Technical Standards for the Registration of Entities that Commercialize Mass Insurance Policies

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

THE COMMITTEE OF STANDARDS OF THE CENTRAL BANK OF RESERVE OF EL SALVADOR,

CONSIDERING:

I. That Article 51 of the Insurance Companies Law establishes that the activities of promotion and placement of insurance carried out by insurance companies may be performed through any company or society registered in the registry kept by the Superintendence, prior to the celebration of the agreements as appropriate, provided that the contracting by the client is voluntary and that it concerns policies that are suitable for mass commercialization.

II. That Article 7 letter e) of the Law on Supervision and Regulation of the Financial System establishes that insurance companies, their branches abroad, and the branches of foreign insurance companies established in the country are subject to the provisions of said Law and therefore to the supervision of the Superintendence of the Financial System.

III. That Article 78 letter j) of the Law on Supervision and Regulation of the Financial System establishes that the Superintendence will organize and keep updated other registries that special laws establish.

IV. That Article 99 first paragraph of the Law on Supervision and Regulation of the Financial System establishes that the Central Bank of Reserve of El Salvador, through its Committee of Standards, is the institution responsible for the approval of the technical regulatory framework that must be issued in accordance with this Law and other laws regulating supervised entities.

V. That in accordance with Article 101, fourth paragraph of the Law on Supervision and Regulation of the Financial System, the powers to approve, modify, and repeal technical norms that must be complied with by the members of the financial system and other supervised entities, which were attributed to the Superintendencies or the Boards of Directors of the Superintendencies whose organic laws were repealed with this Law, are transferred to the Central Bank of Reserve of El Salvador.

THEREFORE,

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

by virtue of the regulatory powers conferred by Article 99 of the Law on Supervision and Regulation of the Financial System,

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

CHAPTER I OBJECT, SUBJECTS, AND TERMS

Object Art. 1.- These Standards aim to establish the requirements for the registration of entities that promote and place mass insurance policies on behalf of insurance companies.

Subjects Art. 2.- The subjects obliged to comply with the provisions established in these Standards are: a) Insurance companies constituted in the country; b) Branches of foreign insurers established and authorized in the country; c) Cooperative associations that provide insurance services; and d) Mass insurance commercializers, who are members of the Financial System.

Terms Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning: a) Central Bank: Central Bank of Reserve of El Salvador; b) Commercializer(s): Any company or society registered in the registry kept by the Superintendence of the Financial System, dedicated to the mass commercialization of insurance policies; c) Entity/entities: Subjects obliged to comply with the provisions of these Standards, described in Article 2; d) Registry: Registry of entities that commercialize mass insurance policies; e) Insurance Companies: Includes companies constituted in El Salvador, branches of foreign insurers, and cooperative associations that provide insurance services; and

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

f) Superintendence: Superintendence of the Financial System.

CHAPTER II REQUIREMENTS FOR REGISTRATION

Art. 4.- Insurance companies that intend to offer and contract mass insurance policies through Commercializers must previously manage the registration of these in the Registry kept by the Superintendence for such purposes.

Art. 5.- Insurance companies must request the necessary information from commercializers for the purposes of carrying out the corresponding registration in the Registry. Likewise, they must provide the Superintendence with any information related to insurance operations carried out.

Art. 6.- For registration in the Registry, the insurance company must present a request signed by its President, Legal Representative, or an attorney-in-fact to the Superintendence, including the data and information of the commercializers, according to the following: a) Name, corporate name, or denomination; b) Residential address; c) Main activity or business; d) Legible copies of the instrument of constitution and its reforms, duly registered in the corresponding Registry, in which it is evident in literal or generic terms that among its purposes or corporate object, the performance of acts such as the one requested is included; e) Copy of the certification of the agreement of the corresponding body, to carry out operations for the commercialization of insurance policies, issued by the competent administrator; f) Valid credential of the legal representative duly registered in the corresponding Registry; g) Valid certificate issued by the General Directorate of Penal Centers stating that the President or Legal Representative of the Commercializer has no criminal record; h) Financial statements with the external auditor's opinion, corresponding to the three years prior to the date of the registration request; i) Copy of the most recent Financial Position Balance Sheet and Statement of Results, as of the date of the request; j) Agreement entered into between the insurance company and the commercializer, in which the conditions for the mass contracting of insurance must be established, specifying:

