RegAlertRule · NI-LAW · 25 Aug 2010
Ley No. 733, Ley General de Seguros, Reaseguros y Fianzas (La Gaceta, Diario Oficial No. 162, 163 y 164, 25-27 de agosto de 2010) (Law No. 733, General Law of Insurance, Reinsurance and Surety Bonds)
English translation of the Spanish text from superintendencia.gob.ni (the Spanish text is the official one). Retrieved 2026-10-26.
Digital Collection "La Gaceta" Nicaraguan Legal Digest LA GACETA OFFICIAL DAILY Telephones: 2228-3791 / 2222-7344 Print Run: 750 Copies 28 Pages Price C$ 45.00 Córdobas YEAR CXIV Managua, Wednesday 25 August 2010 No. 162 4598 TABLE OF CONTENTS Page.
NATIONAL ASSEMBLY Law No. 733 General Law on Insurance, Reinsurance and Sureties ................4599 GOVERNMENT HOUSE Decree No. 54-2010 ...........................................................4608 Presidential Agreement No. 175-2010 ..................................4608 Presidential Agreement No. 178-2010 ..................................4609 Presidential Agreement No. 181-2010 ..................................4611 Presidential Agreement No. 182-2010 ..................................4611 MINISTRY OF FOREIGN AFFAIRS Ministerial Resolution No. 005-2010 ................................4611 Ministerial Resolution No. 006-2010 ................................4612 Ministerial Resolution No. 007-2010 ................................4613 MINISTRY OF EDUCATION Tender by Registration No. 49-2010 .................................4613 MINISTRY OF HEALTH Restricted Tender No. 29-08-2010 ..............................4614 NICARAGUAN SOCIAL SECURITY INSTITUTE Tender by Registration No. 17-2010 ................................4615 NATIONAL TECHNOLOGICAL INSTITUTE Restricted Tender No. 14-2010 ...................................4615 Restricted Tender No. 15-2010 ...................................4616 NATIONAL WATER AUTHORITY Restricted Tender No. 02-2010 ...................................4616 CENTRAL BANK OF NICARAGUA Restricted Tender UA-08-31-10 .................................4616 MUNICIPALITIES Municipality of Managua Tender Notice No. 18 ...............................................4617 Municipal Municipality of Jinotega Call for Tender ............................................4617 Municipal Municipality of Tisma Purchase by Quotation No. 023/2010 ...............................4617 UNIVERSITIES Professional Degrees ..........................................................4618
JUDICIAL SECTION Notice .....................................................................................4625 Guardian Ad-Litem ...........................................................4625 Declaration of Heir ...................................................4625
Digital Collection "La Gaceta" Nicaraguan Legal Digest LA GACETA - OFFICIAL DAILY 4599 25-08-10 162 NATIONAL ASSEMBLY LAW No. 733 The President of the Republic of Nicaragua To its inhabitants, Know ye:
That, THE NATIONAL ASSEMBLY Has ordered the following:
GENERAL LAW ON INSURANCE, REINSURANCE AND SURETIES
TÍTULO I APLICACIÓN DEL RÉGIMEN DE ESTA LEY
Single Chapter Purpose, Scope and Supervision
Artículo 1 Objeto.
This Law is of public order and social interest and its purpose is to regulate the establishment and operation of insurance, reinsurance, surety companies and branches of foreign insurance companies; as well as the participation of insurance intermediaries and auxiliaries, in order to safeguard the rights of the public and facilitate the development of the insurance activity.
It is a special function of the State, through the Superintendency of Banks and Other Financial Institutions, to safeguard the interests of the insured who entrust their premiums to insurance, reinsurance or surety institutions and to their intermediaries, which are legally authorized and registered to carry out such operations. In the application of this Law, the State shall reinforce the security and confidence of the public in said institutions, promoting adequate supervision that ensures the liquidity and solvency of the institutions governed by this Law, seeking a balanced development of the insurance system that generates healthy competition and a diversified and efficient portfolio of products for consumers.
Whenever this Law uses the term "Insurance Entity", "Insurance Company" or their equivalents, whether in uppercase or lowercase, singular or plural, it shall be understood to refer to entities operating in insurance, reinsurance, surety and re-surety, national or foreign, privately, state or mixed owned, except for the exceptions expressly contemplated in this Law.
Art. 2 Alcance.
The following natural or legal persons are subject to the scope of application of this Law:
1) Legal persons, whether national or foreign, domiciled in the country, that engage in underwriting or marketing insurance, reinsurance and bonds.
2) Natural or legal persons that engage in the country in activities related to the intermediation of insurance, bonds, reinsurance and re-bonding contracts.
3) Natural or legal persons that act as auxiliaries of insurance companies and carry out actuarial activities, concerning this matter, risk assessment and indemnification of claims for damages covered by said contracts and consultancies in general.
4) Companies or entities of a state or mixed nature, that engage in underwriting or marketing insurance, reinsurance and bonds.
This Law is not applicable to activity derived from social security.
Art. 3 Conceptos.
For the purposes of application of the provisions contained in this Law, the terms indicated in this article, whether in uppercase or lowercase, singular or plural, shall have the following meanings:
Real assets: It is the total assets less the non-realizable or recoverable asset called fictitious asset.
Non-real assets or fictitious assets: They are those that do not constitute effective investment, that is, they do not have a clear realization value and income-producing capacity. The following must be included within these:
various debtors, except accounts receivable; furniture and equipment, other assets and deferred charges.
Addendum: Document that is attached to an insurance policy in which certain modifications or declarations are established in the previous content thereof, leaving it in a new tenor.
Insurance agents: They are Nicaraguan natural persons or foreigners residing in the country, authorized by the Superintendent and registered with the Superintendency, dedicated to the placement of insurance on account and in the name of an insurance company authorized to operate in the country, who have received technical and practical training in insurance matters.
Insurance agencies: They are commercial companies constituted by insurance agents authorized by the Superintendent and registered with the Superintendency, whose sole corporate purpose is to offer insurance only in the name of an insurance company, promote the subscription of the corresponding contracts and obtain their renewal. The subagents of the insurance agency shall maintain a commercial relationship with it.
Adjusters or claims liquidators: Natural or legal persons authorized by the Superintendent, and registered with the Superintendency, with special theoretical and practical knowledge about the causes producing the claims and the valuation of the damages caused so that the insurance entity, based on its report, determines the amount of the corresponding indemnity.
Insured: Natural or legal person who, through the payment of a premium, receives the protection of the insurance company, which gives them the right, by virtue of the provisions of the insurance policy, to collect the indemnities that occur.
Beneficiary: Person designated in the policy by the insured or the policyholder as the holder of the indemnity rights established in said document.
Effective Capital: It is the capital requirement intended to back the technical risks that affect an institution (solvency), investment risks, credit risks and other risks that may affect it.
Risk capital: It is the capital that represents the own sources of financing of the insurance company and is constituted by the difference between real assets and enforceable liabilities.
Portfolio: Set of policies or insurance, reinsurance and bond contracts issued and subscribed, whose risks are covered by the insurance companies.
Abusive clauses: Clauses that totally or partially prohibit or impede the exercise of a right of the insured that this Law grants and therefore produce no effect.
Coinsurance: Participation of two or more insurers in the coverage of the same risk, by virtue of direct contracts made by each of them identifying the others, indicating the percentage of participation in the risk that each has.
Mass insurance marketers: They are legal persons, authorized by the Superintendent and registered with the Superintendency for
Digital Collection “La Gaceta” Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4600 25-08-10 162 to place mass insurance as an added service to their main functions.
These entities are not authorized to underwrite insurance, but shall only distribute coverages underwritten by insurance companies.
General conditions: It is the set of basic principles established by the insurer to regulate all insurance contracts it issues in the same branch or modality. The rules regarding the extension and object of the insurance, risks excluded on a general basis, form of settlement of claims, payment of indemnities, subrogation, communications, jurisdictions, among others, are established.
Special conditions: It is the set of provisions that forms part of the insurance policy, in which the modifications, extensions or repeals of the general or particular conditions that have resulted from the agreements between the insurer, the insured and/or policyholder are set forth.
Particular conditions: Document that forms part of the policy and that sets forth the aspects specifically relating to the individualized risk that is insured and in particular: name and domicile of the policyholder, insured and beneficiary; concept under which it is insured, effect and duration of the contract, amount of the premium, surcharges and taxes, insured objects, covered risks and their situation, nature of the covered risks, scope of coverage, among others.
Board of Directors: Board of Directors of the Superintendency of Banks and Other Financial Institutions.
Policyholder: Person who signs with an insurance entity a policy or insurance contract.
Insurance contract: Commercial contract for the provision of future services, by which an insurance company undertakes, through the payment of a premium, to indemnify another natural or legal person for the losses or damages suffered as a consequence of probabilistic, fortuitous or force majeure events, or to pay a sum according to the duration or events of the life of one or several persons.
Insurance broker: Insurance brokers are natural or legal persons authorized by the Superintendent and registered with the Superintendency, dedicated on their own account and in their own name to soliciting, negotiating or obtaining insurance in Nicaragua, on behalf of third parties, issued by insurance companies authorized to operate in the country.
Spin-off: Process by means of which an insurance company, without dissolving, transfers in block one or several parts of its patrimony to one or more insurance companies. It shall also be considered that there is a spin-off when an insurance company dissolves without liquidating, dividing its patrimony into two or more parts, transferring them to several insurance companies or allocating it to the creation of new companies.
Risk assessor: These are natural or legal persons, authorized by the Superintendent and registered with the Superintendency, specialized in conducting studies using a scientific methodology to determine, within a specific period of time, the probability of personal injury or property loss occurring, as well as their quantification as a prior action to the insurance process, so that the insurance company may assess the risk to be covered.
Surety bond: It is an accessory commercial contract under which the surety company undertakes to indemnify the beneficiary, up to the limit established in the contract, in the event of breach by the bonded party of its contractual obligations, through the options stipulated therein. The expenditures or payment of the surety bond made by the surety must be reimbursed by the bonded party or by whoever guarantees the bonded party before the issuing company of the surety bond.
Fronting: It is an operation by which the insurance entity that assumes a risk is designated, but actually transfers its entire coverage or a large part of it to other foreign insurers or reinsurers.
Merger: Process by which two or more insurance companies are dissolved without being liquidated in order to integrate a new one, or when an existing one absorbs another or others. The new insurance company or the incorporated one acquires ownership of the rights and obligations of the dissolved companies.
Indemnification: Amount that the insurance entity is contractually obligated to pay in the event of a loss. It is consequently the consideration corresponding to the insurer in exchange for the insured's obligation to pay the premium. The purpose of indemnification is to achieve an economic restoration in the assets of the insured affected by a loss, either through a replacement of the damaged object or through the delivery of a certain amount of money, or through the provision of services. However, in either case, there must be a double limitation on the indemnification: on the one hand, it cannot be higher than the sum insured in the policy for the risk affected by the loss; and on the other, it cannot exceed the real value of the damaged object immediately before the accident occurred.
Claims investigator: These are natural or legal persons registered with the Superintendency, who at the request of a party intervene in the investigation or obtaining of data related to a loss, and must submit to their principal the report on the occurrences of the loss.
Superintendency Law: Law No. 316, “Law of the Superintendency of Banks and Other Financial Institutions,” approved on 29 September 1999 and published in La Gaceta, Official Gazette No. 196 of 14 October 1999.
General Banking Law: Law No. 561, “General Law of Banks, Non-Bank Financial Institutions and Financial Groups,” approved on 27 October 2005 and published in La Gaceta, Official Gazette No. 232 of 30 November 2005.
Microinsurance: Contract under which protection against specific and limited risks is granted to low-income persons, as well as to small entities, in exchange for the payment of low-cost premiums.
Callable liabilities: These are liabilities that represent a current, immediate or term responsibility, defined or estimated, on the part of the insurance company and that do not depend on the occurrence of a fortuitous event for their enforceability.
Appraiser: Person with specialty and proven experience in appraisal work.
Premium: The value of the installment or payment that the policyholder or insured must satisfy to an insurance company, as consideration for the coverage of the risk specified in the insurance, reinsurance and surety contract.
Retention limit: Maximum limit of the total guaranteed sum insured that the insurance company may assume under its own account and responsibility in a proportional reinsurance contract.
Facultative reinsurance: That in which the ceding company does not undertake to cede nor does the reinsurance company undertake to accept a certain class of risks, but rather these must be communicated individually, establishing for each specific case the conditions that shall govern the cession and acceptance.
Proportional reinsurance: That in which the reinsurer participates in a fixed proportion in all risks assumed by the cedent in certain lines or modalities of insurance.
Reinsurance or re-surety: The commercial contract under which
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4601 25-08-10 162 a reinsurance or re-surety company accepts wholly or partially a risk already covered by the direct insurer, or the remainder exceeding the amount insured by the direct insurer.
Retrocession: Commercial contract and technical instrument by which a reinsurance company cedes to another reinsurance company part of the risk accepted in reinsurance from another reinsurer.
Subagents: These are natural persons, Nicaraguan or foreigners residing in the country, authorized by the Superintendent at the request of an insurance brokerage company, or an insurance agency to place insurance on account and in the direct name of the requesting company. The proposed subagents must have received technical and practical training in insurance matters.
Mass insurance: These are insurances characterized by being products standardized as merchandise with a simplified form of marketing and distribution, whose purpose is to place insurance at costs more accessible to the public.
Mass insurance is not an individual line but a particular way of organizing and distributing insurance.
Loss: It is the realization of the insured risk provided for in the insurance contract, from which the insurer's indemnification obligation arises.
Loss ratio: Coefficient or percentage that reflects the existing proportion between the cost of claims arising in a given set or portfolio of policies and the overall volume of premiums earned by such operations in the same period.
Insurance application: It is the document completed by the policyholder, by means of which they request from the insurance entity the coverages described in said document and, consequently, the issuance of the corresponding insurance policy of any nature.
Sum insured: Value attributed by the holder of an insurance contract to the goods covered by the policy and whose amount is the maximum quantity that the insurer is obliged to pay, in the event of a claim.
Superintendency: Superintendency of Banks and Other Financial Institutions.
Superintendent: Superintendent of Banks and Other Financial Institutions.
Art. 4 Authorization, Oversight and Auditing.
The Superintendency shall authorize, oversee and audit the companies and natural persons referred to in this Law. Therefore, the activity of insuring, reinsuring and bonding may only be carried out by legal persons, public, private or mixed, authorized to operate as such by the Superintendency in accordance with the provisions of this Law and other applicable rules.
Art. 5 Objectives of Supervision.
