Gloria Sabando, Ecuador’s Superintendent of Banking and Insurance, recently announced that the seventeen (17) companies that operate in the country’s mandatory auto coverage market (SOAT--Seguro Obligatorio de Accidentes y Transito) must return US$ 19.4 million in premium to their customers, representing a 30% credit against “excessive” premiums charged in 2009. Ms. Sabando also stated that the reimbursement should occur the moment that the SOAT coverage is renewed in 2010. The announcement impacts the following companies: AIG, Alianza, Bolivar, Cervantes, Colonial, Constitucion, Coopseguros, Interoceanica, Latina, Olympus, Oriente, Panamericana, Rocafuerte, Sucre, Sweaden, Unidos y Vaz Seguros.
Despite significant dismay over the decree among local companies, insurers have little ability to challenge the pronouncement and have already begun making arrangements to comply with the reimbursement requirement. Several local executives have publicly criticized the concept of basing such a decision upon accident results for a single year, and have questioned the political motives underlying the decree. Corposoat, an organization representing Ecuador’s compulsory auto carriers has filed an appeal with the Superintendency, seeking reconsideration of the requirement and clarity as to how the SOAT system will function going forward. According to Patricio Salas, manager of Corposoat, the main goal of the appeal is to ensure that the SOAT program is regulated in a balanced and reasonable manner.