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

i. The types of insurance policies to be commercialized en masse; ii. Clause stipulating that the insured will not be charged any additional fee on the established premium; iii. That commercializers must provide information to users clarifying that the responsibility for the insurance taken is that of the respective insurance company and that the use of said means for contracting does not constitute certification of its solvency; iv. That the commercializer must provide information on the coverages and characteristics of the policy to be commercialized in such a way that it is understandable to potential insured persons, in accordance with what is established in the Consumer Protection Law; v. Whether the collection of premiums will be carried out by the insurance company or by the commercializer; vi. Clearly establish that the insurance company will be responsible to the client in the process of presenting claims and paying indemnification, in cases where a loss materializes for the insured or beneficiaries; vii. The explicit indication that the commercializer acts before the client and/or insured, on behalf and under the responsibility of the insurance company, regarding the insurance policies taken; viii. The measures that the insurance company will require the commercializer to implement, so that the latter complies with measures to mitigate or cover risks associated with insurance operations, including those related to the prevention of money laundering and asset financing, terrorism financing, and the proliferation of weapons of mass destruction; ix. Indication that commercializers must apply and execute the mechanisms required by the insurance company for the identification, attention, and knowledge of clients to whom insurance has been granted; if the commercializer has established procedures, it may use them for such purposes, provided that they are in concordance with the mechanisms required by the insurance company; and x. Compliance with the submission of information and documentation of the insured by the commercializer to the insurance company, which must be sent within ten business days following the subscription of the insurance. The information of the insured must contain as a minimum, the policies subscribed, type and Number of Identity Document, Tax Identification Number (TIN) where applicable, gender, certificate number, validity, amount and periodicity of the premium, and other information that the insurance company considers pertinent.

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

Additionally, clauses that facilitate an adequate review of the respective performance of operations and provision of services through the commercializer, by the insurance companies, the Superintendence, and other supervisory bodies, must be included. k) Models of policies to be commercialized. In the event that the policy to be commercialized or any of the documents forming part of it were already deposited with the Superintendence, they must clarify in the request the date and number of the note in which they were notified of the deposit of the same with the Superintendence. Each time a new mass commercialization policy is promoted, the insurance company must send the corresponding model to the Superintendence for the respective deposit; l) Organizational structure of the commercializer with indication of the unit or units responsible for the commercialization of insurance policies; m) Detail of the points of sale, channels, or digital media that commercializers will have; n) Annual Training Plan for the personnel who will attend the mass commercialization of insurance, which must include a specific training program to be developed prior to the start of commercialization. Once the commercializer is registered with the Superintendence, the insurance company must send to it, within the first five business days after each training has been imparted, the list of attendance signed by the participants in cases where it was imparted in person or the participation record when it was by digital means, where attendance is proven as evidence of the implementation of said program; o) Manuals of Procedures and Internal Control Policies for the mass commercialization of insurance, which must contain as a minimum, the following descriptions:

i. Procedures and controls for the commercialization of policies; ii. Delivery of policy certificates to the insured; iii. The receipt of premiums; iv. The transfer of received premiums to the insurance company and the entry of commissions, according to the term established in the agreement; and v. Claims by the insured. p) Procedure for the submission of information and documentation of the insured by the commercializer to the insurance company, according to what is established in letter j) roman x) of this article, specifying the position of the person delegated for its submission, as well as the attention of queries derived from the information submitted; q) Inform regarding the technological infrastructure to be used for the mass commercialization of insurance, according to the following:

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

i. Name of the Computer System to be used for the registration of transactions, and if they are online; ii. Technical documentation of the Hardware and Software of the technological platform where the insurance policy to be commercialized will be administered, as well as the communication diagram and security mechanisms between the insurance company and the commercializer; and iii. The platform with which the insurance policy will be administered, once installed, must be tested by both parties in the different processes of the promotion and placement of the insurance to be commercialized, and must be endorsed through certification by the Internal Auditor of the insurance company as evidence of the tests performed; this certification must be sent to the Superintendence. r) Document with instructions for sales management with the client (Sales Script), considering what is stipulated in Article 30 of the Regulations of the Consumer Protection Law, in case the sale is made by telemarketing or digital media; and s) Advertising material to be used for the initial promotion of the insurance policy and at the moment of contracting, detailing in its content as a minimum what is required in Article 30 of the Regulations of the Consumer Protection Law.

In the case that the commercializer corresponds to an entity supervised by the Superintendence, and the documentation required in letters f), g), and h) of this article, was already in the possession of this, and the same is duly updated and its effects have not expired for legal causes, it will not be necessary to present it again, the insurance company must refer to said situation in the presentation of the request.

The Superintendence must publish on its website the Registry of Commercializers that are with valid authorization.

Procedure for registration of commercializers Art. 7.- Upon receipt of the registration request in the registry, in accordance with what is established in Article 6 of these Standards, the Superintendence will proceed to verify compliance with the requirements defined in these Standards, as well as the most recent credit rating of the commercializer in the Financial System prior to the presentation of the request, when applicable, which must be thirty business days. In any case, the denial must be reasoned.

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

If the request is not accompanied by the complete and duly formatted information detailed in Article 6 of these Standards, the Superintendence, due to the lack of necessary requirements, may require the applicants to present the missing documents within a period of ten business days counted from the day following the notification, a period that may be extended at the request of the company, when there are reasons justifying it.