The Superintendency shall have, in addition to the provisions of the Superintendency Law, the following objectives with respect to the supervision of insurance companies, insurance auxiliaries and insurance intermediaries:
1) Regulate the activity of insurance, reinsurance and bonds, their intermediation and marketing, in such a way that the insurance market is dynamic, transparent and organized;
2) Foster transparency in risk profiles and quality of insurance companies, both to grant correct incentives to their users and for efficient management thereof;
3) Contribute to the establishment of a modern and efficient insurance system, attending to technical criteria of specialization in the field of insurance, reinsurance and bonds according to the lines of business or operations they carry out;
4) Update the supervision modalities or methodologies, adapting them to the best international practices and focused on risk-based supervision;
5) Ensure the liquidity and solvency of insurance companies, reinforcing the security and confidence of the public in them; as well as generating healthy competition and a portfolio of diversified and efficient products for users;
6) Guarantee protection of the rights of users or clients who entrust their premiums to insurance, reinsurance or bond institutions and their intermediaries, as well as oversee respect for the same in the face of the development of the insurance market.
Art. 6 Powers.
The Superintendent shall have the following powers with respect to the supervision of insurance companies, insurance auxiliaries and insurance intermediaries:
1) Issue the necessary instructions for the application and compliance with the laws, regulations and other rules that regulate the supervised natural and legal persons;
2) Supervise, oversee and control the operations of insurance companies, intermediaries, auxiliaries and other persons subject to this Law. For this purpose, it may examine the operations, books, accounts, files and documents;
request the financial statements and other reports on the dates it considers convenient to specify the capital and reserve investments; and in general, request all data and background information that allows it to become informed of their status, development, solvency and compliance with the applicable legal regime. All information provided by the company must be truthful, sufficient and timely. Every request for information by the Superintendent must be attended to without alleging any reservation;
3) When required in the exercise of its faculties, convene the shareholders, members of the board of directors, president, managers or other officials or employees of the insurance companies;
4) Investigate acts that suggest the execution of operations violating this Law, and for this purpose may order inspection visits to the presumed responsible parties and, where appropriate, order the suspension of said operations;
5) Inform the Board of Directors about the facts or situations that in its criteria affect the proper functioning or solvency of the insurance companies, proposing the pertinent measures;
6) Investigate administrative infractions of which it becomes aware, for non-compliance with the laws on the matter and other applicable legal provisions, and impose the corresponding administrative sanctions in accordance with this Law and the other laws that regulate the activities of the companies, as well as the rules emanating from the Board of Directors and instructions of the Superintendent;
7) Create a registry in which updated copies of the models of the text of the policies and general conditions, particular conditions and addenda, insurance application, questionnaires and all those documents related to the issuance of authorized insurance policies are available. Insurance and bonds may not be issued with policy models that are not registered;
8) Verify the accuracy and sufficiency of the technical and mathematical reserves constituted in accordance with the rules generally issued by the Board of Directors, as well as the reasonableness of the financial statements and other statistical accounting reports requested in accordance with the laws, rules and requirements;
9) Create and maintain the registry of natural or legal persons authorized to carry out the operations reserved for insurance companies, insurance intermediaries and auxiliaries;
10) Prepare, maintain and publish statistics relating to the operations of supervised companies that contain at least the financial statements, solvency margin, required capital solvency, technical indicators, legal information, the lists of insurance intermediaries and other authorized auxiliaries, and other data it considers appropriate;
11) Authorize, supervise and control the activities carried out by insurance, reinsurance and surety intermediaries and auxiliaries;
12) Authorize insurance companies to publish risk assessments, technical and financial indicators carried out by themselves or through national or foreign risk rating agencies, provided that there are no conflicts of interest between the rating company and the insurance companies concerned;
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13) Provide to foreign supervisory authorities information received from the natural or legal persons it supervises, provided it has signed with said authorities information exchange agreements that contemplate the principle of reciprocity, and must in all cases refrain from providing the information when in its judgment it may be used for purposes other than supervision, or for reasons of public order, national security or any other cause agreed in the respective agreements;
14) In the name and on behalf of the corresponding supervised entity, and with prior authorization from the Board of Directors, contract audit services for special cases when it considers it necessary for the better performance of its functions. If the situation justifies it, the Superintendent shall follow the procedure established in article 169 of the General Banking Law, to make effective the payment to the auditing firm; and
15) The others established in this and other laws.
Art. 7 Activities Considered as Insurance, Reinsurance and Surety.
The following shall be considered insurance, reinsurance or surety activities, regardless of the name assigned to them, those that comply with any of the following characteristics:
1) They are governed by a contract that includes the advance payment of a premium and defines coverage limits and payment terms and the rules that shall regulate the contractual insurance relationship between both parties, specifying their respective rights and obligations;
2) The contract has a contingency for the indemnification of a loss suffered or the satisfaction of a capital amount, which is determined by the occurrence of a future and uncertain event that is outside the control of the insured;
3) Random events that result in the payment of indemnities promised in a contract, which shall be measured and provisioned using methods internationally recognized by the insurance sector;
4) The others determined by the Board of Directors.
It corresponds to the Superintendent the power to determine whether an operation is considered insurance, reinsurance or surety, in accordance with the provisions of this article and the corresponding prudential rules.
Art. 8 Applicable Legal Regime.
The natural or legal persons subject to this Law shall be governed first by the provisions of this Law, the General Banking Law to the extent applicable, the Superintendence Law, the general rules issued for this purpose by the Board of Directors and by the instructions issued by the Superintendent. In matters not provided for in the aforementioned laws, rules and instructions, they shall be subject to common legislation.
TITLE II INSURANCE COMPANIES
Chapter I Authorizations
Art. 9 Corporate Form and Name.
To organize and operate as an insurance, reinsurance or surety institution or company, authorization from the Superintendence is required. Every insurance institution or company organized in Nicaragua must be incorporated and operate as a corporation with a single corporate purpose in accordance with this Law, the Commercial Code approved by the National Congress on 30 April 1914 and published in La Gaceta, Diario Oficial No.
248 of 30 October 1916, its amendments and other laws applicable to this type of company insofar as they are not modified by this Law.
These companies may adopt any name they deem convenient, which must be different from any other existing insurance, reinsurance or surety company, always adding the concept of insurance, reinsurance or surety company or another equivalent.
Art. 10 Application for Authorization to Incorporate.
Natural or legal persons that intend to establish an insurance company must submit a written application to the Superintendent, containing the names and surnames or trade name, domicile and profession of all the organizers, who must present the documentation and comply with the requirements demanded below:
1) The draft articles of incorporation and its bylaws.
2) An economic-financial feasibility study, which includes, among other aspects, the feasibility of the insurance, reinsurance and surety products to be offered, the lines to operate and the viability of their operation;
considerations on the market, the characteristics of the insurance company, the projected activity, the organization and administration scheme, the financial bases of the operations projected to be developed, and the conditions in which it will operate according to various contingency scenarios. The Board of Directors may issue rules of general application on this matter.
3) The name and credentials of the persons who will act as members of the board of directors and make up the principal team of its management.
4) The relationships of significant linkage and the determination of their units of interest, under the terms established in article 71 of this Law, of the persons who will be shareholders of the company, members of its board of directors and other persons who will make up the main management team. The Board of Directors may issue general rules regulating the provisions of this numeral.
5) A draft or document evidencing a deposit in the current account of the Superintendency, in the amount of one percent of the minimum mandatory share capital, for the processing of the application. Once they have begun operations, said deposit will be returned to the promoters. If the application is denied, ten percent (10%) of the deposit amount will go in favor of the National Treasury; the balance will be returned to the interested parties. In the event of withdrawal, fifty percent (50%) of the deposit will go in favor of the National Treasury, returning the corresponding balance.
6) Letter of intent or direct backing from reinsurers with whom they intend to place the business of ceded premiums.
7) The other requirements demanded in other laws and those established in a general manner by the Board of Directors, among them, those intended to ensure:
a. The lawful origin of the assets invested or to be invested in the company.
b. Verification that those who will make up its board of directors are not subject to the impediments established in article 44 of this Law.
8) Additionally, each of the shareholders who participate either individually or together with their related parties, in a percentage equal to or greater than five percent of the capital must comply with the following requirements:
a. Solvency: To have the capacity to meet economic commitments through the set of resources that constitute equity or consolidated assets equivalent to the projected investment and, when they are reduced to a lower figure, to inform the Superintendent of this fact as soon as possible.
b. Integrity: That there are no fraudulent conducts or serious or repeated negligence that could put at risk the stability and security of the company proposed to be established or that of the insured.
The Superintendent shall indicate that there are presumptions of fraudulent or negligent conducts when any of the following circumstances concur:
i. That the person is in a state of bankruptcy, suspension of payments, creditors' composition, or equivalent financial situation;
ii. Those who have been convicted with principal or accessory penalties, serious and less serious, in accordance with the current Penal Code;
iii. That judicial proof has been established of participation in activities related to drug trafficking and related crimes, money laundering and other assets or terrorist financing;
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iv. That the person is or has been a debtor of the financial system against whom judicial demand for payment of a credit has been filed, or whose overdue balances of substantial amounts have been settled as determined by general rule issued for that purpose by the Board of Directors.
v. That in the last ten (10) years the person has been a director, manager, or officer of a company in the financial system, who by determination of the Superintendent, or of its own corporate authorities, has been imputed responsibility for said company having incurred deficiencies of twenty percent (20%) or more of the minimum mandatory share capital required by Law, or that said company has received contributions from the Deposit Guarantee Fund as established in its Law.
vi. That the person has been administratively sanctioned or judicially convicted for participation in a serious infraction of financial laws and/or regulations.
vii. That the person cannot demonstrate the legitimate origin of the funds to acquire the shares.
viii. Other circumstances that could put at risk the stability and security of the company proposed to be established and that of its insured, as determined by the Board of Directors through general rule.
In the case of those partners or shareholders who are legal entities that intend a participation of five percent (5%) or more in the capital of the company, they must inform about their partners or shareholders natural or legal persons with a participation equal to or greater than five percent (5%) in the share capital of this second company. In the event that there are partners or shareholders legal entities with a participation equal to or greater than five percent (5%), information must be provided about their partners or shareholders natural or legal persons with a participation equal to or greater than five percent (5%) in the share capital of this third company, and so on, until reaching, as far as materially possible, the final level of partners or shareholders natural persons with participation equal to or greater than five percent in the share capital of the company in question.
The Board of Directors may issue generally applicable rules indicating the information and documents that must be submitted to prove compliance with the provisions of this numeral.
If the company is approved, the information referred to in numerals 3), 4) and 8) of this article must be updated or expanded within the terms, forms and conditions established by the Superintendent.
The same requirements shall apply, under the terms established by general rule issued by the Board of Directors, to natural or legal persons that at the entry into force of this Law are authorized to operate as insurance, reinsurance and bonding companies.
Art. 11 Publication of the List of Shareholders.
Once the application is received and all required information is obtained, the Superintendent shall publish, at least in two newspapers of wide national circulation, once only, and at the expense of the interested applicants, the list of shareholders, as well as the founding directors of the company that is intended to be incorporated. In the case of shareholders that are legal entities, the list of shareholders that hold more than five percent (5%) of the share capital of said entities must also be published. The foregoing is for the purpose that any person who has knowledge of any of the circumstances set forth in numeral 8 of article 10 and article 44 of this Law may object to the status of the shareholders and directors, respectively, who will form part of the projected company.
Such objections must be submitted in writing to the Superintendent, within a period of no more than fifteen days after publication, attaching the pertinent evidence; otherwise, the objection shall be deemed not filed.
Art. 12 Study of the Application and Authorization to Incorporate.
Once the application and corresponding documents have been submitted, and after complying with the provisions of the preceding article, the Superintendent may request from the Central Bank of Nicaragua a non-binding opinion, which must be issued within a term of no more than sixty (60) days.
Once the study of the application by the Superintendent has been completed and the opinion of the Central Bank of Nicaragua has been issued, if applicable, the Superintendent shall submit the application to the consideration of the Board of Directors, which shall grant or deny the authorization to incorporate as an insurance company, all within a period not exceeding one hundred twenty (120)
days from the submission of the application.
In the event that the information provided with the application is not complete or is deficient in accordance with the requirements of this Law, the period mentioned in the preceding paragraph shall be calculated from the date on which the applicant satisfactorily corrects or completes the application.
Art. 13 Content of the Authorization.
The authorization to incorporate issued by the Board of Directors shall specify the lines of business that the insurance companies may operate, in accordance with the provisions of article 66 of this Law.
Art. 14 Validity of Deed and Bylaws.
In the case of a positive resolution, the authorizing notary must mention the number of the edition of La Gaceta, Diario Oficial, in which the resolution of authorization to incorporate as an insurance company issued by the Board of Directors has been published and insert in full in the deed the certification of said resolution. The registration in the Public Commercial Registry shall be null and void if this requirement to commence activities is not complied with.
Art. 15 Requirements to Commence Operations.
To commence operations, insurance companies incorporated in accordance with this Law must comply with the following requirements:
1) The minimum share capital fully paid in cash;
2) Eighty percent of it in a demand deposit at the Central Bank;
3) Testimony of the corporate deed and its bylaws, with the corresponding registration in the Public Commercial Registry;
4) Opening balance sheet, certified by an authorized public accountant;
5) Certification of the appointments of the directors for the first period, of the manager or principal executive of the insurance company, the compliance officer and the internal auditor, as submitted attached in the application for authorization to incorporate;
6) Verification by the Superintendent that the company has, among others, adequate physical facilities and technological platform; as well as the systems, procedures and administrative infrastructure necessary to provide the services proper to its corporate purpose, such as:
a. Issuance of policies;
b. Recording of its operations;
c. Accounting;
d. Valuation of the portfolio of assets and liabilities;
e. Electronic processing of accounting, financial, technical and statistical information;
f. Infrastructure for the payment of claims and attention to policyholders and beneficiaries;
g. The other services corresponding to the specialty of the operations that the company intends to carry out;
h. Name and data of the authorized actuary registered with the Superintendency to sign the technical notes and the reserves of technical provisions;
i. General conditions, particular conditions, applications, reinsurance contracts and addenda to the signed contracts;
j. Procedure manuals for each of the operational and internal control processes of the companies, such as internal audit, claims, underwriting, among others;
k. Comprehensive system for the prevention and management of the risks of money laundering, goods or assets and terrorist financing in accordance with the rule issued by the Board of Directors;
l. Any other information that in the Superintendent's judgment is necessary.
The Board of Directors may issue general rules on the foregoing requirements.
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4604 25-08-10 162 If the application for authorization to operate with evidence of compliance with the aforementioned requirements is not submitted within six months from the notification of the resolution authorizing its incorporation, it shall be void, and the amount of the deposit referred to in numeral 5) of article 10 of this law shall accrue to the National Treasury.´
Art. 16 Verification of Requirements.
