Bill that increases state control of insurance sector to be discussed

Tuesday, April 14, 2009

Venezuela's congress on Wednesday (Apr 15) will start a public hearing to discuss a major bill aimed at significant reform of the country's insurance landscape and increased state control over the sector.

The insurance and reinsurance subcommittee of the congress' finance committee will be conducting the public hearing, congress said on its website. The subcommittee will discuss the bill with the national insurance council and representatives of insurance companies, insurance brokers and insurance agents, among others.

Deputy Simón Escalona highlighted the importance of passing the bill - which was approved in a first debate in March and consists of 309 articles - during the current congressional period, according to the website.

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The bill eliminates bancassurance, as it is "very negative" from all points of views, said Escalona, adding that there are numerous customer complaints about banks forcing clients to buy life insurance, the website reported.

According to a bill document, the insurance regulator (Superintendencia de Seguros) - which would change its name to Superintendencia de la Actividad Aseguradora - would be the body through which the state would increase its control over the sector.

The new regulator would oversee insurers, reinsurers, insurance brokers, insurance agents, prepaid medical services companies and cooperatives, among others.

Prepaid medical services companies and cooperatives are not overseen by the insurance regulator.

Among other responsibilities, the new regulator would have authority to set prices and establish terms for insurance contracts.

The article 242 of the new legislation would create "seguros solidarios" that would provide coverage for retirees, seniors and people earning monthly salaries of up to 25 tax units (1,150 bolívares).

Today's insurance and reinsurance law dates back 1995.

At end-February, there were 50 insurance companies operating in Venezuela, according to latest statistics from Sudeseg.

The Venezuelan insurance industry reported combined net profits of 1.06bn bolívares (US$495mn) in 2008.