The Superintendence in the same notice will indicate to the applicants that if the information is not completed within the aforementioned period, it will proceed without further procedure to archive the request, reserving its right to present a new request.

If after the analysis of the documentation presented according to Article 6 of these Standards, the Superintendence has observations or when the documentation or information is not sufficient to establish the facts or the information that is intended to be accredited, the Superintendence may warn the applicants to remedy the deficiencies communicated to them or present additional documentation or information requested.

Applicants will have a maximum period of ten business days counted from the day following the notification, to resolve the observations or present the information required by the Superintendence.

The Superintendence may, through a reasoned resolution, extend by up to ten more business days the period indicated in the previous paragraph, when the nature of the observations or deficiencies warned requires it.

The request and documentation may be presented through the means made available by the Superintendence, which may be electronic. In any case, the period referred to in the first paragraph of this article will begin to count from the next business day after the request has been presented.

Extension Period Art. 8.- Applicants may present to the Superintendence a request for extension of the periods indicated in the fifth paragraph of Article 7 of these Standards, before the expiration of said period, must express the grounds on which it is based and propose, if applicable, the pertinent proof.

The extension period may not exceed ten business days and will start from the next business day following the expiration date of the original period.

Suspension of the period Art. 9.- The period of thirty business days indicated in the first paragraph of Article 7 of these Standards, will be suspended for the days that elapse between the notification of the requirement to complete information or documentation referred to in the second and fifth paragraphs of said article, until the interested parties remedy the observations required by the Superintendence.

Once the complete and duly formatted documentation is presented, the Superintendence will proceed to give a response if the request is authorized or denied, which it will notify within a maximum period of three business days from the date the resolution is issued.

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

CHAPTER III OF THE RESPONSIBILITIES OF INSURANCE COMPANIES AND COMMERCIALIZERS

Of the operations Art. 10.- The insurance company assumes complete responsibility before the insured for all operations derived from insurance policies, carried out through the commercializers that have been contracted with them.

Insurance companies will be responsible for ensuring that commercializers have the due registration in the Superintendence to operate as such.

Of the update and submission of information Art. 11.- Insurance companies must ensure that the commercializers they operate with keep their contact information updated with the Superintendence.

Art. 12.- The commercializer member of the financial system registered in the Superintendence will be responsible for communicating to it any modification of the information that affects that contained in the registry entry, presenting for this purpose the corresponding documentation within a maximum period of thirty days subsequent to the event that motivates it.

In case of modifications of address, telephone, email, as well as the name and position of the persons designated to receive notifications or to receive documentation related to the commercializer, this must inform the Superintendence within a maximum period of seven business days.

When the commercialization is carried out by an entity that is not part of the members of the financial system, to which the Law on Supervision and Regulation of the Financial System refers, it will be the insurance company responsible for sending to the Superintendence the information established in the first and second paragraphs of this article.

Art. 13.- In accordance with what is established in the agreement entered into between the insurance company and the commercializer, referred to in letter j) of Article 6 of these Standards, the commercializer is responsible for submitting the updated information within the period and periodicity requested by the insurance company with respect to Technical Standards for the Submission of Information by Insurance Companies for the Preparation of Reports -39), approved by the Central Bank through its Committee of Standards.

Prevention of money laundering and terrorism financing Art. 14.- The operations carried out by insurance companies through commercializers must comply with the Laws, Instructions, and Regulations in force related to the prevention of Money Laundering and Assets, Terrorism Financing, and the Proliferation of Financing of Weapons of Mass Destruction.

Insurance companies and commercializers will be responsible for the verification of compliance and management of the same.

In any case, in insurance companies, Internal Audit, in attention to the -15) approved by the Central Bank of Reserve through its Committee of Standards, will incorporate in its annual plan the compliance with these Standards.

CHAPTER IV OTHER PROVISIONS AND VALIDITY

Time of safeguarding of information Art. 15.- The Registry, whether physical or electronic, of operations, transactions, and client identification carried out by insurance companies through commercializers, must be preserved according to the period established in the Law Against Money Laundering and Assets.

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

Art. 16.- Any modification in the conditions authorized by the Superintendence for the mass commercialization of insurance, must be requested previously by

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TECHNICAL STANDARDS FOR THE REGISTRATION OF ENTITIES THAT COMMERCIALIZE MASS INSURANCE POLICIES

Approval: 06/28/2024 Validity: 07/16/2024

the insurance company to the Superintendence, providing the relevant documentation and justification. The Superintendence will evaluate the request and may approve, deny, or modify the conditions as deemed necessary to ensure compliance with regulatory standards and consumer protection.

Validity Art. 17.- These Standards will enter into force on the date indicated in the header of this document.

San Salvador, June 28, 2024.

[Signature]

Committee of Standards Central Bank of Reserve of El Salvador