The Superintendent shall verify whether the applicants have fulfilled all the requirements demanded by this Law for the operation of an insurance company or entity; otherwise, it shall notify the petitioners of the defects, errors or omissions that it notices, so that within a period of fifteen business days they comply with the omitted requirements. The Superintendent, at the request of the interested parties, may extend this term once only for up to five additional business days, provided they justify, in the Superintendent's judgment, the extension. Once the deficiency has been remedied, the Superintendent shall grant the authorization within a term of five days from the date of the correction. The authorization must be published in La Gaceta, Official Gazette, at the expense of the authorized company and must be registered in the corresponding Public Commercial Registry in the Second Book, Companies, of said Registry also at its expense.
In the event of failure to comply with the Superintendent's instructions within the term established above, it shall be understood that the interested parties have abandoned the application, the authorization of incorporation being without effect and the amount of the deposit referred to in numeral 5) of article 10 of this Law shall accrue to the National Treasury. Consequently, the shareholders must proceed with the liquidation of the company in accordance with common law, and the promoters may not submit a new application until after a period of three years counted from the date of non-compliance referred to in this article, and the Superintendent's resolution must be recorded in the Public Registry.
Art. 17 Non-transferability of the Authorization.
The authorizations granted to incorporate and operate as an insurance company or entity are non-transferable.
Art. 18 Branches of Companies Authorized in the Country.
Authorized insurance companies may establish branches, or other means of providing related services anywhere in the national territory, provided that the premises where they provide services offer security and trust for the user public.
The opening and closing of such offices shall be communicated in advance to the Superintendent at least sixty days in advance, for its purposes. In the case of opening, they must indicate the address and type of operations to be carried out. In the case of closure, the reasons justifying it. The Board of Directors may issue general rules on this matter.
Art. 19 Branches and Subsidiaries Abroad.
The opening abroad of branches and subsidiaries of insurance companies incorporated in the country shall require authorization from the Superintendent. For the purpose of granting the authorization, the provisions on financial groups contained in the General Banking Law shall be considered, where applicable, and if, in the country receiving the investment, there are supervisory bodies that apply in their reviews regulatory procedures based on international standards, especially those relating to capital adequacy and other prudential rules that are similar or more rigorous than those used in Nicaragua. Capital allocations in the case of branches as well as investments in subsidiaries shall be considered as risk assets for the Nicaraguan insurance company.
Art. 20 Branches of Foreign Insurance Companies.
Insurance companies legally incorporated abroad may operate in the country through the establishment of a branch, without prejudice to their participation as shareholders in insurance companies incorporated or to be incorporated in Nicaragua under the terms of this Law. For the establishment in the country of a branch of a foreign insurance company, it must comply with this Law and submit an application to the Superintendent through a representative accredited by public instrument, accompanied by the following documents:
1) Certification of the deed of incorporation or constitutive act and bylaws of the applicant company and of the legal authorization that supports its incorporation and operation in the country of origin, as well as proof of the validity of all of the foregoing;
2) Proof that the applicant company is legally authorized to establish branches in Nicaragua, in accordance with its bylaws and the laws of its country of origin, accompanied by a certification issued by the supervisory authority of that country confirming its conformity with the application;
3) Audited general balance sheets, profit and loss statements and annual reports of the applicant company for the last five years;
4) A minute proving deposit in the current account of the Superintendency, for value of one percent (1%) of the amount of the minimum capital, for the processing of the application. Once they have begun operations, said deposit shall be returned to the promoters. In the event that the application is denied, ten percent (10%) of the deposit amount shall accrue to the National Treasury; the balance shall be returned to the interested parties. In the event of withdrawal, fifty percent (50%) of the deposit shall accrue to the National Treasury;
5) Any others that the Board of Directors may require on a general basis, which in no case may be different from those required of national insurance companies, to the extent applicable.
All documents accompanying the application must be submitted duly authenticated.
Applications for the establishment of branches of foreign insurance companies shall be processed only when institutional information exchange can be effected between the supervisors of both countries and the parent insurer has been operating for more than five years. If it is a foreign insurer originating from a merger, the years of operation of the oldest company shall be counted.
Once the application and documents referred to in this article have been submitted, the Superintendent may request from the Central Bank of Nicaragua a non-binding opinion, which must be issued within a term no greater than sixty
(60) days.
Art. 21 Application to the Superintendency.
The application referred to in the preceding article shall be processed in accordance with the provisions of this Law in all matters that are applicable, in the judgment of the Superintendent.
Art. 22 Authorization of Establishment.
Once the authorization resolution for the branch of the foreign insurance company has been issued by the Board of Directors, the deed of incorporation and bylaws of the foreign insurance company shall be registered in the Public Commercial Registry, together with the certification of the minutes of the board of directors of the company where the establishment of the branch is authorized, as well as the certification of the authorization resolution issued by the Board of Directors.
Art. 23 Requirements to Commence Activities.
To commence operations, the foreign branch of an insurance company whose establishment has been approved in accordance with this Law must fulfill the requirements to commence operations established in
article 15 of this Law, in all matters that are applicable, and must add to the application referred to in the aforementioned article, identification records, good conduct and technical capacity of the administrators appointed for the branch and evidence of their faculties and powers, duly authenticated.r:
Art. 24 Subjection to the Laws of the Republic of Nicaragua.
Insurance companies incorporated abroad that obtain authorization to establish branches in the country are considered domiciled
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4605 25-08-10 162 in Nicaragua for any legal purpose, in the locality that corresponds in accordance with general rules, and shall be subject to the laws of the Republic, especially to this Law, to the General Banking Law, as a non-bank financial company, to the Superintendency Law, to the rules issued by the Board of Directors, and to the resolutions and instructions issued by the Superintendent; being obligated to comply with all the requirements to which insurance companies operating in the country are subject, without being able to make use of diplomatic channels in any case related to their operations.
Art. 25 Mergers.
The merger of two or more insurance companies shall require authorization from the Superintendent, who shall grant or deny it by reasoned resolution based on the provisions of articles 26, 27, 28 and 29 of this Law, the rules issued by the Board of Directors on this matter and the provisions of the Commercial Code.
The legal representatives of the entities interested in merging, sixty days prior to holding the shareholders' meeting to adopt the merger agreements, must inform the insured, bonded, shareholders and creditors, by notice that must be published in two newspapers of national circulation, in which a summary of the reasons for the merger, the administrative and financial conditions under which it will be carried out, as well as the method to be followed for the extinction of liabilities, must be provided. From that moment, the accounting books and other books shall be available to the shareholders for their information.
Once the provisions of the preceding paragraph have been fulfilled as well as the term established in the Commercial Code for creditors to express their disagreement with the merger process has elapsed, the legal representatives of the insurance companies shall submit to the Superintendent an application for approval, to which they must attach the following documentation:
1) The feasibility study of the merger project, explaining the reasons for the merger and the administrative and financial conditions under which it will be carried out, among others;
2) The financial statements at the end of the fiscal year or for the interim period, for which an opinion of external auditors has been issued, that have served as the basis for establishing the conditions under which the merger will be carried out. The financial statements may not correspond to a date earlier than three months before the merger notice;
3) The valuation method of the company to be merged and the exchange ratio resulting from its application;
4) Certification of the minutes in which the merger agreements have been approved;
and
5) Other requirements that the Board of Directors establishes by general rule.
When a foreign insurance company legally incorporated in its country participates in the merger, reliable documentation issued by its board of directors or its equivalent must be attached, by means of which it is accredited that the merger has been approved and the representatives of the company are designated to execute the respective agreement. In addition, the certification of the supervisory body of the country where the company is domiciled shall be attached, stating that it is a solvent company and subject to the supervision of said body.
Art. 26 Authorization or Objection of the Merger.
Upon receipt of the application for authorization of merger with the documents referred to in the preceding article and those established by general rule, the Superintendent may authorize or object to it within three months following its submission.
Art. 27 Grounds for Objecting to the Merger.
The Superintendent may only object to the merger for the following causes:
1) When the absorbing or new company does not comply with the mandatory capital stock amounts established in this Law, and there are not sufficient guarantees that it will be capitalized in the necessary amount and within an adequate period;
2) When the absorbing or new company does not comply with the adequate levels of equity or the solvency rules in force and there are not sufficient guarantees that its equity situation will be satisfactorily adjusted within an adequate period;
3) When it determines that the administrators of any of the interested companies do not meet the conditions of responsibility or suitability necessary to participate in the respective operation, or the shareholders who own more than five percent (5%) also do not meet such conditions
of the share capital of any of the participating insurance companies;
4) When, as a result of the merger, the absorbing or new company may maintain or determine inequitable prices, limit services, or prevent, restrict or distort free competition in the markets in which it participates, whether as head office, parent company or through its branches, the necessary measures to prevent it are not taken. None of these hypotheses shall be considered when the absorbing or new company serves less than twenty-five percent (25%) of all direct premiums issued in the market. This percentage may be reviewed by the Board of Directors to guarantee free competition and avoid monopolistic or oligopolistic situations;
5) When it determines that the merger may cause harm to the public interest or to the stability of the financial system.
In the case of numerals 4) and 5), the Superintendent may request from the National Institute for the Promotion of Competition, to support its objection to the merger, a non-binding opinion, which must be issued within a term no greater than thirty days.
During the period set in the previous article, any creditor of the companies who demonstrates legal or economic interest in the matter may oppose the merger. This opposition shall suspend the completion of the merger until it is resolved judicially.
Art. 28 Formalization of the Merger Agreement.
The absorbing or new company shall formalize the merger agreement once the Superintendent has authorized it. The formalization of the agreement through the merger deed must be sent to the Superintendent one month after the date it is registered in the Commercial Registry.
Art. 29 Content of the Merger Deed.
The merger deed must contain:
1) List of the minutes where the merger agreement is recorded;
2) The audited balance sheets on the basis of which it was approved;
3) The balance sheet of the absorbing company or of the new company;
4) The amendment of the bylaws derived from the merger;
5) Authorization resolution for the merger issued by the Superintendent; and
6) Authorization resolution of the board of directors of the non-domiciled company when applicable.
Art. 30 Authorization for Acquisition of Shares, Portfolio Transfer, Spin-off, Conversion, Capital Reductions and Amendments to the Articles of Incorporation.
Authorized insurance companies, as well as natural or legal persons interested in acquiring shares of these, shall require the approval of the Superintendent for the following:
1) Portfolio transfers, spin-off or conversion of financial services, the latter being understood as the cases in which insurance companies, operating in certain lines, seek to add new lines or reduce the lines for which they are authorized to operate. The conversion does not alter the legal personality of the company and shall only confer upon it the powers and impose upon it the legal requirements and limitations proper to the form adopted. The Board of Directors may issue generally applicable rules with respect to the provisions of this numeral;
Digital Collection “La Gaceta” Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4606 25-08-10 162
2) Reduction of its share capital;
3) Amendments to the articles of incorporation. The amendment consisting of an increase in share capital is excepted, which must be reported to the Superintendent.
If the increase in share capital is due to the entry of new shareholders who acquire five percent (5%) or more of the share capital, or in the case of existing shareholders who acquire shares that, added to those they already hold, represent an amount equal to or greater than the aforementioned percentage, the provisions of numeral 4) of this article must be complied with. The amendments referred to in this subsection shall not require judicial authorization; it shall be sufficient with the certification of the resolution of the general shareholders' meeting notarized before a notary, which shall be registered in the corresponding public registry; and
4) To acquire directly or through third parties, shares of an insurance company that by themselves or added to those already held, or together with those of its related parties, represent an amount equal to or greater than five percent (5%) of its share capital.
The corporate rights of the new shareholder are suspended until it obtains the authorization of the Superintendent imposed by this article.
The Superintendent may only deny the authorization, by reasoned resolution, if the petitioner does not comply with the information requirements indicated in numeral 4) and the solvency and integrity requirements referred to in numeral 6), both of article 10 of this Law.
The Superintendent must rule within a period of thirty (30) business days counted from the date on which the information referred to in the previous paragraph has been fully provided. If there is no response within the aforementioned period, the transaction shall be deemed authorized.
Acquisitions of percentages less than five percent (5%) must be notified to the Superintendent within a period no greater than thirty (30) days counted from the date on which the transfer occurred.
Art. 31 Conditions resulting from the Transfer, Merger or Spin-off of Insurance Contracts.
The processes of portfolio transfer, merger or spin-off, to which the previous articles refer, shall in no way modify the terms and conditions in force agreed in the corresponding insurance contracts.
In any case, for their modification, the manifestation of the will of the contracting parties, or of their beneficiaries, as the case may be, shall be necessary.
Chapter II Capital, Reserves and Investments
Art. 32 Risk Capital.
To carry out their activity, insurance companies as well as branches of foreign insurers must at all times have risk capital, whose main objective is for the company to have sufficient financial resources to cover obligations caused by unforeseen losses with respect to the risks they underwrite, both as a consequence of dynamic pressures and of possible changes in economic and market conditions.
Art. 33 Effective Capital and Capital Calculation Base.
Insurance companies must at all times have effective capital. The Board of Directors, by general rule, may at the appropriate time establish the formulas for calculating effective capital and risk capital. These formulas shall take into account the risks faced by insurance companies, the levels of resources they have, as well as the best practices in risk measurement and supervision promulgated by international regulatory bodies.
The capital calculation base shall be made up of the base capital and any other subdivision that the Board of Directors establishes by general rule in accordance with the best international practices in this regard.
The aforementioned base capital shall be made up of paid mandatory share capital, capital paid in permanent preferred shares or with a clause for non-ordinary conversion into share capital available to cover losses, with a non-cumulative dividend clause, according to regulations established by the Board of Directors; donated capital not subject to return; amount received in excess of the nominal value of shares issued when placed above par; irrevocable contributions received from shareholders intended solely to increase share capital;
legal reserve and accumulated results from previous periods that the general shareholders' meeting of the insurance company has resolved to capitalize expressly and irrevocably.
From the foregoing provisions, the book value of purchased goodwill shall be subtracted or deducted, according to the parameters established by the Board of Directors by generally applicable rule.
From the capital calculation base, any pending adjustment to be constituted and the book value of holdings and obligations in subsidiaries and associates must be subtracted or deducted. The latter, according to regulations established by the Board of Directors by general rule.
The Board of Directors is empowered to establish, by generally applicable rules, additional components to the capital calculation base.
Likewise, it may establish additional deductions to those already established for the different capital classifications.
Art. 34 Mandatory Share Capital.
