Panama: Verzekeringen
From Handelswijzer Midden-Amerika
Features
At 31 March 2007, 20 insurance companies were operating in the Panamanian insurance market, of which ten held reinsurance licences, five were reinsurers, four were captive insurers, four reinsurance brokers, one insurance brokers' portfolio manager, and four managers of captive insurers. In addition, 275 insurance brokers' licences had been granted to legal persons and 1,792 to natural persons. It is estimated that, at the same date, insurance activities provided 1,773 direct jobs. The market comprises both companies set up in Panama (with Panamanian or foreign capital) and branches of foreign companies.
During the 12 months up to December 2005, premiums in the insurance market amounted to B 430 million. Insurance against loss or damage and against non-material loss accounted for 40 per cent of total insurance, 36 per cent corresponded to life insurance, 15 per cent to health insurance, 4 per cent to transportation insurance and 2 per cent to personal accident insurance. In 2005, the insurance branch's share of GDP was 2.8 per cent and insurance companies' assets amounted to B 765.2 million in 2004 (the last year for which figures are available). Insurance showed net profits of B 21.4 million, equivalent to 7.6 per cent of the companies' net wealth in 2004.
Regulatory framework
The Panamanian Insurance and Reinsurance Supervisory Authority is a decentralized public body of the MICI and is the insurance regulatory and supervisory authority. It has a National Reinsurance Commission which regulates reinsurance.
The legal framework for insurance in Panama is provided in the Insurance Law No. 59 of 29 July 1996, the Reinsurance Law No. 63 of 19 September 1996 and the Law on Captive Insurance No. 60 of 29 July 1996. The Insurance Law regulates insurance companies, managers of companies and insurance brokers or adjusters, as well as the profession of broker or provider of insurance throughout Panama. Insurers may be established in the form of public limited companies or branches or agencies of foreign companies. In the case of a branch of a foreign company, a certificate from the competent supervisory authority in the country of origin is required showing that the parent company has been duly established in that country and that it has been totally solvent according to its legislation for a minimum of five years. Authorization to operate a branch in the Republic of Panama is restricted to those areas in which the company is engaged in its country of origin. The authorities have indicated that the preliminary draft of a new insurance law is under consideration (June 2007).
Companies seeking authorization to operate as an insurance company, whether Panamanian or foreign, must constitute and pay up minimum capital in cash of B 2 million. Moreover, they must set aside in their liabilities reserves for their activities in Panama according to the type of risk. Insurance companies must also keep a contingency reserve for statistical deviations of between 1 and 2.5 per cent, as well as a reserve for disaster risks, also between 1 and 2.5 per cent for all areas. In addition to these reserves, all insurance companies must establish and maintain a reserve fund with 20 per cent of their net profits until it reaches B 2 million and thereafter with 10 per cent. There is also a requirement on investing the reserves built up in accordance with the Insurance Law in Panama: 75 per cent must be invested in Panama in State bonds and securities or real estate registered in Panama. The remaining 25 per cent may be invested outside Panama in assets with an adequate investment rating given by a reputed risk assessor.
Insurance companies are subject to a tax of 2 per cent on the premiums net of cancellations collected under policies issued in Panama covering risks situated in Panama, except in the case of bonds, whose invoicing is not considered to be an insurance premium. Insurance premiums are also subject to a consumption tax of 5 per cent, except for personal and collective life insurance. The consumption tax on premiums for fire insurance is exclusively for the Republic of Panama's fire brigade.
Under the Insurance Law, insurance to cover goods and persons in Panama may only be taken out with insurance companies authorized to operate in Panama. If this is not possible, the Supervisory Authority is empowered to authorize the insurance to be taken out abroad. Such authorization must be registered with the Authority. Insurance and reinsurance companies established in Panama may place or accept reinsurance with other insurers or reinsurers domiciled in Panama or abroad.
The Supervisory Authority's Technical Council is responsible for granting licences to insurance companies. Insurers must have a licence for each area in which they wish to operate and also to open up or close down branches in Panama or branches or agencies abroad. There are three areas each with its corresponding type of licence: life insurance, general insurance and bond insurance. The model policies must receive prior authorization from the Authority before they can be sold to the public. Insurers may freely fix premiums and commission. The Council also grants authorizations for engaging in the activity of insurance broker and insurance manager. An insurance broker's licence requires the holder to be a Panamanian national domiciled in Panama or abroad and already exercising the activity when the Insurance Law was enacted.
Reinsurance is supervised by the Insurance and Reinsurance Supervisory Authority. The Commission is responsible for approving or rejecting applications made to the Authority for the purpose of operating as a reinsurance company in Panama or for any type of licence whose purpose is to carry out reinsurance transactions. Reinsurance premiums covering risks situated abroad are not subject to tax. The minimum capital required is B 1 million; technical reserves must not be less than 35 per cent of the net premiums determined up. Law No. 63 of 19 September 1996 provides that companies authorized to conduct reinsurance activities must appoint at least two general agents, both of whom must be resident in Panama and one of whom must be a Panamanian national.
Law No. 60 of 29 July 1996 is intended to encourage the creation of captive insurers, which are offices established in Panama to insure or reinsure individual or specific risks abroad. Captive insurers must receive prior authorization in the form of a licence granted by the Insurance Supervisory Authority. The Law provides that captive insurers must keep an actual office in Panama. They may also obtain licences for long-term risks and for general insurance for Panamanian and foreign companies. In the case of general insurance, the registered capital must not be less than B 150,000; if the company is involved in long-term risk or both areas, the paid-up registered capital must not be less than B 250,000. Premiums derived from captive insurers' activities are not subject to tax in Panama.
The agricultural sector may take out insurance through the Instituto de Seguros Agropecuarios – ISA (Agricultural Insurance Institute), which is the autonomous State body created by Law No. 34 of 29 April 1996 to act as an agricultural insurance finance company to support investment in the primary production sector.
Bron: Organization of American State's Foreign Trade Information System (SICE)
