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Corporate & Business
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New Law of Insurance and Bond Institutions Apr 2013

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New Law of Insurance and Bond Institutions

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On April 4th 2013, a New Mexican Law of Insurance and Bond Institutions was published in the Official Federal Gazzette, along with some amendments to the Law of Insurance Contracts. Following please find some of the highlighted changes:

Law of Insurance and Bond Institutions

This Law will enter into force two years following the date of publication, i.e., April 4^th, 2015, therefore, on that date, the current General Law of Insurance Institutions and the Federal Law of Bonding Institutions will be repealed.

The New Law aims to regulate mutual societies, Insurance and Bond Institutions, its activities and operations, as well as the agents involved, in order to protect its users.

Furthermore the New Law contains a special chapter regulating the Adjustors? activities and faculties. Under the New Law, the Adjustors can be companies or individuals. In the case of companies, their representative shall comply with the requirements of the Law.

Moreover, new Corporate Governance considerations are added and the Insurance and Bond Institutions are obliged to include them in their bylaws.

Law of Insurance Contracts

Regarding the amendments of the Law on Insurance Contracts, since the amendment, it is important to point out that it is now required to specify in the insurance policy if it is a mandatory insurance, if so, the payment of the insurance cannot be divided on single trips, personal accidents and occupational risks.

Furthermore, the amendment establishes that for other types of insurance, partial payments of the insurance premium can be made in less than one month, but always for the same period of time.

Regarding compensation damages, the parties of the insurance contract are legally capable, based on the difficulty of valuing each insured object, to set the value of the objects for the event of theft. What is new about this amendment is that the value that is taken into account is an estimate value, not the real value as previously referred to in the current Law of Insurance and Bonds.

Also, the amendment includes a new chapter that regulates Guarantee Insurance, which was not regulated before.

The Guarantee Insurance will be enforceable in favor of the Insurance Institution in order to obtain the due payment from the user of its services and shall serve as an executive title to guarantee the fulfillment of the contractual obligations.

Nevertheless, this chapter will also enter into force in two years, along with the New Law of Insurance and Bond Institutions, until April 4^th, 2015.

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For additional information, you may contact any of the members of our Corporate & Business Practice Team.