As of 15 July 2013, registered non-domiciled foreign insurers are able to offer in Colombia, International Marine Transport, Commercial International Aviation and Launch & Space Transportation ("MAT") insurance providing cover to the risks related to goods en route, the vehicle transporting them and the liability that could arise therefrom, pursuant to Law 1328 of 2009. This development is intended to deal with the deficit of local insurance capacity as a consequence of the rapid economic growth and numerous infrastructure projects. However, foreign insurers are not allowed to offer, solicit or advertise other types of insurance products in Colombian territory or to its residents.
A compulsory registration requirement for all foreign insurers willing to do MAT business in Colombia has been established by secondary legislation. Such foreign insurers must file a registration application before the Superintendence of Finance ("SFC") to be recorded in the "registry of foreign insurers that offer commercial international aviation, international marine transport and launch and space transport insurance in Colombia" ("RAIMAT"), as per the SFC’s 19 External Ruling dated 27 June 2013.
The application for registration must comply with a set of requirements and documentation such as evidence of financial solvency equal or above the amount required for local players to operate MAT insurance (c. USD $15,000,000), the filing of financial statements, and a risk rating report from a recognised agency, among others. The registration must be updated annually.
Lloyd's syndicates will also be able to offer MAT insurance in Colombia upon registration in RAIMAT; however, individual registration of every syndicate will not be necessary because the registration of the market as a whole will allow every syndicate to offer MAT in Colombia.
SFC can deny the registration in the RAIMAT if solvency and suitability conditions are not sufficiently proven. The SFC can also suspend or cancel the registration in case it considers such measures necessary in accordance with the scenarios established in the External Ruling 19.
Law 1328 further allowed Colombian nationals and residents, either legal entities or individuals, to purchase any type of insurance abroad except for insurance related to the social security system, such as workers compensation and retirement insurance, as well as compulsory insurance, insurance that require previous evidence of the purchase of a compulsory insurance, such as complementary health plans and insurance where the insured is a public entity. A formal opinion from the SFC is expected in order to clarify whether the new regulation will allow the execution of MAT insurance contracts between Colombian residents and foreign insurers online or by way of signing hard copies of the policy.
Foreign non-domiciled insurance brokers will be allowed to offer MAT insurance in Colombia from foreign non-domiciled insurers registered in the RAIMAT provided that they are authorised by the foreign insurer and notified by the latter to the SFC.
The SFC will not supervise activities of non-domiciled foreign insurance companies registered in the RAIMAT, or its authorised foreign agents. As such, the SFC does not have jurisdiction to initiate administrative investigations against them. However, offering MAT insurance in Colombia without registration in the RAIMAT is considered an "insecure practice". Insurance contracts executed with unregistered foreign non-domiciled insurers would be deemed null and void locally. Apart from this, foreign non-domiciled insurers shall be in compliance with the mandatory registration and it is important to be in good standing with the SFC in case the foreign insurer is willing to expand with a branch in the local market.
This article was prepared in collaboration with our usual local agent Bernardo Salazar.