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.
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This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.
2012 saw significant changes to the Argentine insurance and reinsurance markets. The main trends were the coming into effect of the new domestic reinsurance framework, increased government intervention in the insurance business and the economy in general, and new regulatory measures to enhance the protection of insurance consumers.
In 2012, most reinsurance treaties, until then placed with foreign reinsurers, were placed for the first time with Argentine reinsurance companies or Argentine subsidiaries or branches of foreign companies, in accordance with regulations introduced in 2011 that gave shape to the Argentine reinsurance market. The new reinsurance regulatory framework came into full effect in 2012 and further regulations were introduced regarding:
Retrocessions from insurers who underwrite reinsurance business (SSN Resolution 36,859).
Online information on reinsurance contracts, to be provided to the SSN (SSN Resolution 36,908).
Rules on financial statements by local reinsurers (SSN Regulation 510).
According to the reinsurance regulatory framework introduced in 2011, Argentine cedants are only permitted to reinsure their risks with local reinsurers, unless exceptional circumstances apply (see below).
Local reinsurers include:
Argentine reinsurance companies;
Argentine subsidiaries or branches of foreign companies established in Argentina and licensed by the Argentine Superintendence of Insurance (Superintendencia de Seguros de la Nacion (SSN)) with local capital or local insurance companies licensed to write direct insurance business.
Admitted reinsurers are foreign reinsurers acting from their home offices that are 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;
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.
In 2012 the market saw significant government intervention in the economy and the insurance business in particular. Further intervention is expected:
National Strategic Insurance Plan (Plan Nacional Estratégico del Seguro (PlaNeS)): The SSN produced a strategic plan for the insurance market, after consultations with different sectors of the insurance market. The alleged purpose of this national plan is, among others, to increase in the following years the percentage that the insurance industry represents in the Argentine gross domestic product. As a result of this strategic plan, which was announced by Argentina’s President in October 2012, further regulations are to be expected, such as changes in legislation, in regulations, new mandatory insurance products, measures to promote public awareness of insurance and its benefits.
Mandatory investments in the “real economy”: By means of Resolution 37,163, the SSN established mandatory investments for insurers and reinsurers, ranging from 5% to 30% of their total portfolio, to finance production or infrastructure projects with an alleged direct impact on the “real economy”, as defined by an Eligibility Committee of Investments for Insurance and Reinsurance Companies (Comité de Eligibilidad de Inversiones de las Compañías de Seguros y Reaseguro) whose members are appointed by the government.
Uniform policy wordings for motor, for environmental and for burial insurance: For these mandatory covers, the SSN set forth uniform texts, to be used by insurers authorised to write those lines.
Foreign currency restrictions: The government established restrictions to the purchase and investment in foreign currencies. This has had an impact in the investments of insurance companies and in the payment of benefits under policies issued in a foreign currency.
In 2012, the SSN maintained its ongoing trend of introducing changes to provide further protection to consumers. The SSN has opened different offices within the country and plans to open several more in the following years. It aims at being closer to insurance consumers and providing faster and more effective solutions to disputes between insureds and insurers.
In 2013, a new unified civil and commercial code may be passed by the Federal Congress, which would repeal the Argentine Civil and Commercial Codes in force for more than one and a half centuries. Along with its 2,671 articles, the new unified code would introduce further protections to consumers. If enacted, the new unified code would obviously have a significant impact in all areas of the Argentine society and community, including the insurance industry.
The main legislation includes:
Insurance Law 17,418 (IL), which regulates insurance contracts.
Insurance Undertakings Law 20,091 (IUL), which regulates insurance undertakings. Under the IUL, the SSN passed the General Regulation of the Insurance Activity (Reglamento General de la Actividad Aseguradora (RGAA)), which was approved by Resolution 21,523, as amended.
Law 22,400, which governs insurance broking 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.
The Reinsurance Regulatory Framework was established by means of SSN Resolution 35,615 and further supplementary regulations issued thereafter.
