Congress has passed a new insurance and bonding law. The law compiles the two separate laws (one governing insurance and the other governing bonding) into a single law. The new law is intended to strengthen the insurance and bonding system according to international best standards and practices, with special regard for corporate control and governance, capitalisation rules, reserve investment and risk management policies, among other things. Specifically, the new law will impose Solvency II standards, which will make Mexico one of first countries to implement Solvency II.

Insurance and bonding companies will have two years to ensure that they adjust their internal policies, procedures and compliance to the new law before it comes into effect. The new stipulations for policies and procedures will include increased corporate governance controls and transparency rules, such as strict eligibility requirements for individuals to become members of the board or high-ranking officers of such entities. The law will also impose increased direct liabilities for such directors and officers, who will now be charged with ensuring that policy and compliance standards are effectively met.

Among other changes, insurance and bonding companies will have to implement additional internal control, IT and accounting systems that ensure operative independence with respect to other members of the business group or consortium of which they are part. The law addresses the fact that entities can be influenced in their decision making and generally engage in transactions with fellow entities of the same group. Entities will need to ensure independence in their operations and will be prevented from appointing as general manager or top-ranking officers individuals who hold similar positions within other entities of the same group of influence.

Insurance and bonding entities will be required to create and implement an integral risk management system to evaluate:

  • the level of compliance in their operations;
  • global solvency levels pursuant to risk profiles;
  • commercial strategies;
  • reserve investments;
  • reinsurance strategies;
  • capital requirements; and
  • other measures that ensure their proper capitalisation, risk dispersion and solvency.

While the new law will require entities to self-regulate further with substantial periodic reporting requirements, the Insurance and Bonding Commission will maintain overall regulatory and supervisory authority. Further, the commission will have greater authority and will authorise the establishment and operation of insurance and bonding entities in lieu of the Ministry of Finance and Public Credit, which currently issues such authorisation.

For further information on this topic please contact Carlos Ramos Miranda at Barrera, Siqueiros y Torres Landa SC by telephone (+52 55 5091 0000), fax (+52 55 5091 0123) or email (