Insurance and reinsurance

Captive insurance

Summarise any captive insurance regime in your jurisdiction as applicable to aviation.

International aircraft carriers and airport concessionaires are obliged to obtain insurance coverage for damages to third parties on the ground, crew members, passengers and any other parties that may suffer harm as a result of their operations.

Maritime insurance regulations are also applicable to aviation insurance, to the extent that they are pertinent and compatible.

Pursuant to article 153 of Law 12 on Insurance of 2012, it is mandatory for entities, companies and persons domiciled in Panama to enter into contracts with insurance companies authorised to do business in Panama with respect to all insurance on assets and persons located in Panama. Foreign insurers may not cover assets or persons located in Panama, unless there is a fronting arrangement with a local insurance company or if any of the following exceptions apply:

  • there is a breach of any treaties or international agreements entered into by Panama;
  • the insurance coverage does not exist in Panama; or
  • it is impossible to obtain insurance owing to rejection of coverage by licensed insurers in Panama.


The superintendency, prior to verification that it is not possible to obtain such insurance in Panama, may authorise its contracting abroad if all legal requirements – among which are the withholding and payment of income tax as provided by the Fiscal Code – are fulfilled. The companies, entities or persons must register the authorisations granted in this connection with the superintendent.

Reinsurance may be placed with local or foreign licensed reinsurers.

Under Panamanian law, captive insurance may apply to any foreign risks, including aviation-related risks. Captive insurance activities undertaken in Panama may not cover risks located in Panama.

Cut-through clauses

Are cut-through clauses under the insurance and reinsurance documentation legally effective?

Cut-through clauses are permitted under the freedom of contracting principles of Panamanian law.


Are assignments of reinsurance (by domestic or captive insurers) legally effective? Are assignments of reinsurance typically provided on aviation leasing and finance transactions?

Assignments of reinsurance are legally effective and are typically provided on aviation leasing and finance transactions.


Can an owner, lessor or financier be liable for the operation of the aircraft or the activities of the operator?

An owner or lessor is not liable for the operation of the aircraft or the activities of the operator. However, the aircraft may be detained for enforcement of liens or for acts of the operator.

Strict liability

Does the jurisdiction adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft?

Panama does not create a regime of strict liability for owners, lessors or financiers with no operational interest.

Third-party liability insurance

Are there minimum requirements for the amount of third-party liability cover that must be in place?

According to Aeronautical Law 21 of 2003, the indemnification that the carrier must pay is as follows:

  • for damages to passengers: 25,000 balboas;
  • for loss, damage or destruction of hand luggage: up to 33.20 balboas; and
  • for loss, destruction or breakdown of cargo or paid luggage: up to 24.75 balboas.


If the cargo or paid luggage is transported according to the declared value and the interested party has paid the additional fees according to the company’s fee, the limit of indemnification will be the value declared.

These limits of liability are not payable if it is proved that the damage is the result of an action or omission of the carrier or the operator or their dependants, with the intention of causing the damage, or being reckless or knowing that the damage would be caused; however, in the case of an action or omission of the dependants, it is necessary to prove that they were acting in their duties as such.

The amount of compensation, subject to the preceding article, shall not exceed the following per aircraft event:

  • 16,600 balboas for aircraft whose weight does not exceed 1,000kg;
  • 16,600 balboas plus 13.25 balboas per kilogram over 1,000kg for aircraft weighing between 1,000kg and 6,000kg;
  • 82,850 balboas plus 8.3 balboas per kilogram over 6,000kg for aircraft weighing between 6,000kg and 20,000kg;
  • 199,000.50 balboas plus 5 balboas per kilogram over 20,000kg for aircraft weighing more than 50,000kg; and
  • 349,000.50 balboas plus 3,325 balboas per kilogram over 50,000kg for aircraft weighing more than 50,000kg.


Indemnification in the case of death or injuries shall not exceed 25,000 balboas per death or injured person.

For the purposes of these provisions, 'weight' means the maximum weight of the aircraft authorised by the airworthiness certificate for take-off.