Modifications on Insurance Matters

On December 27, 2023, the National Executive Branch submitted to Congress a Bill that deregulates the insurance industry by partially modifying the Insurance Companies Law. The Bill also places all insurers and reinsurers on an equal footing with the application of the PAIS tax, partially modifying the Law of Social Solidarity and Productive Reactivation within the framework of the Public Emergency.

With the express mandate of “improving the provision of insurance,” giving “freedom to insurance companies to define their products without prior authorization,” and generating “dynamism in the insurance industry,” highlighted in the Bill’s message of presentation to the Federal Congress, the Bill modifies and repeals some regulations of Law 20091, which required the Superintendence of Insurance’s (SSN) prior authorization for certain activities.

In this sense, the Bill modifies the text of article 6 of Law 20091, eliminating the obligation of licensed insurers to obtain the SSN’s prior authorization to open or close branches in Argentina, although it maintains the obligation to obtain its prior authorization to open or close branches or agencies abroad.

Further, the Bill modifies article 23, eliminating the obligation to obtain the SSN’s prior authorization to operate in any line of insurance. Therefore, licensed insurers may operate in any line of insurance as long as they comply with the requirements the SSN regulations will establish.

The Bill also eliminates the obligation to obtain the prior approval for insurance plans, including their technical and contractual elements. Instead, insurers will simply report them to the SSN before commercializing them. The Bill also repeals article 24, which establishes in detail the content that insurance plans must have, as well as those insurance plans that are prohibited, such as those covering risks arising from pure financial credit operations.

The Bill modifies article 26 of Law 20091, eliminating the obligation that a commission may only be agreed within a maximum and a minimum to be established by the SSN. However, it maintains that the SSN can regulate the exercise of insurers’ right to freely agree on commissions.

The Bill further eliminates the SSN’s power to observe insufficient, abusive, or discriminatory premiums, and to approve uniform minimum premiums.

It is important to highlight that in insurance matters, the General Regulation of the Insurance Activity -which regulates Law 20091- and other complementary regulations has a crucial role in regulating the insurance activity. Therefore, if the Bill is passed, the SSN will have to adapt the entire regulatory plexus to avoid incompatibilities with this new paradigm.

Finally, the Bill modifies article 36 of Law 27541, which exempted State companies and any other entity exclusively owned by the Federal State and its equivalents in the Provinces, the City of Buenos Aires, and the municipalities from paying the PAIS tax, which caused an advantage for State insurers and reinsurers. The Bill excludes entities included in article 2 of Law 20091 from this exceptional regime, so that all insurance or reinsurance entities that must access foreign currency will be subject to the PAIS tax.