MEXICO Law and Practice Contributed by: Carlos de la Garza, Raúl Acosta and Enrique Tamez, De la Garza & Acosta Abogados, S.C.
2.2 Writing of Insurance and Reinsurance In accordance with the Insurance and Bonding Insti- tutions Law and the Sole Insurance and Bonding Circular and its Annexes in Mexico, only commer- cial companies authorised by the National Insurance and Bonding Commission may enter into insurance contracts. These legal standards also condition the use of the words “insurance”, “reinsurance”, “assur- ance”, “surety” and “guarantee” – as well as others that express similar ideas, in any language – in the names of commercial companies, to avoid confusion among consumers. In this regard, any insurance – whether for consumers, small and medium-sized enterprises (SMEs) or large corporations – must be issued by an institution that is authorised for this purpose by the National Insurance and Bonding Commission. The requirements that must be met to obtain such authorisation are outlined in the Insurance and Bonding Institutions Law and in the Sole Insurance and Bonding Circular and its Annexes, which is constantly updated. Regarding the underwriting of various insurance con- tracts to cover a specific risk against damage, the insurer allows the concurrency of policies, provided that each insurer is informed, in writing, of the names of the insurers and the insured sums. The contracting of “excess reinsurance” policies intended to insure a greater civil liability risk than initially contracted with an insurance company is also valid, with no special rules applying in this regard. In Mexico, the underwriting of insurance and reinsur- ance is limited to authorised institutions that comply with the legal and solvency requirements established primarily in the Insurance and Bonding Institu- tions Law. There are differences in the requirements depending on the type of client (consumers, SMEs or companies), and excess coverages and reinsurance are subject to specific regulations to ensure the stabil- ity of the system and the protection of policyholders. Detailed provisions can be found in the Insurance and Bonding Institutions Law and in the regulations issued by the National Insurance and Bonding Commission.
Finally, reinsurance contracts are regulated by the leg- islation agreed upon by the parties, usually referring to Mexican law. In such cases, the provisions of the Federal Civil Code relating to contracts and obliga- tions are relevant, as they are generally supplementary to mercantile matters. 2. Regulation of Insurance and Reinsurance 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance Regulation of the insurance and reinsurance sector is the responsibility of the Ministry of Finance and Public Credit ( Secretaría de Hacienda y Crédito Público ) with regard to the application of the Insurance and Bonding Institutions Law. A decentralised body of said Minis- try, the National Insurance and Bonding Commission ( Comisión Nacional de Seguros y de Fianzas ), is in charge of supervising the operations of the insurance and bonding sectors. Matters relating to insurance companies are regulated within this framework, including: • the authorisation to establish themselves; • the modification of their statutes; • the requirements to ensure their proper operation; • the manner in which they fulfil their obligations; • the determination of their premiums; • their solvency; • the manner in which their contracts must be issued; • the products they can market, depending on the sector in which they are authorised; • the preparation of technical notes; • the constitution, increase, valuation and registra- tion of current risk reserves; and • proof of their solvency. In summary, the regulation of the insurance and reinsurance sector in Mexico combines a solid legal framework, technical supervision by the National Insurance and Bonding Commission, and the imple- mentation of international standards.
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