The National Insurance and Bonds Commission recently issued a temporary measure to enable insureds and their beneficiaries to be immediately compensated for damages suffered as a consequence of the September 7 and 19 2017 earthquakes that affected several areas of Mexico.
The temporary measure applies to Mexican insurers that have ceded risks to reinsurers and allows them to use funds to meet assumed risks and recover compensation from reinsurers for damages that were ceded at a later date.
The measure is reflected in Transitory Provision 77 of the Sole Provisions on Insurance and Bonds, under which advance payments made by Mexican insurers to compensate for damages caused by the earthquakes – on behalf of reinsurers – will be registered in their balance under specific line items.
The amount recorded under "Payments in advance of claims [that arose] from the earthquakes of September 7 and 19 2017 on Reinsurers Account" will be considered when evaluating an insurer's solvency capital requirement.
The temporary measure will remain in effect until April 2018. After this time, the balance reported must be renamed, in its entirety, to the insurer's "Current account".
Mexican insurers must file information with the insurance regulator on their payments in advance of claims that have arisen from the earthquakes. Insurers that have received no such claims must notify the regulator by way of a formal writ addressed to the general management of financial supervision before October 13 2017 in order to be exempt from the measure.
For further information on this topic please contact Carlos Ramos Miranda at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email ([email protected]). The Hogan Lovells website can be accessed at www.hoganlovells.com.