Insurance companies incorporated in the country must have at least as mandatory share capital to carry out the activity, divided into registered and non-convertible-to-bearer shares, the following amounts, according to the group of insurance to be operated:
1) When they operate only insurance modalities included in the group of property and casualty insurance and mandatory insurance, according to the classification established in article 66 of this Law, the sum of forty million córdobas (C$ 40,000,000.00);
2) When they operate only insurance modalities included in the group of personal insurance (life, personal accidents, health, pension insurance, and annuities), according to the classification established in article 66 of this Law, the sum of forty million córdobas (C$ 40,000,000.00);
3) When they operate the insurance modalities included in the group of property and casualty and mandatory insurance as well as the group of personal, annuities and pensions, the sum of eighty million córdobas (C$80,000,000.00);
4) When they operate in the surety modality, the sum of ten million córdobas (C$ 10,000,000.00); and
5) When they operate reinsurance or reinsurance of sureties, the sum equivalent to one and a half times (1.5 times) the amounts established in the preceding numerals for each of the modalities they operate.
The Superintendent, in order to issue the opinion referred to in
article 12 of this Law, on the mandatory share capital of each of the insurance companies requesting authorization to be incorporated, shall base it on the volume of operations that the respective company expects to carry out in accordance with the financial projection it must submit, pursuant to
article 10 of this Law, based on reasonable and detailed assumptions, for a number of years in the course of which the company will cease to have annual deficit results, according to the assumptions.
The Board of Directors shall update the amount of mandatory share capital at least every two years in the event of exchange rate variations of the national currency, which must be published in a newspaper of wide national circulation, without prejudice to its publication in La Gaceta, Diario Oficial.
Likewise, the Superintendent, by rule issued by the Board of Directors for that purpose, may order capital increases in the event that a company is in a situation of risk.
Art. 35 Constitution of Reserves.
Insurance companies must constitute sufficient technical reserves and provisions to respond for compliance with obligations arising from insurance, reinsurance and surety contracts. The reserves that
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4607 25-08-10 162 must be constituted are the following:
1) Unearned premium reserves for unearned premiums corresponding to insurance, reinsurance and surety contracts;
2) Claims reserves, for obligations arising from those claims that have occurred and are pending payment, whether they are settled or in the process of settlement, and those incurred but not reported;
3) Provision reserves for statistical deviations in claims;
4) Mathematical reserves for life insurance policies taken out for terms greater than one year, including those derived from annuity contracts;
5) Catastrophe reserves, for damages caused by extraordinary events and which must be established for the normal development of the insurance activity; and
6) Any other reserve that the Superintendent determines by reasoned resolution, as may be necessary for a given insurance company.
The Board of Directors may issue general rules in this regard, and may determine the establishment of other reserves, if it deems it necessary.
Art. 36 Calculation of Reserves.
The calculation of reserves must be carried out using actuarial methods based on the application of generally accepted international standards and justified by the analysis format issued by the Board of Directors.
The valuation of technical reserves must adhere to the actuarial practice standards issued for that purpose by the Board of Directors, through general provisions.
Art. 37 Registry of Actuaries.
The valuation of the technical reserves referred to in the preceding article must be prepared and signed by an actuary authorized by the Superintendent and registered with the Superintendency to evaluate, certify and sign such calculations.
The Superintendency shall maintain a registry of authorized actuaries, so that, among other aspects, they evaluate, certify and sign actuarial technical studies, actuarial balance sheets, actuarial technical notes and the reserves of insurance companies and branches of foreign insurers; for such purposes, it shall be required at a minimum to be a graduate in the actuarial career, as well as to have internship or practical requirements in the field.
Art. 38 Capital Reserves, Loss Coverage and Distribution of Profits.
Insurance institutions, in addition to the reserves referred to in article 35 of this Law, must establish a capital reserve of fifteen percent of their net profits.
Whenever the capital reserve of an insurance institution reaches an amount equal to its paid-in or assigned and registered capital, forty percent of said capital reserve shall automatically become paid-in or assigned capital, as the case may be, with new shares being issued and distributed among existing shareholders in proportion to the capital contributed by each.
The profits of insurance institutions shall be determined annually. If losses result from the year's operations, they must be covered in the following manner:
1) First, with applications from special reserves, if any;
2) Second, with application of capital reserves;
3) Lastly, with the insurance institution's own paid-in capital.
If an insurance institution has suffered losses affecting part of its paid-in capital, it must be restored within the periods determined by the Superintendent. All its future profits must be allocated, first, to replenish the capital reserves, and in the meantime the insurance institution may not pay dividends or participations before its capital reserves and its minimum paid-in capital have been restored to the original amount.
Distribution of profits may only be made from profits actually realized, with prior authorization from the Superintendent, based on a general rule issued by the Board of Directors.):
Art. 39 Characteristics of Investments.
The technical and mathematical reserves, the paid-in capital and capital reserves and the other funds of insurance companies must be backed by investments of high security, liquidity and profitability and in the corresponding currency according to the operation that originated them. The investment policy must establish that the investments of said companies comply with those characteristics.
Insurance companies must keep records of their investments fully identifiable for each of their technical and mathematical reserves, capital, capital reserves and other funds.
Art. 40 Requirements that Investments Must Meet.
The Board of Directors, following the guidelines established in the preceding article, shall establish through general rules the instruments, maximum concentration percentages, markets and minimum requirements that insurance companies must comply with in investing their assets fully backing their technical and mathematical reserves, capital and capital reserves and other funds.
Art. 41 Non-Attachability of Assets. Exceptions.
The real assets backing the reserves and the risk capital and effective capital of an insurance company or entity may not be encumbered nor are they subject to attachment or other precautionary measure, act or contract that prevents or limits their free availability.
The assets of insurance companies fully identified as investments of their technical and mathematical and catastrophe reserves assigned to the fulfillment of commitments and obligations with insureds, beneficiaries and reinsurance companies are likewise non-attachable, unless the precautionary measure is adopted to guarantee compliance with obligations arising from insurance contracts entered into with their clients, in which case the amount to be attached may not exceed the amount of the specific reserve to cover the obligation.
The movable and immovable property and any property in general of insurance companies or entities, whether state-owned or not, may be subject to attachment, seizure or any other precautionary or prejudicial measure. Any judicial or administrative action in contravention of this article shall be absolutely null, without prejudice to any resulting liabilities.
Chapter III Administration and Control
Art. 42 Integration of the Board of Directors. Formalities of Meetings.
The administration of insurance companies shall be in charge of a board of directors and a general manager, within their respective spheres of competence.
The board of directors shall be composed of a minimum of five directors and the alternates determined by its own deed of incorporation or its bylaws. The board of directors must mandatorily hold meetings at least once a month. The principal and alternate members of the board of directors shall be appointed by the general shareholders' meeting for periods determined in accordance with the deed of incorporation and bylaws, which may not be less than one year. They may be re-elected.
The agreements and resolutions of the board of directors shall be recorded in the respective minute book, and must be signed by the president and the secretary thereof. The participation of the directors in the meetings shall be demonstrated with
Digital Collection "La Gaceta" Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4608 25-08-10 162 their signature on the attendance document that will become part of the respective minutes.
The board of directors, on an exceptional basis, and once the legal requirements have been met, may hold meetings without the need for a physical gathering of its members, through communication among them by email, telephone, fax or any other means of communication that evidences the participation, identification and decision of the participants. In this case, the secretary must verify the foregoing, drawing up the corresponding minutes, in which the matters and resolutions taken are incorporated, which must be signed by the president and the secretary of the board of directors. The other directors must, in due course, ratify in a separate document, with their signature, their participation in the respective meeting.
The certifications of the minutes must be issued by the secretary of the board of directors, or, failing that, by a public notary designated by said board.
Art. 43 Requirements to be a director The members of the board of directors of insurance companies may be natural or legal persons, shareholders or not. In the case of natural persons, they must be no less than twenty-five (25) years old on the day of appointment, and of recognized honorability and professional competence.
In the case of legal persons, they shall exercise the position through a representative, who must meet the above requirements and shall be personally and jointly liable for their actions together with the shareholder they represent.
(To be continued)
GOVERNMENT HOUSE Government of Reconciliation and National Unity United Nicaragua Triumphs DECREE No. 54-2010 The President of the Republic In use of the powers conferred by the Political Constitution of the Republic of Nicaragua.
HAS ISSUED The following:
DECREE Amending Decree No. 71-98, Regulations to Law No. 290, Law of Organization, Competence and Procedures of the Executive Branch.
Article 1. Article 158 of Decree No. 71-98 is amended, and its amendments contained in Decree 25-2006, regarding the structure of the Ministry of Education, in the sense of adding numeral 2, and the numbering is shifted, which shall read as follows:
"Art. 158… 2. "Secretariat of Educational Planning and Investments".
Article 2. This Decree shall enter into force upon its publication in La Gaceta, Official Gazette Given in the city of Managua, Government House, on the thirteenth day of the month of August of the year two thousand ten. Daniel Ortega Saavedra, President of the Republic of Nicaragua. Paul Oquist Kelley, Private Secretary for National Policies.
-------------------------- PRESIDENTIAL AGREEMENT No. 175-2010 The President of the Republic of Nicaragua In use of the powers conferred by the Political Constitution AGREES
Article 1. That being the State of the Republic of Nicaragua, owner in dominion and possession of a real property located at Kilometer 6 ½ of the southern highway, in the Municipality and Department of Managua, registered under Number: 28625 Volume: 1324 Folios: 187 to 188 Entry 6th, Column of Registrations, Section of Real Rights, Book of Properties of the Public Registry of the Department of Managua, now Office of Public Registry of the Department of Managua; which was assigned in Administration in favor of the Executive Secretariat of the National System for Prevention, Mitigation and Attention of Disasters (SINAPRED); by Presidential Agreement No. 242-2002, published in La Gaceta, Official Gazette No. 111 of 14 June 2002; and by Public Deed Number Forty (40) authorized in the city of Managua at nine in the morning of 4 September 2002, before the offices of the Notary of the State, Octavio Armando Picado García; and whose area assigned in Administration is reduced, by the severance and Donation that will be made in favor of the Army of Nicaragua, in accordance with this Agreement.
Article 2. That based on numeral 3 of article 17 of Law No. 181, Code of Organization, Jurisdiction and Military Social Security, published in La Gaceta, Official Gazette No. 165 of 2 September 1994; authorizes the Attorney General of the Republic to appear before the Notary of the State to sign Public Deed of Severance and Donation in favor of the Army of Nicaragua, of a real property belonging to the State of the Republic of Nicaragua, described in article 1 of this Agreement; for exclusively military purposes, necessary to safeguard the integrity, independence, security and national defense. From the aforementioned parent real estate property, an area of four thousand six hundred fifty-nine square meters with forty-five square centimeters (4,659.45 m²) is severed; within the following boundaries (points, bearings, distances): Point 1 - 2 Bearing S 18º 33’ 26’’ W Distance 32.72 m; Point 2 - 3 Bearing N 82º 02’ 58’’ W Distance 7.13 m; Point 3 - 4 Bearing S 19º 04’ 23’’ W Distance 7.87 m; Point 4 - 5 Bearing S 53º 23’ 53’’ E Distance 7.55 m; Point 5 - 6 Bearing S 17º 54’ 49’’ W Distance 12.77 m;
Point 6 - 7 Bearing N 71º 18’ 45’’ W Distance 12.90 m, Point 7 - 8 Bearing N 71º 18’ 45’’ W Distance 79.91 m; Point 8 - 9 Bearing N 16º 06’ 50’’ E Distance 37.76 m; Point 9 - 10 Bearing S 72º 11’ 43’’ E Distance 32.75 m; Point 10 - 11 Bearing N 17º 55’ 10’’ E Distance 19.05 m; Point 11 - 1 Bearing S 71º 04’ 27’’ E Distance 61.65 m; with the following adjoining properties:
North: SINAPRED (Remainder), South: Others, East: Carretera Sur towards Las Piedrecitas and towards the Siete Sur and, West: SINAPRED (Remainder).
Article 3. Authorize the Attorney General of the Republic to appear before the State Notary to sign the Public Deed of Area Reduction of the Real Estate assigned in Administration in favor of the Executive Secretariat of the National System for Disaster Prevention, Mitigation and Attention (SINAPRED), by Presidential Agreement No. 242- 2002, published in La Gaceta, Official Gazette No. 111 of 14 June 2002.
The reduction of the area assigned in Administration corresponds to the remaining area of the severance of property Number 28625, ordered by article 2 of this Agreement; which corresponds to an area of nine thousand three hundred sixty-one square meters with eight hundred sixty-four square centimeters (9,361.864 m²); within the following boundaries (points, bearings, distances): Point 1 - 2 Bearing S 18º 34’ 02’’ W Distance 27.84 m; Point 2 - 3 Bearing N 71º 04’ 27’’ W Distance 61.65 m; Point 3 - 4 Bearing S 17º 55’ 10’’ W Distance 19.05 m; Point 4 - 5 Bearing N 72º 11’ 43’’ W Distance 32.75 m; Point 5 - 6 Bearing S 16º 06’ 50’’ W Distance 37.76 m; Point 6 - 7 Bearing N 71º 18’ 45’’ W Distance 7.82 m; Point 7
- 8 Bearing N 14º 08’ 53’’ E Distance 2.79 m; Point 8 - 9 Bearing N 70º 47’ 49’’ W Distance 49.47 m; Point 9 - 10 Bearing S 25º 01’ 30’’ W Distance 1.39 m; Point 10 - 11 Bearing N 71º 25’ 23’’ W Distance 17.37 m; Point 11 - 12 Bearing N 18º 45’ 55’’ E Distance 83.74 m; Point 12 - 1 Bearing S 71º 04’ 27’’ E Distance 167.31 m; with the following adjoining properties: North:
Parcels 02900, 03002, 03100, 03200, 03300, 03400, 03500, 03800; South:
Nicaraguan Army, others; East: Nicaraguan Army, Carretera Sur Towards
Digital Collection “La Gaceta” Nicaraguan Legal Digest LA GACETA OFFICIAL GAZETTE Telephones: 2228-3791 / 2222-7344 Print run: 750 Copies 28 Pages Value C$ 45.00 Córdobas YEAR CXIV Managua, Thursday, 26 August 2010 No. 163 4626 SUMMARY Page
NATIONAL ASSEMBLY Law No. 733.- General Law of Insurance, Reinsurance and Bonds (Continuation) .............................................................................4627 HOUSE OF GOVERNMENT Decree No. 56-2010 ...................................................................4636 Presidential Agreement No. 185-2010 ........................................4637 Presidential Agreement No. 186-2010 ........................................4637 Presidential Agreement No. 187-2010 ........................................4638 Presidential Agreement No. 188-2010 ........................................4638 Presidential Agreement No. 189-2010 ........................................4639 MINISTRY OF FOREIGN AFFAIRS Ministerial Resolution No. 008/2010 ......................................4639 Ministerial Resolution No. 009/2010 ......................................4639 Ministerial Resolution No. 010/2010 ......................................4640 MINISTRY OF DEVELOPMENT, INDUSTRY AND TRADE Factory, Commerce and Service Trademarks ..............................4641 NICARAGUAN INSTITUTE OF MUNICIPAL DEVELOPMENT Restricted Bidding No. 002-07-2010 ..................................4641 Administrative Resolution No. 025-2010 ...............................4642 NICARAGUAN INSTITUTE OF CIVIL AERONAUTICS Public Bidding No. 01/2010 ................................................4642 NICARAGUAN INSTITUTE OF AGRICULTURAL TECHNOLOGY Restricted Bidding No. 14-2010 .........................................4643 NICARAGUAN INSTITUTE OF SOCIAL SECURITY Executive Resolution No. RI-153-2010 ...................................4643 GENERAL DIRECTORATE OF REVENUE Call for Bidding ..................................................................4644 MAYOR'S OFFICE Morrito Municipal Mayor's Office Purchase by Quotation .............................................................4645 UNIVERSITIES National Agrarian University Invitation to Bid ...................................................................4645 Professional Titles .................................................................4645
JUDICIAL SECTION Notice ............................................................................................4653
Digital Collection “La Gaceta” Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4627 26-08-10 163 NATIONAL ASSEMBLY LAW No. 733 GENERAL LAW OF INSURANCE, REINSURANCE AND BONDS (Continuation)
Art. 44 Impediments to be Director.
