance or reinsurance companies, or other persons or entities providing insurance or reinsurance related services? What regulatory and/or other protections exist for policyholders if the insurance company is insolvent?

On the insolvency of an insurer or reinsurer:

  • The Argentine Superintendence of Insurance (SSN) must revoke its licence to underwrite new business.

  • The commercial courts must order its liquidation.

The liquidation process is governed by the provisions of Bankruptcy Law 24,522 (as amended). The SSN acts as, and has all the powers of, the liquidator (Articles 51 and 52, Insurance Undertakings Law 20,091 (IUL)).

The liquidator can terminate insurance contracts with a 15-day notice. The insurer is liable for losses incurred during that period, unless the insured replaces the protection with another insurance contract. In life insurance the liquidator must transfer the existing policies through a bidding process. If transfer is not possible, the liquidator is entitled to terminate policies.

In a liquidation process insureds have, as a group, a preferred credit over the balance due from the reinsurer. There is no state guarantee fund providing protection for policyholders on the insolvency of insurers.

Other persons or entities providing insurance or reinsurance related services (for example, insurance and reinsurance brokers, and loss adjusters) are subject to ordinary bankruptcy rules.

 
30. Can excess insurance policies "drop down" to provide coverage if the primary insurer goes into insolvency?

Drop-down clauses for when the underlying insurer is insolvent can be agreed in excess policies, although they are uncommon. There is no legal provision concerning drop-down arrangements.

 
31. Is a right to set-off mutual debts and credits recognised in an insolvency proceeding involving an insurer or reinsurer?

In the event of liquidation of an insurer or reinsurer, mutual debts and credits concerning reinsurance contracts are set off (Article 161, Insurance Undertakings Law 20,091 (IUL)). However, there is no clear statutory or case law guidance whether all of the mutual debts and credits are to be set off or only those which accrued prior to the liquidation.

 

Taxation of insurance and reinsurance providers

32. What is the tax treatment for insurers, reinsurers, and other persons or entities providing insurance and reinsurance-related services?

Insurers and reinsurers

At a federal level, insurance and reinsurance companies are subject to the following taxes:

  • Income tax (Impuesto a las Ganancias). This is charged on the accrued income at a 35% rate, less authorised deductions.

  • Tax on presumed minimum income (Impuesto a la Ganancia Mínima Presunta). The total value of the company's assets is taxed at the rate of 1%. Corporate income tax payable for the same fiscal year is allowed as a credit towards this minimum tax. To the extent that this minimum tax payable exceeds the corporate income tax payable in the same fiscal year, the amount of any excess minimum tax paid can be carried forward as a credit against any corporate income tax liability for the following ten years.

  • Value added tax (Impuesto al Valor Agregado) is charged at a 21% rate, levied on all insurance services except for:

    • retirement insurance;

    • life insurance;

    • labour risks insurance;

    • related reinsurance or retrocession protections.

The following taxes only apply to insurance companies:

  • Excise tax (Impuestos Internos). The general rate is 8.5% of the premium. Labour risks contracts are subject to a reduced 2.5% rate. Life and personal accident insurance contracts are exempted, as well as some contracts associated with agricultural activities.

  • Argentine Superintendence of Insurance (SSN) fee (Tasa Uniforme) of 0.6% on premiums paid by insureds.

  • Firemen tax of 0.32% of non-life insurance premiums.

At a local level, insurance and reinsurance companies are subject to the following taxes:

  • Turnover tax (Impuesto a los Ingresos Brutos) levied on gross income resulting from business activity carried within the respective provincial jurisdiction. Each province and the City of Buenos Aires apply different tax rates and exemptions, although the general tax rates for services range between 3% and 5.5%.

  • Stamp tax (Impuesto de Sellos), which is levied on public or private instruments that are either:

    • executed in Argentina; or

    • executed abroad, but are deemed to have effects in one or more relevant jurisdictions within Argentina.

In general, this tax is calculated on the economic value of the instrument. Each jurisdiction applies different tax rates (usually 1% or 1.2%) and exemptions.

Value added tax, excise tax, stamp tax and the SSN fee are generally borne by the insureds.

Insurance brokers and reinsurance intermediaries

Insurance brokers and reinsurance intermediaries are subject to the following taxes:

  • Income tax.