The SSN is primarily responsible for regulating and supervising the insurance industry. Supervision is limited to the companies writing business in the Argentine jurisdiction.
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.
An insurance contract is "an agreement whereby the insurer undertakes, for a premium or contribution, to indemnify a damage or to comply with the agreed-upon obligation, if the foreseen event occurs" (Article 1, IL).
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).
The 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 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 bonds).
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, and are specially governed by Law 26,682 and beyond the powers and duties of the SSN.
Extended warranty services (that is, service contracts generally marketed by home appliance retailers), which cover the malfunctioning of electrical appliances or other devices.
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).
Insurance activities can only be performed by one of the following types of entities, with SSN's prior approval (Article 2, 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.
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, that is, local reinsurers and admitted reinsurers (see Question 1, The New Reinsurance Regulatory Framework).
Insurers and reinsurers cannot carry on any business other than their insurance or reinsurance business. Certain activities are specifically restricted, including (Article 29, IUL):
Holding property jointly with another person or entity without the SSN's 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.
Retained risk. Insurers can fix their own rates of retained risk (Article 32, IUL). However, the SSN can object to retention of risk that exceeds certain limits (Article 32, 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 1, The New Reinsurance Regulatory Framework).
Retention of risk. Local reinsurers cannot retain for an individual or for an accumulation of risks more than 10% of the reinsurer's capital, calculated as of the closing date of their latest financial statements. They must retain at least 15% of written premiums, calculated annually on the basis of their total portfolio (SSN Resolution 35,794).
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 35,794). Local insurance companies acting as local reinsurers can only retrocede to local reinsurers, but not to admitted reinsurers (SSN Resolution 36,859).
Persons, goods and any other insurable interest of Argentine jurisdiction can only be insured with insurers licensed by the 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.
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 (that is, for example, proposal forms, questionnaires, policy wording, bases for the premiums, reserves) approved by the SSN.
Insurance agents (agentes institorios). Insurers can appoint agents to sell insurance on the insurers' behalf. To enter into this insurance agency agreement, the insurer must:
File a power of attorney with the Public Registry of Commerce.
Report the appointment to the SSN.
Insurance agents need not obtain any special authorisation or licence from the SSN.
Insurance brokers (productores asesores de seguros). Only individuals and companies that the SSN has licensed as insurance brokers can carry on insurance broking activities. To obtain an insurance broking 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 broking 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 and a net worth of ARS1 million.
Errors and omissions insurance.
An undertaking to place all operations with reinsurance companies authorised under the reinsurance framework in force (see Question 1, The New Reinsurance Regulatory Framework).
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.
There are no exemptions.
Insurance agents need not obtain any special authorisation or licensing from the SSN (see Question 9, Insurance/reinsurance intermediaries).
There are no exemptions.
In addition to restrictions applicable to any corporation under general corporate law, the following cannot be shareholders of insurance/reinsurance companies (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 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 broking companies must be composed of individual brokers. Companies can also be shareholders of insurance broking companies provided at least four individual brokers hold an equity interest, one of whom must also be a director or manager of the company.
There are no specific restrictions for loss adjusters.
The SSN's prior approval is required for any share transfer of insurers or local reinsurers. Until the SSN has issued its authorisation, certain acts cannot take place, such as:
Payment of the outstanding share price.
Transfer of the shares.
Entry of the transfer in the company records.
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.
There are no approval or notification requirements, other than those concerning anti-trust matters (see above, Insurance/reinsurance providers).
There are no approval or notification requirements for loss adjusters, other than those concerning anti-trust matters (see above, 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 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 SSN.
Reinsurance brokers must observe additional requirements, such as:
Maintaining a net worth not lower than ARS1 million.
Maintaining errors and omission insurance with a limit not lower than US$3 million or 10% of premiums broked 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 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.
Insurers and local reinsurers are subject to sanctions from the SSN for failure to comply with applicable legal and regulatory requirements, including:
Revocation of the licence.
