MEXICO Law and Practice Contributed by: Carlos de la Garza, Raúl Acosta and Enrique Tamez, De la Garza & Acosta Abogados, S.C.
9.7 Alternative Dispute Resolution Mediation in insurance matters falls under the respon- sibility of the ad hoc administrative body known as the National Commission for the Protection and Defence of Users of Financial Services. This method of conflict resolution is widely utilised in Mexico. Furthermore, as mentioned in 9.3 Litigation Process , during oral commercial trials, the judge is required to encourage the parties to reconcile their interests to avoid litigation and reach an agreement. This obliga- tion is consistently upheld in practice. 9.8 Penalties for Late Payment of Claims In Mexico, the Law on Insurance and Bonding Insti- tutions provides a special formula for calculating the compensation an insurer must pay to the insured or policyholder beneficiary in cases of unjustified delay in settling a claim. The compensation amount is con- verted into Investment Units ( Unidades de Inversión ), a unit of account updated daily by the Bank of Mexico in line with inflation and designed to protect investors from inflationary fluctuations while maintaining the purchasing power of money. The following procedure is applied. • Obligations in national currency are denominated in Investment Units, calculated at their value on the due date of the period legally granted to the insurance company for fulfilment. Payment is then made in national currency, based on the value of the Investment Units on the date the payment is executed. • The insurance institution must pay default interest on the obligation denominated in Investment Units as described above. This interest is capitalised monthly, with the rate determined by multiplying by 1.25 the term deposit cost of liabilities denomi- nated in Investment Units used by the country’s multiple banking institutions. The Bank of Mexico publishes this rate monthly in the Official Gazette of the Federation ( Diario Oficial de la Federación ). • When the principal obligation is denominated in foreign currency, the insurance institution is required to pay the original obligation, as well as default interest, capitalised monthly by applying to the obligation amount a percentage derived
from multiplying by 1.25 the term deposit cost of liabilities denominated in United States dollars by the country’s multiple banking institutions, as pub- lished monthly by the Bank of Mexico in the Official Gazette of the Federation. • Default interest accrues daily from the due date of the payment period until the day the payment is made. Judges must order insurers to pay this compensa- tion even if it has not been explicitly requested by the insured in their claim. In October 2024, the Supreme Court resolved an amp- aro review in which it was determined, by a majority of three votes to two, that an additional award of damag- es for delay in non-performance was not appropriate. The ruling clarified that punitive damages for delayed payment of a claim are inadmissible. However, this criterion is not binding. 9.9 Insurers’ Rights of Subrogation In insurance for things encumbered by privileges, mortgages or pledges, the privileged creditors, mort- gagees or pledgees are subrogated by operation of law to the compensation, up to the amount of the claim secured by such encumbrances. Similarly, the insurance company that pays the com- pensation is subrogated, up to the amount paid, in all the rights and actions against third parties that cor- respond to the insured person due to the damage suf- fered. In the case of surety insurance, the insurer is subrogated, up to the limit of the compensation paid, to the rights and actions that the insured may exercise against the contracting party and, if applicable, other parties responsible for the claim. For inland transport insurance, the insurance com- pany is subrogated to the rights of the insured parties to pursue claims against the carriers for damages for which they are liable. In personal insurance, the insurance company may not be subrogated to the rights of the insured or the beneficiary against third parties because of the loss, except in the case of insurance contracts covering medical expenses or health.
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