Panama has passed a new Insurance Law which aims to boost the country's insurance industry and changes the way local and foreign companies do business there.
The Insurance Law, also known as Law 12, came into force on April 3, 2012, and replaces the 1996 statute which was widely considered as out of date. The new law had been under discussion for several years and has gone through numerous changes. The final version received input from across the insurance industry and is broadly supported.
One of the most notable features of the new law is the opening up of distribution channels, which had previously been dominated by local broker firms. Insurers can now offer their products through alternative marketing channels. The law also increases the minimum capital requirements for local insurers from US$2 million to US$5 million and imposes other solvency controls based on international standards. It also contains provisions to regulate the micro-insurance sector in the country.
For foreign reinsurers, the most important change is that they must now be registered with the Insurance Superintendency and make annual filings of their financial statements, rating certificates and other documents. Prior to enactment of the new law, foreign reinsurers did not need to be registered in order to write business in Panama. Article 48 of the Insurance Law stipulates that the regulator, the Insurance and Reinsurance Superintendency, will set up a register of all foreign reinsurers but no further details have yet been announced.