Amis wants law changed to better fight offshore insurers

Mexico's insurance association Amis is lobbying the insurance regulator CNSF and the finance ministry to decriminalize the purchase of policies from offshore insurers so that consumers are more willing to report this illegal practice to the authorities. "We are asking for changes to the law so that well-intentioned buyers aren't punished in order to get charges brought against these companies and their practices," Amis chairman Rolando Vega told press on the sidelines of the insurance industry's annual convention Tuesday. The association of insurance brokers and agents, Amasfac, also favors decriminalizing the purchase of these policies, which would require congress to change Mexico's insurance law. "Because the law says that the buyer is also committing an offence, the policy holder doesn't want to cooperate," Amasfac chairman Daniel Peña told BNamericas on the sidelines of the conference. Under Mexican law, a foreign insurance company must open a subsidiary that meets local capital and solvency requirements in order to legally do business. However, some US, Canadian and European companies have taken advantage of loopholes to sell through some brokers and agents, sometimes going so far as taking clients across the border to sign policies in the US. Life and health insurance are the lines most affected by this practice, according to Amis and Amasfac. While it is of deep concern to local insurers and brokers, the industry has been reluctant to provide hard figures on the volume of premiums lost to illegal sales. One source in the broker industry told BNamericas that insurers could be losing US$15mn-20mn in premiums a year, with brokers missing out on US$4mn in commissions. Perhaps more harmful to the insurance industry than lost revenues and commissions is the potential damage to its reputation in the event that offshore companies refuse to honor the claims brought by Mexican policy holders. "I know of cases where they [offshore operators] haven't paid the amount insured when a claim is made," Peña said. AMIS URGES LOCAL REGISTRATION Amis has tried to get offshore insurance companies to register in Mexico through a combination of dialogue and pressure through the regulator. To date, Amis has convinced one foreign insurer, Amedex, to register while a second company that has been selling an important volume of health insurance policies has requested an operating license. US-based life and health insurer Amedex started operations last year after filing for a license in 2003, an Amis executive told BNamericas. "We understand there is a Danish company that is very advanced in the [licensing] process," the executive said. Amasfac's Peña would like to see CNSF crack down on agents selling these policies and make public those insurers who do business illegally in Mexico. "There are a lot of agents that sell with impunity," he said, adding, "They are mainly US [companies] and almost all of them have their headquarters in Miami."