Governor signs Insurance Code amendment into law

By John McPhaul

jpmcphaul@gmail.com

Gov. Pedro Pierluisi Urrutia on Sunday signed into law Senate Bill 722, which amends the Insurance Code to adopt on the island the regulatory standards applicable to reinsurance operations in jurisdictions participating in the International Covered Agreement (ICA), insurance and reinsurance regulatory measures under the authority of the Federal Insurance Office (FIO).

Thus Puerto Rico joins the jurisdictions of the United States, which must adopt, on or before Sept. 1, 2022, measures recognized by the U.S., the European Union and the United Kingdom in the ICA so that their laws are consistent with the federal Dodd-Frank Act.

The measure was part of a package of five pieces of legislation that the governor signed, the majority of which were related to the Department of Transportation and Public Works), including the AutoExpreso system and the Integrated Transportation Authority.

“The elimination of commercial barriers between the participating jurisdictions of the Covered Agreement opens the door to greater reinsurance purchase options for domestic insurers by expanding the solvency capacity and, therefore, supporting the obligations assumed with their policyholders in their respective lines of insurance business,” reads the legislation’s statement of purpose.

The Office of the Insurance Commissioner (OCS), which favored the bill, said reinsurance is an additional guarantee so that companies can comply with the payment of claims to policyholders. In turn, the OCS indicated that with the new law, the insured can count on greater access to products while the companies can have the necessary support in handling the claims of their insured, in particular for losses related to catastrophes.