The following may not be members of the board of directors of an insurance company or entity:
1) Persons who directly or indirectly are delinquent debtors for more than ninety (90) days or for a number of three (3) times, during a period of twelve (12) months, of any company subject to the supervision of the Superintendency, or who have been judicially declared in a state of insolvency, concurso, bankruptcy, or forced liquidation. The Board of Directors may issue generally applicable rules to regulate the provisions of this numeral;
2) Those who with any other member of the board of directors of the company are spouses or a partner in a stable de facto union, or have a relationship of kinship within the second degree of consanguinity or second degree of affinity. This ground shall not apply when the relationship exists between a proprietary director and their respective alternate;
3) The directors, managers, officers, agents or employees of any other supervised financial company that belongs to another financial group;
4) The managers, officers, executives and employees of the same company, with the exception of the chief executive;
5) Those who directly or indirectly are holders, partners or shareholders who exercise shareholder or administrative control over legal entities that have credits overdue for more than ninety (90) days or for a number of three (3) times during a period of twelve (12) months, or that are in judicial collection in the same entity or in another of the financial system;
6) Insurance and surety intermediaries and auxiliaries, and reinsurance brokers;
7) Persons who have been sanctioned in the fifteen (15) years prior to their appointment for causing patrimonial harm to an entity supervised by the Superintendency;
8) Persons who have been sanctioned in the fifteen (15) years prior to their appointment for causing harm to public trust, by altering financial statements of an entity supervised by the Superintendency;
9) Those who have participated as directors, managers, deputy managers or officers of an entity supervised by the Superintendency that has been subjected to intervention processes and declaration of compulsory liquidation status, for whom by judicial or administrative resolution of the Superintendent responsibilities, presumptions or indications have been established or are established linking them to the aforementioned situations.
The foregoing shall allow evidence to the contrary;
10) Those who have been convicted of principal or accessory penalties, serious and less serious, in accordance with the current Penal Code.
Art. 45 Effects of the Previous Article.
The election of persons included in the prohibition of numerals
2) to 9) of the previous article shall be invalid, with legal effects from the notification by the Superintendent. The members of the Board of Directors who at any time come to have the impediments of the
previous article shall cease in their positions.
Art. 46 Prohibition in Case of Conflicts of Interest.
When any shareholder, any of the members of the board of directors or any officer of an insurance, reinsurance and surety company has a personal interest or conflict of interest with the company in the processing or resolution of any matter or operation, or their financial group, partners, or the firm or company to which they belong, or their spouse or relatives within the fourth degree of consanguinity or second degree of affinity have such interest, they may not appear or influence before the officers and bodies of the company in charge of the processing, analysis, recommendation and resolution thereof, nor be present during the discussion and resolution of the related matter.
Art. 47 Responsibility of Directors.
The members of the board of directors of an insurance company, without prejudice to other sanctions applicable to them, shall be personally and jointly liable with their assets for the losses caused to the company for authorizing prohibited operations and for the acts carried out or resolutions adopted by the board of directors in contravention of the laws, the rules issued by the Board of Directors, the instructions and orders of the Superintendent, and other applicable provisions, being exempt from that liability only those who have recorded their dissenting vote in the minutes of the corresponding session, and those who were absent during said session and in the session where the respective minutes are approved.
Art. 48 Cases of Infidence. Exceptions.
The same responsibilities established in the previous article correspond to the directors, officers or employees of an insurance company who reveal or disclose any confidential information about matters communicated to the company itself or that have been discussed therein, as well as the same directors, officers or employees who use such information for personal purposes.
Not included in the previous paragraph are the information required by authorities by virtue of legal attributions, nor the ordinary exchange of confidential reports between insurance companies or similar companies for the exclusive purpose of protecting operations in general.
Art. 49 Vacancy of the Position of Director.
The position of director of an insurance company is considered vacant when:
1) They miss three (3) sessions consecutively, without presenting a justified excuse or prior authorization from the board of directors;
2) They incur absences, with or without authorization, that exceed one third of the total sessions held in a period of twelve (12) months ending on the date of the last absence.
The previous grounds do not operate to the extent that the designated alternate attends the sessions.
Art. 50 Communication to the Superintendent.
Every election of members of the board of directors or appointment of the general manager and/or chief executive and of the internal auditor of an insurance company must be communicated immediately by the president of the board of directors or the secretary thereof to the Superintendent; without prejudice to sending certification of the minutes of the session in which the appointment was made, within the following seventy-two (72) hours after the signing of the minutes. Attached to the minutes, the company shall deliver to the Superintendent the information corresponding to the selected person, including the name, home and postal address, experience and qualifications, and the end date of the term of office. The Superintendent may annul any election or appointment that does not meet the suitability and competence requirements for said position, in accordance with general rules issued for this purpose by the Board of Directors.
Art. 51 Obligations of the Board of Directors.
The board of directors of insurance companies, without prejudice to the other legal and contractual provisions applicable to it, shall have, among others, the following obligations:
1) Ensure the liquidity and solvency of the company;
2) Supervise the management of the company with the objective of maximizing returns to shareholders, in accordance with the general responsibility of ensuring that its financial resources are sufficient to meet its obligations, that policyholders are treated fairly in accordance with the insurance contract, its agreed additions and modifications, and that the provisions of this Law are complied with;
3) Appoint and remove the senior officers of the company and establish
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4628 26-08-10 163 the level of remuneration thereof, based on criteria that promote the interests of the company and that do not encourage imprudent behavior in accordance with the Corporate Governance policies issued by this collegiate body;
4) Approve policies and procedures to identify, address and resolve conflicts of interest; as well as to identify and object to transactions with related parties, for the purpose of ensuring the best interest of the company;
5) Approve procedures regarding fair treatment of customers, including information to them, the protection of their personal information, the prompt evaluation and compensation of legitimate claims of policyholders and beneficiaries, and the handling of complaints and reports from users;
6) Ensure that the policies, systems and processes necessary for the proper administration, evaluation and control of the risks inherent to the business are implemented and instruct that they be maintained in adequate operation and execution;
7) Approve investment policies and procedures, with the criteria and responsibility of a prudent and reasonable person, to avoid undue risk of loss and obtain a reasonable return; and also that they appropriately reflect the responsibility structure of the company and comply with the provisions of article 39 of this Law;
8) Follow up on the procedures, strategies and policies indicated above, to ensure that the company is complying with them and that they are regularly modified, so that changing circumstances are taken into account;
9) Be duly informed through periodic reports on the progress of the company and know the monthly and annual financial statements thereof, as well as regarding the reports of the internal and external auditors and of the regulatory comptroller referred to in this Law;
10) Ensure that the recommendations derived from the reports of the internal audit, external audit, money laundering prevention officer, as well as the instructions of the Superintendent, are implemented;
11) Adopt the necessary measures to correct irregularities detected in management;
12) Ensure that due diligence is observed by the employees and officers of the company in the handling and use of its products and services
13) Comply with and enforce the provisions of the applicable laws, rules, guidelines and internal regulations;
14) Know and dispose without delay of whatever is necessary for the compliance and execution of measures of any nature issued by the Board of Directors and the provisions of the Superintendent, as well as provide the information requested by the latter, guaranteeing its certainty and veracity with respect to facts or operations that could affect the stability and soundness of the company;
15) Ensure that active, passive and contingent operations do not exceed the limits established in the Law and respective rules;
16) Establish the measures conducive to guaranteeing the timely performance of independent internal and external audits that ensure knowledge of eventual errors and anomalies, analyze the effectiveness of controls and the veracity, accuracy and transparency of the financial statements;
17) Timely approve and ensure compliance with all Manuals required by the corresponding rules; and
18) Receive training in the subjects established in the laws and rules issued by the Board of Directors.
The Board of Directors may issue generally applicable rules establishing the manner in which some or all of the responsibilities set forth herein shall be applied and executed.
Art. 52 Removal or Suspension of Directors and Officers.
The Superintendent shall declare without legal value and without corporate and legal effects the appointments of the directors, the general manager or chief executive officer, the internal auditor, the regulatory comptroller and the Money Laundering/Terrorism Financing Prevention (PLD/FT) officer of the insurance companies or entities if they do not satisfy the requirements of law. Likewise, it may order whoever is appropriate to dismiss the directors and officers for irregularities committed in the exercise of their functions in accordance with this Law or the general rules derived therefrom, all without prejudice to the corresponding civil or criminal liabilities.
In the case of directors and officers of state-owned insurance entities, whose appointment comes from the President of the Republic, and who are involved in situations that warrant their removal, the Superintendent, by reasoned resolution, shall inform the President of the Republic of the situation so that he may order what is appropriate.
Art. 53 Appointment of Manager. Legal Representation.
The board of directors may appoint one or several managers or chief executive, whether or not shareholders, who must meet the requirements established in article 43 and not have the impediments referred to in article 44 of this Law insofar as applicable. Such managers or chief executive shall have the powers expressly conferred upon them in the appointment or in the power of attorney granted to them. They shall not require special authorization from the board of directors for each act they perform in the fulfillment of the functions assigned to them and shall have, for the performance thereof, the legal representation of the insurance company with broad executive powers. Without prejudice to the provisions of this paragraph, the judicial and extrajudicial representation of insurance companies shall correspond to the president of their board of directors.
The general manager or chief executive of the insurance company must monthly send to the directors all information that allows them to know the real state of the company, including accounting records for their knowledge or examination, in order that they assume their responsibilities and exercise their duties in accordance with the provisions of this Law. The foregoing must be a mandatory agenda item of the ordinary sessions of the board of directors.
Art. 54 Manager of Branches of Foreign Companies.
Branches of foreign insurance companies established in Nicaragua shall not need to have a board of directors resident in the country. Their administration and legal representation shall be in charge of a duly authorized manager, resident in the country, and shall be subject to the requirements and disqualifications established in the preceding articles of this Law, insofar as applicable. The Superintendent, when deemed necessary, may require the presence of the officer of the foreign insurance company in charge of supervising the activities of the branch or a representative with sufficient power.
Art. 55 Corporate Governance.
The corporate governance of insurance companies consists of the set of guidelines that regulate the internal relations among the general shareholders' meeting, the board of directors, management, officers and employees; as well as between the company, the supervisory body and the public.
Art. 56 Corporate Governance Policies.
The policies that regulate the corporate governance of insurance companies must include, at least, the following:
1) Corporate values, ethical standards of conduct and procedures to ensure compliance;
2) The corporate strategy, in a manner that allows verifying the success of the company as a whole and the individual contribution to it;
3) Policies for the assignment of responsibilities and levels of delegation of authority in the hierarchy for decision-making;
4) Policies for interaction and cooperation among the board of directors, management and auditors;
5) Internal control policies appropriate to the nature and scale of its activities, including clearly defined provisions for the delegation of powers, the liability regime, and the necessary separations of functions. Such functions shall be supervised by an internal auditor as indicated in the following article and by the rules issued in this regard by the Board of Directors;
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6) Policies on comprehensive processes that include the management of the various risks to which the company may be exposed, as well as adequate information systems and a committee for the management of such risks;
7) Policies on mechanisms for the identification, measurement, monitoring, control and prevention of risks and policies for the management of conflicts of interest;
8) General salary policies and other benefits for workers;
9) Adequate information flows, both internal and to the public;
10) Written policies on the granting of insurance, credits, investment regime, evaluation of asset quality, sufficiency of reserves and administration of the different risks;
11) Creation of committees, such as the audit committee and the committee for the prevention of money laundering and terrorist financing.
12) Other aspects relevant to the operation of the company.
The Board of Directors may issue rules of general application establishing the manner in which some or all of the corporate governance aspects set forth herein shall be applied and implemented.
Art. 57 Internal Auditor. Requirements, Functions, Periods and Reports.
Without prejudice to the oversight and supervision that corresponds to the Superintendent over insurance companies, such companies must have an internal auditor in charge of the functions of inspection and supervision of the operations and accounts of the respective company. The internal auditor must be a certified public accountant with a minimum of three years' experience in institutions of the financial system, and shall be appointed by the general shareholders' meeting, or by the parent company of the foreign branch, for a period of three years and may be re-elected. Such appointment shall require the written favorable opinion of the Superintendent.
The internal auditor may be removed before the expiration of their term, by the vote of a two-thirds (2/3) majority of shareholders present at a general meeting or by decision of the parent company of a foreign insurance company; in both cases, they must first justify such decision before the Superintendent, who may object to it.
The auditor must submit a quarterly report of their work to the monitors elected by the general shareholders' meeting, to the board of directors or to the parent company in the case of branches of foreign insurance companies, and to the Superintendent. The foregoing is without prejudice to immediately notifying the aforementioned instances, and subsequently the Superintendent within the following seventy-two (72) hours, about any significant situation or finding detected that requires immediate action for its correction or prevention.
The internal auditor of state-owned or mixed-ownership insurance entities shall be subject exclusively to the terms of this Law, to the Rules issued by the Board of Directors, and to the instructions of the Superintendent.
The Board of Directors may issue general rules that internal auditors must comply with in the performance of their duties.
