Insurance laws Puerto Rico (US)
Puerto Rico's insurance laws are primarily codified in Title 26 of the Laws of Puerto Rico, known as the Puerto Rico Insurance Code. This comprehensive legal framework governs the authorization, regulation, and operation of insurance entities within the jurisdiction.
đ Key Components of the Puerto Rico Insurance Code
1. **Authorization of Insurers (Chapter 3)**To qualify for authority to transact insurance in Puerto Rico, an insurer must
Be a stock, mutual, reciprocal, cooperative, or Lloydâs insurer of the same general type as may be formed as a domestic insurer under this title
Have paid-in capital or surplus as specified and required under this title, based upon the type and domicile of the insurer and the kinds of insurance proposed to be transacted
Transact or propose to transact in Puerto Rico only those insurances which are among those authorized by its charter and among those it is authorized to transact in the state where it is held its deposit hereinafter required, and only such insurance as meets the standards and requirements of this title
Be not ineligible for such authority by reason of any provision of its charter or law of the state or country of its domicile
2. **Insurance Holding Company System Regulatory Act (Chapter 44)**This chapter regulates the relationships and transactions within insurance holding company systems to ensure that
Transactions are fair and reasonable
Charges or fees for services are reasonable
Expenses incurred and payments received are properly credited to the insurer or health service organization
Books, accounts, and records of each party to such transactions are maintained to clearly and accurately disclose the nature and details of the transactions
The surplus of the insurer or health service organization is reasonable in relation to its liabilities and is sufficient to meet its financial obligations Additionally, insurers must notify the Commissioner of their intention to engage in certain transactions within the holding company system at least 30 days in advance
3. **Reinsurance Regulations (Chapter 4)**Chapter 4 outlines the conditions under which domestic insurers may cede reinsurance, including
Requiring prior written authorization from the Commissioner if a domestic insurer intends to reinsure 75% or more of its direct risks
-îEstablishing guidelines for credit for reinsurance, including the recognition of credit for reinsurance obtained from foreign insurers not authorized to transact insurance in Puerto Rico
4. **Reinsurance Credit Amendments (Law 37-2022)**In 2022, Puerto Rico adopted provisions from the Dodd-Frank Act through Law 37-2022, amending Chapter 46 of the Insurance Code This amendment allows foreign reinsurers domiciled in "Reciprocal Jurisdictions" to be regulated under the same conditions as domestic reinsurers, including the elimination of collateral or guarantee requirements for reinsurance contracts This change aims to expand reinsurance options for domestic insurers and integrate Puerto Rico more closely into the international reinsurance market
đď¸ Regulatory Authority
The Office of the Commissioner of Insurance (OCS) is the primary regulatory body overseeing the insurance industry in Puerto Ric. It is responsible for ensuring compliance with the Insurance Code, granting licenses to insurers and intermediaries, and protecting the interests of policyholder. The OCS provides detailed information on authorization requirements for international insurers and reinsurers on its official website.
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