Those who directly or indirectly advertise insurance business without the relevant 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 cancel the registration of an admitted reinsurer when it fails to comply with the relevant regulatory requirements (see Question 1, The New Reinsurance Regulatory Framework).
Insurance agents can be subject to sanctions from the SSN for failure to comply, including:
Insurance brokers can also be subject to revocation of the licence. Reinsurance brokers can be suspended or have their licence revoked.
Loss adjusters can be subject to sanctions from the SSN for failure to comply, including:
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 to enter into a contract after they have reached the age of 18.
Unless the prior approval of the SSN is obtained, local reinsurers cannot cede more than 40% of the premiums of each fiscal year to affiliated companies or companies belonging to the same group, which are located outside Argentina (SSN resolution 35,794). Local insurance companies acting as local reinsurers cannot retrocede to admitted reinsurers (SSN Resolution 36,859) (see Question 1, The New Reinsurance Regulatory Framework and Question 8, Insurers).
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. 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.
The 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.
The 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, IL):
Name and domicile of the parties.
Interest or life insured.
Risks underwritten by the insurer.
Term for which risks are covered.
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, IUL).
Policies must indicate the SSN's resolution that approved the relevant insurance plan (Article 25, IUL).
Depending on the type of insurance contract, commonly found clauses generally include, among other things:
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).
Both facultative and treaty reinsurance are commonly found in the Argentine market (see Question 1, The New Reinsurance Regulatory Framework).
Clauses concerning the following subjects are common:
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).
Certain clauses are mandatory in reinsurance contracts, for example, they must contain clauses providing that:
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 SSN will object to any brokerage commissions in excess of (SSN Resolution 36,266):
20% in facultative reinsurance.
5% in proportional treaties.
15% in non-proportional treaties.
The 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, according to the parties understanding (or what the parties may have understood if they had acted with care and diligence) (Article 1198, first paragraph, Civil Code). Argentine case law has held this rule 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 (for example, Sacco, Jorge c La Agrícola Cía de Seguros SA, CNCom, Sala B, July 30, 1979 - ED 86-477).
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).
Depending on the circumstances, insurance contracts may be considered consumer contracts and subject to consumer protection legislation (mainly Law 24,240, as amended, the Consumer Protection Law, “CPL”).
In consumer contracts, obscure clauses shall be interpreted in the way most favourable to the consumer (Article 37, CPL) and “abusive clauses” shall be deemed null. According to the CPL, abusive clauses are those predisposed by one of the parties that breach the duty of good faith and cause a serious imbalance in the parties’ rights and obligations to the detriment of the consumer. The limitation period is significantly longer in consumer contracts.
According to the IL, the limitation period for insurance contracts is one year (Article 58, IL). However, Article 50 of the CPL establishes a three-year limitation period for consumer contracts.
Consumers and consumers’ associations may also demand punitive damages, in addition to the damage actually suffered (Article 52 bis, CPL).
According to the CPL, a consumer is any individual, even if not privy to a consumer relationship, who is the final recipient of a good or service as a consequence or in occasion of a consumer relationship (e.g., a “by-stander”).
In addition to these general consumer protection regulations, the 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.
For additional protections, see Question 33.
The 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.
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 33,860, 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 (Resolution 36,100).
Environmental insurance (Resolution 37,160).
Burial insurance (Resolution 37,072) (see Question 1, Increased government intervention).
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.
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.
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).
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.
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.
The limitation period for claims brought under an insurance contract is one year from the date the relevant obligation becomes payable (Article 58, IL). However, different specific rules can apply in certain circumstances (see below).
The Consumer Protection Law (CPL) provides for a limitation term of three years, which certain cases have decided applies to insurance contracts with consumers (Article 50, CPL).
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).
The limitation period is interrupted while the proceedings for adjusting a loss are under way (Article 58, IL).
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).
There is no express legal provision concerning limitation periods in reinsurance contracts, and the courts have applied conflicting limitation periods of one, five and ten years.
In principle, the policyholder, the insured or any other third party cannot enforce the reinsurance contract against the reinsurer (Article 160, 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 have some third parties, for example:
The beneficiary of life insurance.
