By Javier Pérez Moreno / Financial and Banking
What is an insurance and bonding entity?
An insurance and bonding entity is an individual or a legal entity duly authorized by the To carry out commercial activities consisting of exchanging proposals and their acceptance, marketing, and advice for the execution of insurance or bonding agreements, their maintenance, modification, renewal, or cancellation.
Intermediaries must carry out their activities in compliance with the Insurance and Bonding Institutions Law, Insurance and Bonds Agents Regulations, and all the other applicable provisions. Additionally, the intermediaries must comply with the information provided by the Institutions and their rates, policies, endorsements, and other information they use.
Regulatory Authority
The authority responsible for the inspection and supervision of insurance and bonding entities is the National Insurance and Surety Commission, a Decentralized Body of the Ministry of Finance and Public Credit.
The National Insurance and Surety Commission will be in charge of supervising and regulating the operation of the Intermediaries, as well as granting the corresponding authorizations to the corporations that wish to start operations in Mexico.
Requirements for the Authorization of Legal Entity Agents
The companies incorporated as Intermediaries must submit a formal request to the National Insurance and Surety Commission indicating its corporate name, the names of the partners, ownership interest, and a registered office to hear and receive notices.
In addition, they must submit a general project of the company organization following the Insurance and Bonds Agents Regulations and the Sole Insurance and Surety Circular. They also must submit a draft of the company’s bylaws, which must comply with the General Corporation Law and the Sole Insurance and Surety Circular.
Subsequently, and if the National Insurance and Surety Commission approves the request employing an authorization opinion, the National Insurance and Surety Commission will set 90 (ninety) calendar days to prepare and deliver additional documents.
Once all requirements are met, the National Insurance and Surety Commission will issue a final authorization, valid for an indefinite term. Likewise, the Intermediary must designate prospective Agents who will be authorized to carry out insurance and bonding brokerage activities.
Error and Omission Policy
One of the requirements that the National Insurance and Surety Commission imposes on brokers for the definitive authorization issuance is to have a Civil Liability Insurance Policy for Errors and Omissions, which must cover the risks related to their brokerage activities. This insurance must be annually renewed and submitted to the National Insurance and Surety Commission within 15 (fifteen) business days from the policy expiration.