New regulations applicable for reinsurers in Ecuador
The Superintendence of Companies, Securities, and Insurance issued in February of 2023, issued new regulations regarding the requirements that foreign reinsurers and reinsurance intermediaries domiciled abroad, must meet in order to obtain or maintain their license to operate in Ecuador.
This regulation was issued to strengthen the requirements for the registration in Ecuador that ensures these companies have the appropriate qualifications to provide their services, in order improve and protect the insurance system in Ecuador.
Among other amendments, the new regulation increases the minimum rating required from international reinsurers. In this regard, it is mandatory to provide a long-term risk rating report letter on a global or international scale in which the rating cannot be lower than:
- A3 from Moodys;
- A – from Standard and Poors
- A- from Fitch; and
- a – from A.M. Best
Local rating reports are not allowed. This new regulation applies for a first-time qualification and for renovations. In this regard, the entities that are registered in Ecuador could operate until the expiration of the license, however they will have to meet the new requirements to continue providing services in Ecuador.
For the registration it is necessary to include the following documentation:
- Copy of the complete risk rating report. It is mandatory to include a copy of the latest opinion or report available, reflecting the solvency and stability to carry out reinsurance operations in Ecuador.
- Certificate of the risks assumed establishing the name of cedent, kind of coverage, even if it is proportional or not.
- Operation permit issued by the competent authorities to operate in country in which the reinsurance company is domiciled.
- Audited financial statements of the last three years.
- Power of Attorney to file the documents and to receive summons and notifications on behalf of the foreign reinsurer.
The regulations have been imposed to prove the solvency of the foreign insurance to operate in the country, including the financial solvency as it is inferred with the new requirements regarding audit financial statements that must include accounts or annual reports.
Finally, the resolution incudes the possibility of the Superintendence of Companies, Securities, and Insurance to require additional background, information and documents that it deems appropriate to decide on the application for registration, renewal, or revocation of registration of a foreign entit.
Insuralex´s Exclusive Memer in Ecuador (PBP) is the largest firm in Ecuador, considered a leader in the legal market and a trusted advisor for national and international clients. It has offices in Quito and Guayaquil and outreach throughout Ecuador.
Insuralex Ecuador PBP endeavors to understand clients’ challenges and needs. Its multi-practice teams – integrating expertise in 17 practice areas – have an industry focus and an in-depth understanding of the specific challenges of each sector.
Insuralex Ecuador PBP’s team has both local and international experience. Several members have attended renowned local and international universities and have worked at first-rate law firms around the world.
Insuralex Ecuador PBP has consistently been honored as Ecuadorian Firm of the Year by Chambers Latin America and by Who´s Who Legal.
Social responsibility is a part of its professional culture. Through the Fabián Ponce O. Foundation (FPO), founded in 1987, the firm encourages and optimizes its social responsibility work. It represents fair causes with an emphasis on family law.