By means of a recent legal opinion, the Financial Superintendency of Colombia (hereinafter, the “SFC”) made important considerations regarding the regulation of microinsurance in Colombia:
- General regulatory framework
Microinsurance does not have specific regulation in Colombia. Therefore, its operation and procurement are subject to the same rules governing insurance contracts set forth in Book Four, Title V of the Colombian Commercial Code and the provisions of the Organic Statute of the Financial System.
- Marketing
In the absence of a special regime, insurance companies may market these products through the same channels authorized for other lines: direct sales, insurance intermediaries, correspondents, or by entering into network‐use agreements with other supervised entities.
- Characteristics of a microinsurance
The SFC also recalled that the Financial Inclusion Form for Insurance establishes four general conditions for an insurance product to be considered microinsurance: (i) its target population; (ii) must be voluntary insurance; (iii) the insurance must be easily understood and managed by users; and (iv) the premium amount, depending on the type of insurance.
- Prior authorization
Although they lack their own regulation, microinsurance products possess all the characteristics of traditional insurance. Their offering constitutes the exercise of insurance activity, reserved to duly incorporated and SFC authorized insurance companies and cooperatives. Consequently, offering these products without the requisite governmental authorization constitutes the illegal practice of the insurance business.
For more information, contact our insurance and reinsurance team.