  • Tax on presumed minimum income.

  • Value added tax.

  • Turnover tax.

  • Stamp tax.

 

Insurance and reinsurance dispute resolution

33. Are there special procedures or venues for dealing with insurance or reinsurance complaints or disputes?

No special court procedures or venues were created for insurance or reinsurance dispute resolution. They are generally heard at the commercial, civil or labour courts.

Claims against insurers can also be brought in other venues:

  • Department of Guidance and Assistance to the Insured, within the Argentine Superintendence of Insurance (SSN).

  • Insured customer service (Servicio de Atención al Asegurado) departments within each insurer (SSN Resolution 35,840).

  • Insurance Ombudsman (Defensor del Asegurado), who operates within the Argentine Association of Insurance Companies (Asociación Argentina de Compañías de Seguros) and has jurisdiction over claims over ARS2,000 (approximately US$140 at the time of writing) and under ARS130,000 (approximately US$9,000 at the time of writing) (see box, Main insurance/reinsurance trade organisations).

  • Consumer protection agencies, where consumers can file their claims and also obtain redress for direct damage (daño directo), that is, economic damage caused in an immediate manner to goods subject to a consumer relation by the action or omission of the supplier.

  • Other fast-track venues: Law 26,993 created three new entities to deal exclusively with consumer claims:

    • a mandatory conciliation system (COPREC);

    • an administrative body with the authority to decide on monetary claims and award damages (Audit of Consumer Relations); and

    • a new judicial forum (National Court of Consumer Relations).

To date the COPREC is the only operative agency, while the Audit of Consumer Relations and the National Court of Consumer Relations are still to be implemented. These entities will solve consumer claims not exceeding ARS333,300 (approximately US$23,000). This cap will not apply to punitive damages up to the maximum of ARS5 million (approximately US$340,000) established by Law 24,240. Consumer claims above this cap will continue to be filed before the ordinary courts. Law 26,993 also provides for a fast-track procedure with new rules:

  • A gratuity for consumers (free legal advice and no court tax).

  • An oral procedure.

  • Very short deadlines.

  • Restrictions on the accepted evidence (for example, no confessional hearing and no rules regarding expert witnesses' evidence).

  • No preliminary defences.

  • A pro-consumer approach (in dubio pro consumer).

  • The decisions rendered by both the Audit of Consumer Relations and the National Court of Consumer Relations which imply fines or compensation of approximately US$2,000 will not be subject to appeal. If the fine amount is higher, the parties may appeal the ruling before the National and Federal Court of Appeals in Consumer Relations. Such law provides for the immediate application of the new procedural rules to the consumer claims currently pending before the ordinary courts.

 
34. Are arbitration clauses in insurance and reinsurance agreements enforceable?

Arbitration clauses cannot be included in insurance policies (Article 57, Insurance Law 17,418 (IL)). However, arbitration agreements can be reached after a conflict has arisen. By contrast, arbitration clauses are admitted in reinsurance agreements, provided the seat of the arbitration is in Argentina.

 
35. Are choice of forum, venue and applicable law clauses in an insurance or reinsurance contract recognised and enforced?

Insurance and reinsurance contracts must be governed by Argentine law and subject to Argentine jurisdiction (Argentine Superintendence of Insurance (SSN) Resolution 38,708).

 

Reform

36. What proposals are there for reform of the law, regulation or rules relating to the provision of insurance or reinsurance services?

The new management of the Argentine Superintendence of Insurance (SSN) has indicated that it will introduce profound changes in the insurance and reinsurance market:

  • The current framework for reinsurance, in force since September 2011, is expected to be amended. It has been signalled by the current administration of the SSN that the minimum capital requirements of the local reinsurers should be significantly increased to conform to international standards. This, in turn, is expected to help promote the local capital market. Also, it has been suggested that there may be more flexibility to placing reinsurance with foreign carriers.

  • The new management of the SSN has suggested that insurance companies will be more closely monitored based on adequate technical standards and that they will be required to maintain positive technical results and not to rely exclusively on financial gains to offset technical losses.

  • The investment regime of insurance companies is likely to be reformulated, to allow insurers to hold part of their investments abroad.