Art. 58 External Audits and Registry of External Auditors.
Insurance companies must contract annually, at least, one external audit. The Board of Directors may determine through general rules the minimum requirements that external auditors must meet, matters relating to their contracting, performance of their duties, and the information they must mandatorily submit to the Superintendency. External auditors shall be obligated to send the Superintendent a copy of their reports, with the respective notes, and shall make available to them the working papers and any other documentation and information relating to the audited companies. Insurance companies may only contract external audit firms registered in the registry maintained for such purpose by the Superintendency and in accordance with the regulations issued on this matter.
The external audits contracted by state-owned or mixed-ownership insurance entities shall be subject exclusively to the terms of this Law, to the rules issued by the Board of Directors, and to the instructions of the Superintendent.
Art. 59 Regulatory Comptroller.
Insurance companies must have a regulatory comptroller responsible for evaluating compliance with the external and internal legal provisions applicable to the company. The regulatory comptroller must be a duly qualified professional, and shall be appointed by the general shareholders' meeting. Their responsibility includes the obligation to prepare an annual evaluation program whose purpose will be to determine the evaluation activities and measures to be developed for the fulfillment of their duties. The regulatory comptroller must also prepare an annual report of the results and observations of their evaluation, including the measures adopted to remedy any failure to comply with the aforementioned provisions. Any serious irregularity detected in the exercise of its functions must be reported immediately to the board of directors and to the Superintendent. In the event that the company requires preparing a regularization plan, the regulatory comptroller shall evaluate its compliance. The Board of Directors may issue generally applicable rules regarding the provisions of this article.
Art. 60 Accounting. Formalities and Requirements.
The Board of Directors, by means of a general rule, shall establish the manner in which the accounting of insurance companies must be kept, as well as the criteria for consolidating their operations and financial statements.
For the foregoing, the Superintendency, in cases not provided for in the Law or by rule, shall determine the accounting obligations of such companies, mandatory accounting principles, formulation of their annual accounts, valuation criteria for the elements comprising them, as well as the regime for approval, verification, deposit and publication of such accounts, all with the purpose of reflecting the real liquidity and solvency situation of the company.
Art. 61 Separation of Accounting by Lines of Business.
Insurance companies and branches of foreign insurers that engage in several insurance operations and lines of business must keep the books, records and auxiliary records separately for the life and general insurance lines of business, in accordance with the rules issued by the Board of Directors.
Art. 62 Availability of Accounting Books.
The accounting books and records referred to in this Law must be kept available at the company's offices, and the recording of operations must be carried out within a period not exceeding thirty (30) days from the date of the operation.
Art. 63 Submission of Financial Statements and Other Reports to the Superintendency.
Insurance companies must send to the Superintendency, at the time and in the manner it specifies, the financial statements, reports on the number and type of policies issued, production, reinsurance, cessions and, in general, any other information that is relevant or necessary for the supervision of insurance companies, and the preparation of statistics on insurance activity.
Art. 64 Approval, Submission and Publication of Audited Financial Statements.
Insurance companies must prepare their financial statements at the close of the fiscal year on 31 December of each year. Within one hundred twenty (120)
days after the close of the fiscal year, the general shareholders' meeting must hold an ordinary session, in order to know and resolve on the audited financial statements, and must send the certification thereof to the Superintendency and have them published in the form, media and models determined by the Board of Directors by means of a generally applicable rule. All of the foregoing within the same term.
Chapter IV Operations and their limits
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Art. 65 Authorized Operations.
Insurance companies may carry out the following operations:
1) Carry out the insurance, reinsurance and bonding operations referred to in the authorization granted under this Law;
2) Establish and invest the reserves provided for in the Law;
3) Administer the sums that insured parties or their beneficiaries entrust to them as profits or indemnities;
4) Administer the reserves retained from domestic and foreign entities, corresponding to insurance, reinsurance and bonding operations;
5) Make investments abroad in accordance with the rule to be issued by the Board of Directors;
6) Grant loans or credits;
7) Acquire the movable and immovable property necessary for the performance of its corporate purpose;
8) Any other that, on a general basis, is authorized by the Board of Directors.
Art. 66 Insurance Lines that May Be Operated.
Insurance companies, according to the authorization granted, may carry out one or more of the following insurance operations:
1) Life:
a) Individual Life.
b) Group Life.
c) Debtor Balance.
2) Personal accidents:
a) Individual.
b) Family.
c) Group.
d) School.
e) Private transport.
f) Public transport.
g) Personal accidents for travelers.
h) Group personal accidents for travelers.
3) Health:
a) Individual medical expenses.
b) Family group medical expenses.
c) Group medical expenses.
4) Pension insurance:
a) Occupational accidents.
5) Annuities:
a) Scheduled annuities.
b) Life annuities.
c) Pension.
6) Property:
a) Fire.
b) Allied lines.
c) Automobiles.
d) Transport.
e) Robbery and theft.
f) Marine.
g) Aviation.
h) Glass breakage.
i) Agricultural and livestock.
j) Money and securities.
k) All risk in construction.
l) Contractor's equipment.
m) All risk of assembly.
n) Boiler and machinery.
o) Machinery breakdown.
p) Bank insurance.
q) Electronic equipment.
r) Credit.
s) Assistance policies.
t) Title insurance.
u) Bond.
v) Unemployment.
w) Civil liability.
x) Fidelity.
y) Professional license civil liability
7) Mandatory:
a) Civil liability for damages to third parties for motor vehicles.
b) Civil liability for damages to third parties for vehicles with foreign license plates.
c) Civil liability insurance for personal accidents in passenger transport.
d) Civil liability insurance for professional license.
8) Bonds:
a) Contractor and supplier bonds.
b) Tax bonds.
c) Professional bonds.
d) Judicial bonds.
e) Other bonds.
9) The special ones declared by the Superintendent in accordance with the provisions of article 68 of this Law.
10) Micro insurance.
11) Any additional line that the Superintendent declares admissible.
Art. 67 Insurance Operations.
The insurances included within the enumeration of operations and lines of the previous article are the following:
1) For life insurance operations: those whose contract basis is risks that may affect the insured in their existence;
2) For personal accident operations: insurance contracts whose basis is the injury or disability affecting the personal integrity, health or vital vigor of the insured, as a consequence of an external, violent, sudden and fortuitous event;
3) For health operations (medical expenses): insurance contracts aimed at covering medical, hospital and other expenses necessary for the recovery of the health or vital vigor of the insured, when affected by an accident or illness;
4) For pension insurance operations (work accidents): insurance contracts aimed at covering medical, hospital and other expenses necessary for the recovery of the health or vital vigor of the insured, when affected by an accident or illness caused by risks derived from work accidents or activities in the exercise of their professional activity;
5) For annuity insurance: the payment of periodic annuities during the life of the insured or those corresponding to their beneficiaries in accordance with the insurance contracts entered into under the terms of the applicable law;
6) For pension insurance: the payment of periodic premiums over a period of time in order to accumulate capital that may be collected in the event of retirement, survival, widowhood, orphanhood or disability;
7) For civil liability insurance: That in which the insurance entity undertakes to indemnify the insured for the damage that their patrimony may experience as a consequence of the claim made by a third party, for the liability that both the insured and those persons for whom they must respond civilly may have incurred.
8) For the transport line: That by which an insurance entity undertakes to pay certain indemnities as a consequence of damages occurring during the transport of goods. These damages may affect the transporting object (hull insurance), or the transported goods themselves (cargo insurance);
9) For the maritime line: It generally guarantees navigation risks that may affect both the transporting vessel and the transported cargo;
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10) For the fire line: those based on the indemnification of all damages and losses caused by fire, lightning and/or explosion, fulmination or accidents of a similar nature;
11) For the agricultural and livestock line: That aimed at covering risks that may affect agricultural, livestock or forestry operations;
12) For the automobile line: the payment of the indemnity corresponding to damages or losses of the automobile and damages or losses caused to third-party property or third parties due to the use of the automobile. Insurance companies engaged in this line may consequently include in the regular policies they issue the additional benefit of civil liability;
13) For the credit insurance line: That aimed at guaranteeing a person the payment of credits in their favor when the insolvency of their respective debtors occurs;
14) For the miscellaneous line: the payment of indemnity due to damages and losses caused to persons or things by any other eventuality provided for in the contract;
15) For the allied lines line: insurance contracts that cover damages and losses caused to persons or things as a consequence of natural events with unpredictable frequency and severity, which when they occur generally produce an accumulation of liabilities for insurance companies;
16) For the mandatory insurance line: coverages that will be established by Law as mandatory for natural or legal persons involved in specific activities;
17) For the bonds line: contracts that guarantee the fulfillment of an obligation acquired by any person or company with respect to a third party called “bond beneficiary”. The bonds that insurance companies may operate include guarantees for maintenance of offer, fulfillment of works contracts, advances, work quality and all those that do not have the character of financial or payment guarantees, as determined by the Board of Directors;
18) For the unemployment line: contracts that guarantee partial or total payments of specific debts of the insured by the insurer in the event that the insured is unable to generate income due to unemployment;
19) For the title insurance line: contracts that protect the insured's legal rights to the property, tenure, use, control and disposition of land;
20) For microinsurance operations: products whose purpose is to facilitate access of the low-income population to insurance protection through the use of low-cost distribution and operation means.
The Board of Directors, by general rule, may indicate the risks that may be covered within each of the operations or branches mentioned in the previous article, provided that the risks not listed have the technical characteristics of those specified for each operation or branch.
Art. 68 Declaration of a Branch as Special.
When any class of risk included in the branches referred to in article 66 of this law acquires such importance that it merits being considered as an independent branch, and requires special regulation, the Board of Directors, upon proposal of the Superintendent, may issue a general rule in that regard.
Art. 69 Modification of the Authorization Granted.
The Superintendent may modify the authorization under which a company operates, for the purpose of eliminating or suspending the practice of one or several of the branches or operations that, in accordance with article 66 of this Law, have been authorized, when it puts at risk the solvency or any other financial indicator of the institution and any of the following cases occurs:
1) At the request of the company, as agreed in its general shareholders' meeting;
2) When any of the situations provided in article 133 of this Law, referring to normalization plans, has occurred, in the judgment of the Superintendent and in protection of the interests of the insured, such modification contributes to improving the financial situation and the coverage of the regulatory parameters of the company;
3) When a company incurs significant losses for two consecutive years, as reported in the annual actuarial income statements provided to the Superintendent;
4) When an authorized product results in significant losses for three consecutive years, in this case the Superintendent may revoke the authorization granted to operate that particular branch;
5) If repeatedly, despite the observations of the Superintendent, the company exceeds the limits of the obligations it may incur in the operations or branches in question;
6) If it verifies that the company does not adequately comply with the functions of the corresponding operations or branches, by maintaining a low issuance of premiums.
In any of the cases, the necessary measures must be adopted to protect the interests of the contracting parties, insured, and beneficiaries. The Board of Directors may issue general rules on this matter.
Art. 70 General Rules for Loans Granted and Taken by Insurance Companies.
The Board of Directors, through general rules, shall specify the class, conditions, and information requirements that insurance companies must comply with in the granting and receiving of loans or credits, taking into account the nature of the resources they manage and the destination they must maintain. Each entity must issue policies for the recovery of its investments.
Art. 71 Limits to Operations.
Active operations carried out by insurance companies with their related parties shall be subject to the limitations and provisions established in this article.
For this purpose, the following definitions and limitations are established:
1) Related parties of an insurance company.
a) Shareholders who, either individually or together with other natural or legal persons with whom they maintain directly or indirectly significant links, own five percent or more of the paid-in mandatory capital of the insurance company;
b) The members of its board of directors, the secretary when a member thereof with voice and vote, the chief executive as well as any other officer with the power, individually or collectively, to authorize credits or substantial investments, qualified in accordance with general regulations established by the Board of Directors. Likewise, legal persons with which such members and officers maintain directly or indirectly significant links shall be included;
c) The spouses and relatives up to the second degree of consanguinity and second degree of affinity of the natural persons included in any of the previous numerals, as well as the legal persons with which such spouses and relatives maintain directly or indirectly significant links;
d) The legal persons with which the insurance company maintains directly or indirectly significant links; and
e) The legal persons members of the financial group to which the insurance company belongs, as well as its directors and officers.
2) Significant Links. Significant links exist in any of the following cases:
a) When a natural person, directly or indirectly, participates as a shareholder in another legal person in a percentage equal to or greater than thirty-three percent (33%) of its paid-in mandatory capital or exercises control by any means, direct or indirect, over a voting right equal to or greater than the same percentage;
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b) When a legal person, directly or indirectly, participates in another legal person or the latter participates in the former, as a shareholder, in a percentage equal to or greater than thirty-three percent (33%) of its paid-in mandatory capital or exercises control by any means, direct or indirect, over a voting right equal to or greater than the same percentage;
c) When two or more legal persons have, directly or indirectly, common shareholders in a percentage equal to or greater than thirty-three percent (33%) of their paid-in mandatory corporate capital or when the same natural or legal persons exercise control, by any means, direct or indirect, over those legal persons, over a voting right equal to or greater than the same percentage;
d) When the Superintendent considers that by any means, direct or indirect, a natural or legal person exercises dominant influence over the shareholders' meeting or board of directors; the administration or management; in the determination of policies, or in the management, coordination, image, contracting or conduct of business, of another legal person;
e) When, by application of the general rules issued by the Board of Directors, the Superintendent may presume that a natural or legal person or several of them maintain, directly or indirectly, significant links among themselves or with another legal person, by virtue of the presence of indications of affinity of interests;
f) In this regard, the following are considered indications of significant linkage by affinity of interests, among others: The common presence of members of boards of directors; the conduct of business at the same premises; the granting of credits for excessive amounts in relation to capital, as favors or without guarantees; the offering of services under the same corporate image;
the possibility of exercising veto rights over businesses; the frequent assumption of shared risks; the existence of common policies or similar management or coordination bodies, and any others included in rules issued for that purpose by the Board of Directors. These presumptions allow proof to the contrary.
3) Indirect Manifestations. In cases where this Law refers to significant links, participations, means and any other manifestation of an indirect nature, it must be understood that such manifestations refer to situations where the execution of acts or contracts, the existence of facts or the intervention of third parties is evidenced, which produce effects equivalent to those that would be produced directly. These evidences allow proof to the contrary.
4) Limitations on active operations with Related Parties. The amount of active operations carried out by an insurance company with all its related parties, both individually considered and jointly with those natural or legal persons that form with it a same unit of interest due to the existence, direct or indirect, of significant links or frequent assumption of shared risks, may not exceed thirty percent (30%) of the calculation base of capital. For the purposes of this Law, unit of interest shall be understood as indicated in the following article.
