MEXICO Law and Practice Contributed by: Carlos de la Garza, Raúl Acosta and Enrique Tamez, De la Garza & Acosta Abogados, S.C.
poser so that they may be included in the contract offer that must then be signed and submitted to the company, serving as the basis for the contract. The Law on Insurance Contracts establishes the mini- mum requirements that must be included in a policy (which must be delivered to the policyholder), speci- fying the rights and obligations of the parties. These requirements include: • the names and addresses of the contracting par- ties and the signature of the insurance company; • the designation of the insured object or person; • the time from which the risk is guaranteed and the duration of this guarantee; • the amount of the guarantee; • the insurable interest; • the insurance premium or fee; • where applicable, a specific statement that it is a legally required liability insurance policy; and • other clauses that must appear in the policy in accordance with legal provisions, as well as those lawfully agreed upon by the contracting parties. In the case of personal insurance, in addition to the aforementioned requirements, the policy must also contain: • the full name and date of birth of the person(s) covered by the insurance; • the full name of the beneficiary, if one is desig- nated; • the event or term upon which the insured sums become payable; and • where applicable, the guaranteed values. 6.5 Multiple Insured or Potential Beneficiaries In Mexico, the law permits individuals other than the policyholder to be named as beneficiaries of the insur- ance contract, such as tenants, subcontractors or mortgage creditors, among others. These beneficiar- ies must be designated as such in the policy, except in the case of liability insurance, where the third-party beneficiary is the third party harmed by the insured, regardless of who that third party may be. Furthermore, when proposing an insurance policy on behalf of another, the proposer must declare all
significant facts that are or should be known by the third-party insured or their intermediary. In the event of any omission, the insurance company is authorised to consider the insurance contract rescinded by opera- tion of law under the same terms as outlined in 6.1 Obligations of the Insured and Insurer . In addition, the third-party beneficiary is entitled to pay the premium if the policyholder fails to do so, and the insurance company is prohibited from rejecting such payment. Given that the purpose of an insurance contract is to provide indemnification, the only requirements for entering into such a contract are that the individuals to be indemnified must have a reparable right, such as a landlord’s interest, and that they must own the insured item that has been damaged by a claim. A life insurance contract taken out in the name of a third party is valid if the third party gives their prior written consent, indicating the insured sum; other- wise, it is voidable. A personal insurance contract is also voidable in the case of the death of a minor under 12 years of age or of a person under guardianship. 6.6 Consumer Contracts or Reinsurance Contracts The position regarding consumer contracts and rein- surance contracts is not significantly different, except that the latter are not subject to specific regulation, and the principle of pacta sunt servanda (“agreements are to be honoured”) prevails, provided that public policy provisions are not violated. Most disputes relat- ed to reinsurance contracts in Mexico are resolved through alternative dispute resolution methods, such as commercial arbitration, where this legal principle is upheld. 7. Alternative Risk Transfer (ART) 7.1 ART Transactions The Insurance and Bonding Institutions Law allows insurance companies to undertake operations through which they transfer portions of the risk from their port- folio related to technical risks to the capital market, in accordance with the guidelines established by the
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