  • Although there may be changes to the insurance framework, it has been suggested that the new administration will discontinue the strategic plan (PlaNes) promoted by the former administration, except for certain specific proposals that may be developed separately.

  • As to the bills to amend the Insurance Law 17,418 (IL), the Insurance Undertakings Law 20,091 (IUL) and the insurance brokering activity (law 22,400), which have not formally been made available to the market by the former administration, it is yet to be seen if the current administration will disregard those bills or if they will actively push them forward. It should be noted that the new administration lacks the majority vote in Congress so it is theoretically possible that these bills may continue to be promoted by the congressmen of the former administration.

 

Main insurance/reinsurance trade organisations

Argentine Association of Insurance Companies (Asociación Argentina de Compañías de Seguros)

Main activities. The association:

  • Defends Argentine insurers' common interests against public powers and official and private entities.

  • Develops and promotes good commercial insurance practices.

  • Drafts proposed regulations to improve transparency, solvency and the protection of the insured.

W www.aacs.org.ar

Association of Life and Retirement Insurers of the Republic of Argentina (Asociación de Aseguradores de Vida y Retiro de la República Argentina)

Main activities. The association promotes life and retirement insurance and long-term investments, while fighting against illegal life and retirement insurance marketed in the country.

W www.avira.org.ar

Argentine Association of Co-operative and Mutual Society Insurers (Asociación Argentina de Cooperativas y Mutuales de Seguros)

Main activities. The association represents mutual societies and co-operatives within the insurance industry and promotes co-operative activities in the insurance market.

W www.bawtime.com/aacms

Insurers from the Interior of the Republic of Argentina (Aseguradores del Interior de la República Argentina)

Main activities. The organisation represents the interests of regional insurers, with head offices outside Buenos Aires, at forums within the insurance activity.

W www.aadira.org.ar

Argentine Association of Insurance Brokers (Asociación Argentina de Productores de Seguros)

Main activities. The association represents, defends and promotes the interests of insurance brokers and the development of the insurance activity.

W www.aapas.org.ar

Argentine Chamber of Reinsurers (Cámara Argentina de Reaseguradores)

Main activities. This organisation, launched in 2012, represents the main reinsurance companies operating in Argentina.



Online resources

Ministry of Economy and Finance, Argentina (InfoLEG)

W www.infoleg.gob.ar

Description. Official website maintained by the Information and Documentation Centre (Centro de Documentación e Información), a department of the Argentine government. The page contains an accurate, reliable and up-to-date database of federal regulations.

SSN

W www.ssn.gob.ar

Description. Official website of the SSN. Free English translations of certain of the laws referred to in the article can be obtained.

Supreme Court of Justice

W www.csjn.gob.ar

Description. Official website of the Argentine Supreme Court of Justice, where original language text of some of the case law referred to in the article can be obtained.



Contributor profiles

Pablo S Cereijido

Marval, O'Farrell & Mairal

T +54 11 4310 0100 ext 2012
F +54 11 4310 0200
E psc@marval.com
W www.marval.com

Professional qualifications. Argentina, 1993

Areas of practice. Insurance and reinsurance; litigation and arbitration; life sciences.

Languages. Spanish, English

Non-professional qualifications. UK (LLM), 1999

Professional associations/ memberships. Member of AIDA (Association Internationale de Droit des Assurances).

Leandro M Castelli

Marval, O'Farrell & Mairal

T +54 11 4310 0100 ext 2006
F +54 11 4310 0200
E lmc@marval.com
W www.marval.com

Professional qualifications. Argentina, 1991

Areas of practice. Insurance and reinsurance; litigation and arbitration; product liability; life sciences.

Languages. Spanish, English

Elias F Bestani

Marval, O'Farrell & Mairal

T +54 11 4310 0100 ext 2009
F +54 11 4310 0200
E efb@marval.com
W www.marval.com

Professional qualifications. Argentina, 1999

Areas of practice. Insurance and reinsurance; maritime law; litigation and arbitration; life sciences.

Non-professional qualifications. United States, New York (LLM), 2003

Languages. Spanish, English

Professional associations/ memberships. Member of the Argentine Maritime Law Association and the Maritime Law Section of the Buenos Aires National Academy of Law.


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