5) Among the active operations that are subject to the above limit are the following:
a) Credits granted by the company;
b) Operations for the purchase of portfolios of credits, insurance and obligations issued by related parties that do not comply with the rules issued by the Board of Directors. The Board of Directors of the Superintendency may issue general rules to regulate the conditions that this type of operations must comply with;
c) Deposits and investments of any nature held by the company, including repo operations, that do not comply with the rules issued by the Board of Directors. The Board of Directors may issue general rules to regulate the conditions that this type of operations must comply with.
6) Basic condition. In any negotiation with its related parties, insurance companies must carry them out under conditions that do not differ from those applicable to any other party not related to the company, in comparable transactions. In the event that comparable transactions do not exist in the market, those terms or conditions that, in good faith, would be offered or applicable to parties not related to the company must be applied.
The provisions of the preceding paragraph are applicable to the following cases:
a) Active operations carried out by the company, including contingent ones;
b) The purchase and sale of assets to related parties;
c) Contractual services performed by or in favor of the insurance company;
d) Any transaction in which the related party acts as agent or receives commissions for its services to the insurance company;
e) Any transaction or series of transactions with third parties, natural or legal, in which the related party has a financial interest;
or in which the related party is a participant in said transaction or series of transactions;
f) When the Superintendent determines that any of the provisions of this literal have been infringed or that any of the companies of the financial group is exposed to contagion risks derived from the situation affecting the related persons, the Superintendent shall have over said companies the same powers of inspection and supervision that the Law grants for the case of insurance companies. If the existence of the infringement or exposure is determined, the Superintendent, without prejudice to the sanctions contemplated by law, shall immediately order the termination of such operations or require the necessary corrective measures.
Art. 72 Limitations on Credits with Non-Related Parties.
Insurance companies may not grant credits, including contingent operations, directly or indirectly, to the same natural or legal person, individually considered or together with those natural or legal persons that form with it the same unit of interest due to the existence of significant links or frequent assumption of shared risks, for an amount that in aggregate exceeds thirty percent (30%) of the calculation base. Within the aforementioned percentage, investments in obligations issued by the same aforementioned persons shall be included.
For the purposes of this article, the following natural and legal persons are considered to form part of the same unit of interest:
1) If the credit applicant is a natural person, their spouse and their relatives within the second degree of consanguinity and second degree of affinity, as well as the legal persons that directly or indirectly maintain significant links with the applicant, their spouse and their aforementioned relatives, shall form the same unit of interest with them; and
2) If the credit applicant is a legal person, the natural or legal persons that directly or indirectly maintain significant links with said applicant shall form the same unit of interest with it.
To determine the significant links indicated in the preceding numerals, the definitions contained in the preceding article shall be taken into account, insofar as applicable.
Chapter V Contracts
Art. 73 Policies.
The Superintendent shall review and approve the general conditions, particular conditions, insurance application, questionnaires, addendum and other documents that form an integral part of the policies, as well as the respective technical notes, for new plans and/or modifications to existing ones.
On the cover page of the General Conditions and Particular Conditions, and in all documents forming part of the policy, the number and date of the Superintendent's resolution through which it was approved must appear in prominent characters.
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4633 26-08-10 163 The Superintendent shall instruct the necessary changes when the policies or models of additional clauses oppose the law; likewise when from the review of the technical notes it follows that the rates are not sufficient to cover the risks, or when the surcharges, interest or provisions are likewise insufficient. The Superintendency shall register the policies and the models of additional clauses.
The contract or clause incorporated therein, entered into by an insurance company, without having the approval and registration in the Superintendency referred to in this article, shall retain its validity in favor of the contracting party, insured or beneficiary or their successors in title, except for the stipulations that harm them; the foregoing without prejudice to the administrative sanctions that the Superintendent shall impose.
Art. 74 Power to Require Modification or Withdrawal of Policies.
In the face of unforeseen or subsequent circumstances, the Superintendent is empowered to require the amendment or prohibit at any time the use or marketing of contracts or policies that do not comply with the rules established in this Law.
Art. 75 Rates.
The rates for insurance, reinsurance and bonds must be sufficient to cover the risks they intend to insure and shall be reviewed and approved by the Superintendent in accordance with the applicable technical bases.
Art. 76 Technical Notes.
Insurance companies must support each of their coverages, plans and corresponding risk premiums in a technical note, prepared by an actuary registered with the Superintendency.
The Board of Directors, in accordance with international practices and the experience of the country's insurance system, may issue general rules containing the criteria, bases and general guidelines that serve as support for the formulation of rates or premiums and other technical support documents in their operations.
Art. 77 Term of the Contract.
Coverage begins from the date and time established in the particular conditions and the payment of the premium, and concludes on the date agreed between the parties, also established therein.
Art. 78 Effects of Non-Payment of the Premium.
Failure to pay the premium on the agreed date causes the insured to be in default; consequently, such state shall be grounds for cancellation of the contract, without prejudice to the parties being able to agree on a new contractual relationship.
The insurer shall be obligated to indemnify the insured for claims that occur when the premium paid to date is equal to or greater than the premium earned at the time the claim occurs. In the opposite case, that is, when the premiums in arrears correspond to a period already earned, the insurer shall not be obligated to indemnify the insured in the event that the claim occurs.
Art. 79 Extension, Renewal, Modification or Reinstatement of the Insurance Contract at the Request of the Insured.
Any request for extension, renewal, modification or reinstatement of a contract may be submitted by the insured, directly or through the named intermediary, by any written or electronic means with acknowledgment or proof of receipt. The insurance company must respond to the request within a period no greater than seventy-two (72) hours. If the insurance company does not respond within this period, the respective request shall be deemed accepted.
The provisions of the preceding paragraph are not applicable to requests for increase of the insured sum, inclusion of new risks and in no case to personal insurance.
Art. 80 Resolution or Modification of the Contract by the Insured.
If the insured does not agree with the terms of the contract signed or policy issued by the insurance company, they may terminate it within thirty (30) days following receipt of the contract or policy, if it does not agree with the terms of their application. Within the same period, they may request the modification of the text regarding the special conditions of the contract. Silence shall be understood as conformity with the policy or contract.
In the event of a claim occurring before any rectification or modification is requested and/or accepted by the insurance company during the time established in the previous paragraph, both parties shall adhere to the provisions of the policy.
They shall adhere to the provisions of the application when the conditions of the insurance policy do not agree with the insured's application, and the insured has paid the premium corresponding to what was requested.
Art. 81 Compensation for Claims.
The Board of Directors may issue general rules that, among other aspects, include:
1) The maximum periods in which compensations must be paid directly to the insured, beneficiaries and/or assignee after the claim has been accepted by the company;
2) What is understood as acceptance of the claim;
3) Maximum period that the insurance company has to accept or reject the claim and determine the amount of compensation; as well as the period that the insured has to accept or reject the amount of compensation;
and also regarding the period that both parties have to resort to the arbitration clause in the event of any controversy;
4) Maximum period that the insurance company has to submit a duly justified request to the Superintendent when the company requires a longer period to conduct additional investigations or obtain sufficient evidence regarding the origin of the claim or for the proper determination of its amount.
Insurance companies may pay the compensation either through the repair or replacement of the insured property, or through cash payment to the insured, beneficiary or the respective service provider.
If the company decides to pay in cash, it is prohibited from making deductions not based on any legal provision or regulation issued by the Superintendency.
Insurance cannot be the object of undue profit by either the insured or the insurer. For the determination of the compensation, the value of the insured interest at the moment immediately prior to the occurrence of the claim shall be used.
Art. 82 Delay in Compensation.
Once the requirements set forth in the policy have been met by the insured, the claim has been accepted by the insurer, and the period for compensation has ended, the delay or default in the payment of compensation by the insurance company, for reasons not attributable to the insured or beneficiary, shall pay a monthly interest equivalent to the average charged by commercial banks for short-term loans from the date on which the compensation payment should have been made; this average shall be determined in each case according to the data recorded in the Central Bank of Nicaragua.
Art. 83 Internal Claims Procedures.
Every insurance company must have a procedures manual, approved by its board of directors, for the handling of claims, which must contain at least the following:
1) Procedures to be followed for the attention of claims;
2) The instance or administrative authority responsible for receiving, attending to and responding to customer claims;
3) Keep a record by lines of business of the claims received, date of occurrence and receipt, number or quantity, amount of the claim, cause, and of the resolutions that have been given to them.
Digital Collection "La Gaceta" Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4634 26-08-10 163 Without prejudice to the provisions established in the general conditions of the insurance policies, every insurance company at the time of delivering it to the user, must provide a brochure containing the procedure or basic requirements for filing claims.
TITLE III ADVERTISING AND CONSUMER PROTECTION
Single Chapter Guiding Principles
Art. 84 Free Competition.
The provision of services referred to in this Law must be inspired by the principle of free competition. In protection of this principle, all types of agreements or covenants between two or more insurance companies, between their associations or other persons subject to this Law, or connected practices between them that, directly or indirectly, have as their object or effect, preventing, restricting, falsifying or eliminating free competition in the insurance market, especially in relation to coverage and premiums of products, are prohibited. The use of pure risk rates based on common statistics, the exchange of credit information, and participation in co-insurance operations and exchange of information about claims and attempted fraud shall not be considered restrictive practices of competition.
The Superintendency shall protect the freedom of users to decide the contracting of their insurance or bonds and to choose without limitations the institution, and where applicable, the intermediary, and shall apply the corresponding sanctions when it verifies conducts or practices that contravene the provisions of this
article.
When the Superintendent considers that insurance companies engage in practices or conducts that restrict and violate free competition in the insurance market, they may request from the National Institute for the Promotion of Competition a non-binding opinion, which must be issued within a term no greater than thirty (30) days.
Art. 85 Principles of Transparency and Soundness of Products.
Regardless of the fact that insurance products are subject to the free competition regime, companies, when carrying out their activity, must observe the following principles:
os:
1) Offer and enter into contracts in relation to authorized operations, under the terms of the applicable legal provisions and in accordance with sound uses and customs in insurance matters, with the purpose of achieving an adequate selection of the risks assumed;
2) Determine, on technical bases, the risk premiums in order to guarantee with a high degree of certainty, in the fulfillment of the obligations that they contract for that purpose with the users of their services;
3) Ensure that the stipulations contained in the contractual documentation correspond to the various insurance operations, and that in determining the amount of premiums and extra premiums, their return and payment of dividends or bonuses, in the event that such benefit is contracted, do not give rise to a reduction of the risk premium;
4) Indicate clearly and precisely, in the contractual documentation of the insurance operations and those related thereto, the scope, terms, conditions, exclusions, limitation or deductible and any other modality established in the coverages or plans offered by the company, as well as the rights and obligations of the users. Likewise, clarity and precision must be sought in the individual or collective communication that companies carry out by any means with their users or with the general public. At a minimum, the basic coverages and the risks not covered by the contract must be stated with prominent characters on the cover page of the policy.
5) The typographic characters must be easily legible. In cases of doubt because they have been drafted ambiguously, they shall be interpreted in the sense most favorable to the user. Likewise, the special conditions added to the general conditions of the contract must, under equal circumstances, equitably favor the users, subject to uniform application rules that each company has. However, in case of ambiguities between the general and special conditions, those favoring the user shall prevail;
6) Respect the principles of equity and sufficiency founded on the rules of insurance and actuarial technique;
7) In those risks for which, by their nature, compliance with the foregoing requirements is not possible, they may result from the backing of reinsurers of recognized solvency that comply with the requirements established in this Law and the rules on reinsurers issued by the Board of Directors.
Art. 86 Advertising.
The propaganda or advertising that insurance companies, intermediaries and insurance auxiliaries carry out in national territory or abroad shall be subject to the provisions of this Law and to the general rules issued by the Board of Directors. For these purposes, the advertising carried out must comply, among others, with the provisions listed below:
1) It must be expressed clearly and precisely, so that it does not mislead the public through promises, estimates, illustrations or projections;
2) It does not hide or omit mention of any important fact that is necessary so that the statements contained in said material do not lead to error in the context of the circumstances in which said assertion was made;
3) It does not generate deception or confusion about the provision of services or the products offered;
4) It does not offer advantages and conditions that are not authorized or within its capacity to fulfill;
5) It does not incur unfair competition by presenting to the public direct or indirect comparisons of products that are not based on real and verified facts;
6) The others that the Board of Directors issues for that purpose through general rules.
Art. 87 Truthful Advertising.
Although the dissemination of advertising programs of insurance companies does not require authorization from the Superintendent, this advertising must conform to the legal and economic reality of the product or service promoted.
When the Superintendent observes that the advertising does not meet the conditions listed in the previous article, or substantiated complaints are submitted to it in that regard, it shall order the modification, suspension or cancellation of the propaganda or advertising, as applicable.
Art. 88 Information to Users of the Insurance Industry.
Intermediaries and insurance companies are obliged to provide their users with the information and documentation related to the service provided, as well as to respond in writing in a timely manner to inquiries or requests for clarification regarding the content of contracts and the status of their claims.
Art. 89 Freedom of Contracting for the Insurance Consumer.
The user may freely select, without any restriction, the insurance company and, where applicable, the corresponding insurance intermediary, and may request the cancellation of their insurance or revoke the designation of their intermediary before the contract expiration date, or alternatively, not renew it upon its maturity date, with no other liabilities than those arising from the policy conditions regarding short-term cancellations and the payment of premiums accrued. The designation, revocation, or substitution of an intermediary at the free will of the user shall not entail liability for the insurance company in its relationship with the revoked intermediary, except for the payment of agreed commissions on those premiums accrued during the period in which the insurance remained in force through its management, once these have been paid by the insured. The Board of Directors may issue general regulations on this matter.
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Art. 90 Authorization to Close to the Public.
Insurance companies may close to the public on national holidays, municipal paid leave days, and those days declared as leave by the Executive Branch, all in accordance with the law.
In the event that an insurance company needs to suspend public service on days not provided for in the preceding paragraph, it must have the prior authorization of the Superintendent. Said closure must be informed to the public at least five (5) business days in advance in a written social media outlet of national circulation, and through prominent notices at the public service offices. The suspension of services due to force majeure or unforeseeable circumstances must be immediately informed to the Superintendent and the public.
Art. 91 Confidentiality of Operations.
Regulated companies under this Law may not give reports on the operations they enter into with their users except, as the case may be, to their legal representatives or to those who have power to intervene in the operation in question, unless expressly authorized by the user or when requested by the judicial authority by virtue of a case it is hearing, by means of a written order in which the cause to which the client is linked must be expressed. In the event of the user's death, information may be supplied to the beneficiary, if any.