The victim of an insured with liability insurance.
The victim of a tort under citación en garantía (see Question 24).
See also Question 29.
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 indirect damages (consecuencias mediatas) where the insurer has acted in bad faith.
Punitive damages can be awarded to a consumer whenever the CPL is violated. The maximum amount that can be awarded to a consumer is ARS5 million (Article 52 bis, CPL).
There is no specific regulation regarding the insurability of punitive damages.
On the insolvency of an insurer or reinsurer:
The SSN must revoke its licence.
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, IL).
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.
In liability insurance, the aggrieved third party has a preferred credit on the sum insured, over that of the insured and its creditors (Article 118, IL).
Although contested by certain legal authors, courts have held on the basis of article 54 of the IUL that in life insurance, insureds and beneficiaries have a preferred credit, for the sums insured or surrender values, over the estate of the insolvent insurer, and so do insureds in other types of insurance products with respect to sums due for losses occurred.
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.
Drop-down clauses can be agreed in excess policies where the underlying insurer is insolvent. However this is uncommon. There is no legal provision concerning drop-down arrangements.
In the event of liquidation of an insurer or reinsurer, mutual debts and credits concerning reinsurance contracts are set off (Article 161, 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.
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). This tax only applies if the total value of the company's assets exceeds ARS200,000 at the end of the entity's financial year. In that case, the total value of the 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 (VAT) (Impuesto al Valor Agregado) is charged at a 21% rate, levied on all insurance services except for:
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.
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%) and exemptions.
VAT, excise tax, stamp tax and the SSN fee are generally borne by the insureds.
Insurance brokers and reinsurance intermediaries are subject to the following taxes:
Tax on presumed minimum income.
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:
Consumer protection agencies, where consumers can file their claims and obtain redress for direct damage (daño directo) not exceeding ARS8,900.
Department of Guidance and Assistance to the Insured, within the SSN.
Insured Customer Service (Servicio de Atención al Asegurado) 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 and under ARS60,000 (see box, Main insurance/reinsurance trade organisations).
Arbitration clauses cannot be included in insurance policies (Article 57, IL). However, arbitration agreements can be reached after a conflict has arisen.
By contrast, arbitration clauses are generally enforceable in reinsurance agreements. According to the SSN, parties must be able to appeal an arbitrator's decision to the courts in Argentina.
Insurance and reinsurance contracts must be governed by Argentine law and subject to Argentine jurisdiction (Article 16, IL and SSN Resolution 35,615).
Some of the goals of the National Strategic Insurance Plan (PlaNes) drafted by the government in 2012 (see Question 1, Increased government intervention) are revamping all the insurance and reinsurance legislation, which was passed in the 1960s, 1970s and 1980s. It is expected that the government will present the Argentine Congress with bills to amend the IL, the IUL and Law 22,400 which governs insurance broking activity (see Question 2, Regulatory Framework).
If passed, the new unified civil and commercial code will also have an impact on the insurance and reinsurance business (see Question 1, Enhancement of consumer protection regulations).
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.
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.
Main activities. The association:
Represents mutual societies and co-operatives within the insurance industry.
Promotes co-operative activities in the insurance market.
Main activities. The organisation represents the interests of regional insurers, with head offices outside Buenos Aires, at forums within the insurance activity.
Main activities. The association represents, defends and promotes the interests of insurance brokers and the development of the insurance activity.
Main activities. This organisation, launched in 2012, represents the main reinsurance companies operating in Argentina.
Qualified. UK (LLM), 1999; Argentina, 1993
Areas of practice. Insurance and reinsurance; litigation and arbitration; life sciences.
Qualified. Argentina, 1991
Areas of practice. Insurance and reinsurance; litigation and arbitration; product liability; life sciences.
Qualified. United States, New York (LLM), 2003; Argentina, 1999
Areas of practice. Insurance and reinsurance; maritime law; litigation and arbitration; life sciences.