The National Commission for the Protection and Defence of Users of Financial Services (CONDUSEF) has issued general provisions to define certain activities that deviate from good practices with respect to the offer and sale of services that insurance entities provide. CONDUSEF's intention is to strengthen the protection of general public interest.

The provisions specify certain conditions to be met by insurers when offering insurance products, as well as practices that should be avoided. The provisions were issued in response to several abusive practices in the insurance sector, whereby customers were not provided full information on insurance products (in particular, products sold via telemarketing and in retail stores). The provisions require insurers to be as transparent as possible with respect to the scope and extent of the insurance products offered and the rights of insureds.

The provisions include specific terms and conditions that must be included in non-negotiable insurance contracts, in addition to those required by the insurance regulator. CONDUSEF will further be empowered to review such documents. Moreover, CONDUSEF will require insurance entities to register such adhesion contracts – once approved by the regulator – with the Insurance Adhesion Contracts Registry, which will be set up and monitored by CONDUSEF.

The provisions also set specific conditions for the issuance and sale of insurance products through telemarketing. Notably, individuals calling potential clients will need to identify themselves and ask whether the insurance product can be sold. If the potential client does not accept, he or she may not be contacted during the following 12-month period.

In addition to the requirements under the Insurance Law and other regulatory provisions, CONDUSEF has set specific conditions to be met with regard to publicity – mainly with the intention of preventing confusion regarding insurance products, their attributes and restrictions. This has accordingly strengthened the existing rules on transparency and accuracy in product descriptions.

Breach of the provisions will be penalised with fines, in addition to affecting the rating of the insurer as posted in the Bureau of Financial Entities (also managed and monitored by CONDUSEF).

Insurers must establish appropriate systems and fully comply with the provisions within 180 days, and must further file periodic compliance reports. Compliance with the provisions will be monitored jointly by CONDUSEF and the insurance regulator.

For further information on this topic please contact Carlos Ramos Miranda at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (carlos.ramos@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.

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