The following are excepted from these provisions:
1) The requirements that the Superintendent demands in this matter.
Likewise, the Superintendent is empowered to process information on money, goods, or asset laundering as provided by laws and international treaties.
2) The information requested by other entities supervised by the Superintendent regarding the names of clients in default or in judicial collection, as well as those clients who issue checks without funds.
3) The information channeled through exchange and cooperation agreements signed by the Superintendent with national or foreign financial supervisory authorities. The information will be channeled through the respective supervisory entities.
4) The other exceptions contemplated by the law.
No administrative authority, except the Superintendent, may directly request from the entities regulated by this law, particular or individual information about their clients.
Art. 92 Right to Appear before the Superintendent.
Users of the services referred to in this Law may appear before the Superintendent or the corresponding administrative instance to file complaints against the entities providing the services regulated by this Law. The Superintendent will give a hearing to the respective entity against which the complaint was filed so that, within the period indicated by said official, it responds as it sees fit. The Superintendent, without prejudice to the administrative sanctions warranted, shall issue the respective resolution, and may instruct the corresponding correction in order to restore the user to their rights, as applicable.
In the event of non-compliance with the resolutions issued by the Superintendent or the Board of Directors by the entities providing insurance services, a fine equivalent to that provided in article 170 of this law shall be applied to them.
TITLE IV REINSURANCE, FRONTING, CO-INSURANCE AND MICROINSURANCE
CHAPTER I REINSURANCE, FRONTING AND CO-INSURANCE
Art. 93 Registration of Reinsurance Brokers and Foreign Reinsurers.
For an insurance company to enter into reinsurance contracts, whether directly or through the intermediation of a reinsurance broker, it must provide the Superintendent with information related to the foreign reinsurer and comply with the requirements established by general regulation of the Board of Directors for the registration of said reinsurance brokers, reinsurers, and the contracts signed.
In the same way, reinsurers domiciled in the country must send the Superintendent the reinsurance contracts issued and the retrocession contracts signed. The Board of Directors may issue regulations on this matter.
Art. 94 Operation with Registered Reinsurers.
National insurance companies, as well as branches of foreign insurance companies operating legally in the country, may only use the services of reinsurers and reinsurance brokers from abroad that appear in the Superintendent's registry.
Any contract entered into by insurers operating in the country with reinsurers shall be effected on market terms.
Art. 95 Reinsurance Contracts with Affiliates, Subsidiaries or Companies of the Same Group.
Insurance companies may enter into reinsurance contracts with those reinsurers of which they are affiliates, subsidiaries or that belong to the same financial group, in accordance with the regulations issued by the Board of Directors for such purpose, among which are the establishment of limits, the quality of reinsurers and any other prudential provision aimed at strengthening the insurance industry and particularly its users.
Art. 96 Information to the Superintendent on the Conditions of Facultative Reinsurance.
In those risks for which facultative reinsurance is required, prior submission to the Superintendent of policy forms and facultative reinsurance contract conditions shall not be necessary, but he shall be informed within thirty (30) days following their issuance, forwarding all pertinent documentation. The Board of Directors shall issue general rules on this matter.
Art. 97 Establishment of Retention and Retrocession.
Insurance companies, as well as those engaged in operating in reinsurance or re-guaranteeing, shall establish their retention and retrocession, in accordance with the general rules issued by the Board of Directors for such purpose.
Art. 98 Risk Distribution Policy.
Insurance companies shall draw up a risk distribution policy and limits, which shall be approved by their board of directors and made known to the Superintendent no later than the first month of the corresponding fiscal year. Said official may recommend or instruct, as appropriate, the changes he deems advisable.
Art. 99 Cession of Risks.
Insurance companies may cede risks to other insurance companies or reinsurance entities domiciled in the country or to foreign reinsurance entities of which they are not an affiliate, subsidiary or that do not belong to the same financial group as the company, in accordance with the regulations issued by the Board of Directors for such purpose, among which are the establishment of limits, the quality of reinsurers and any other prudential provision aimed at strengthening the insurance industry and particularly its users.
Art. 100 Security Measures with Reinsurers.
When the Superintendent has rational or evident indications of the lack of technical or financial capacity of any reinsurance institution or reinsurance brokerage, he shall order the insurance company to cancel the contract and replace the reinsurer.
Art. 101 Reinsurance Reserves In proportional reinsurance contracts or in facultative reinsurance contracts in which the constitution or deposit of reserves is foreseen, the ceding insurance companies shall constitute these same reinsurance reserves.
Digital Collection “La Gaceta” Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4636 26-08-10 163
Art. 102 Reinsurance of Branches to Reinsure with their Parent Company.
Branches of foreign insurance companies established in the country may reinsure with a foreign institution, without prejudice to compliance with the provisions of article 94 of this Law and in accordance with the regulations issued for this purpose by the Board of Directors, among whose regulations is that of establishing limits, quality of reinsurers and any other prudential provision aimed at strengthening the insurance industry and particularly its users.
Art. 103 Primacy of Contracts.
The terms and conditions of reinsurance and counter-guarantee agreements shall not affect the contract entered into between the insurance companies and the policyholders or subscribers; except in those cases of facultative reinsurance in which the reinsurers require special conditions that in any case must be incorporated into the text of the policy and be expressly accepted and signed by the user.
Art. 104 Fronting.
When an insurance company wishes to carry out a fronting operation, it shall submit all the requirements issued by general rule by the Board of Directors on this matter. Said requirements shall be submitted within thirty (30) days following the issuance of the fronting, sending all pertinent documentation to the Superintendent.
Art. 105 Coinsurance.
When two or more insurance companies wish to share their participation in the coverage of the same risk, they may carry out a coinsurance operation, establishing the percentage of participation of each one over the total risk. The Board of Directors may issue general regulations on this matter.
Chapter II Microinsurance
Art. 106 Orientation of Microinsurance.
Microinsurance is aimed at low-income households that normally may not be protected by other insurance and/or social security schemes, people who do not have access to appropriate insurance or social security services. Of particular interest is the provision of coverage for people who work in the informal economy who do not have access to formal insurance or to social protection benefits provided directly by employers, or by the government through employers.
Art. 107 Clearly Defined and Simple Policies, Rules and Restrictions.
Microinsurance contracts must be written in simple language, preferably in the local language, so that all people can understand what is covered and what is excluded. The basic characteristics of these policies is that they must have low premiums, small insured sums, minimal and simplified exclusions, no deductibles, copayments or franchises apply.
The termination of the contract due to non-payment of the premium or voluntarily with thirty (30) days' notice by the parties, as regards the term for the payment of compensation and the maximum term to resolve the claim shall be in accordance with the provisions of article 81 of this Law, relating to the compensation of claims.
Art. 108 Use of Rates and Policy Models.
Insurance, reinsurance and other service rates shall be freely established, in accordance with the applicable technical bases and that allow covering the risks offered to their insureds.
Art. 109 Authorization of Policy Models.
Prior authorization from the Superintendency shall be required for the use of policy models, contract conditions, technical bases and insurance rates or premiums. The Superintendency shall, by means of a reasoned decision within a period no greater than three (3) months from the date of deposit of the policy, order the necessary changes when they contain clauses that oppose the legislation or when the technical bases are not sufficient to cover the risks.
Art. 110 Power of the Superintendency to Require Modification or Withdrawal of Policy.
Without prejudice to the preceding article, the Superintendency is empowered to require the amendment or prohibit at any time the use or commercialization of contracts or policies that do not comply with the rules established in this Law.
Art. 111 Consumer Protection.
The Superintendency may also determine that the content of certain contractual clauses is harmful or prejudicial to the consumer, and in protection of the interests of the contracting parties, insured parties or beneficiaries, require changes to such clauses. For the same purpose, the Superintendency may establish standard clauses of mandatory use for the various types of insurance contracts.
Art. 112 Reports.
Microinsurance operations shall require reports appropriate to the scale and scope of the business. The Superintendency shall design forms and tools to ensure adequate reports for monitoring, controlling and supervising in such a way that the microinsurance insurer shall submit a special quarterly report to the Superintendency on microinsurance operations.
Art. 113 Term of the Contract.
In the case of insurance with a term of no more than one year, coverage begins on the date and time established in the particular conditions and upon payment of the premium, and ends on the date agreed between the parties, also established therein.
In cases where, due to the characteristics of the insurance, it necessarily requires a term longer than one year, the matter shall be subject to the regulations issued by the Board of Directors by general rule.
Art. 114 Generally Applicable Rules.
The Board of Directors may issue generally applicable rules on this matter.
(Continued)
CASA DE GOBIERNO Gobierno de Reconciliación y Unidad Nacional Unida Nicaragua Triunfa DECREE No. 56-2010 The President of the Republic CONSIDERING I That in monitoring the Liquefied Petroleum Gas (LPG) market it has been detected that Nicaraguan families sometimes fail to maintain constant LPG consumption due to the high costs of its presentation in 25-pound cylinders, having to use firewood for their household requirements.
II That for the benefit of the family economy and the environment, it is necessary to promote the use of Liquefied Petroleum Gas cylinders with a lower acquisition cost, as a valid and real option for end users that guarantees rotation and replacement capacity due to their low cost.
III
Digital Collection "La Gaceta" Nicaraguan Legal Digest LA GACETA OFFICIAL DAILY Telephones: 2228-3791 / 2222-7344 Circulation: 750 Copies 28 Pages Price C$ 45.00 Córdobas YEAR CXIV Managua, Friday 27 August 2010 No. 164 4654 TABLE OF CONTENTS Page.
NATIONAL ASSEMBLY Law No. 733.- General Law on Insurance, Reinsurance and Surety Bonds (Final Part) ........................................................................4654 MINISTRY OF THE INTERIOR Bylaws of the Interdenominational Apostolic Prophetic Ministry Jesus Christ is the Source of Salvation .................................4664 MINISTRY OF FOREIGN AFFAIRS Ministerial Resolution No. 011-2010 ................................4666 Ministerial Resolution No. 012-2010 ................................4666 MINISTRY OF DEVELOPMENT, INDUSTRY AND COMMERCE Factory, Trade and Service Marks ........................4668 MINISTRY OF HEALTH Restricted Tender No.29-08-2010 ...............................4671 MINISTRY OF EDUCATION Ministerial Agreement No. 011-2010 .....................................4671 MINISTRY OF ENERGY AND MINES Administrative Resolution No. 080/2010 ..........................4672 Ministerial Agreement No. 30-DM-215-2010 .......................4672 NICARAGUAN SOCIAL SECURITY INSTITUTE Registration Tender No. 17-2010 ................................4674 NATIONAL TECHNOLOGICAL INSTITUTE Restricted Tender No. 14-2010 ....................................4675 Restricted Tender No. 15-2010 ....................................4675 NICARAGUAN INSTITUTE OF AGRICULTURAL TECHNOLOGY National Public Tender No. 09-2010 .........................4676 CENTRAL BANK OF NICARAGUA Restricted Tender UA-08-31-10 .................................4676 Restricted Tender UA-08-29-10 .................................4677 MUNICIPALITIES Tisma Municipal Mayor's Office Purchase by Quotation No. 023/2010 ...............................4677 Managua Mayor's Office Tender Notice No. 19 ...............................................4678 Posoltega Municipal Mayor's Office Purchase by Quotation No. CC-06/2010 ..........................4678 Purchase by Quotation No. CC-07/2010 ..........................4678 Purchase by Quotation No. CC-08/2010 ..........................4679 UNIVERSITIES Professional Degrees ..........................................................4679
JUDICIAL SECTION Certification ..........................................................................4681 Revocation of Power of Attorney .........................................4681
Digital Collection "La Gaceta" Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4655 27-08-10 164 NATIONAL ASSEMBLY LAW No. 733 GENERAL LAW ON INSURANCE, REINSURANCE AND SURETIES (Final Part)
TÍTULO V INTERMEDIARIOS Y AUXILIARES DE SEGUROS
Single Chapter Insurance Intermediaries and Auxiliaries
Art. 115 Insurance Intermediaries and Auxiliaries.
Insurance intermediaries are natural or legal persons authorized to provide services as insurance brokers, mass insurance marketers, insurance agencies, insurance agents and insurance subagents.
External insurance auxiliaries are natural or legal persons authorized to provide services as adjusters, claim investigators or average or damage assessors, consultants, actuaries, risk assessment and claim indemnification.
Internal insurance auxiliaries are those natural persons who work in insurance companies under an employment contract and who provide their services as adjusters, claim investigators or average inspectors, consultants, actuaries, risk assessment and claim indemnification.
The following may not act as insurance intermediaries or auxiliaries: the directors, managers, officers or employees of insurance companies and the directors, managers, administrators or employees of banking and financial institutions.
No natural or legal person may perform the functions of insurance intermediaries or auxiliaries, external or internal, without the prior authorization of the Superintendency and registration in the corresponding registry.
Art. 116 Authorization to Operate.
Insurance intermediaries and auxiliaries are subject to the supervision of the Superintendency and their activities shall be subject to the provisions of this Law and to the rules of a general nature issued by the Board of Directors, and it shall be incumbent upon the Superintendent to grant the authorizations to operate as insurance intermediaries or auxiliaries, in accordance with the aforementioned rule.
The authorizations shall be non-transferable and must be recorded in the registry kept for such purpose by the Superintendency. Every three (3) years the registry must be updated by providing the corresponding information. The Board of Directors, by means of a rule of a general nature, shall establish the cost of the initial registration and its updating, as well as the other requirements for such purposes. The companies shall in no case accept business or enter into contracts with intermediaries and auxiliaries that do not have authorization to operate.
Art. 117 Request for Information from Insurance Intermediaries and Auxiliaries.
The Superintendent is empowered to request and gather information and documentation related to the acts, operations and services of external insurance intermediaries and auxiliaries. Insurance companies, intermediaries and external auxiliaries shall be obliged to keep at the disposal of the Superintendency the documents that support their operations.
Art. 118 Required Manuals.
Insurance intermediaries and external auxiliaries must have an internal control manual and a money laundering and terrorist financing prevention manual. The provisions set forth in the aforementioned manuals must be adjusted to their operations and to the rules issued by the Board of Directors. Their non-compliance shall be subject to the regime of administrative measures issued by the aforementioned Board of Directors. Natural persons operating as insurance agents and as internal insurance auxiliaries are excepted from this provision.
Art. 119 Functions and Duties of Insurance Intermediaries.
The functions and duties of insurance intermediaries are:
1) Provide technical advice to users or clients so that they obtain risk coverage adequate to their interests;
2) Inform their users or clients about the conditions of the contract, about the risks, benefits and exclusions of the policies, observing the scope of the deductibles thereof, proportional rule, form and terms of payment, effects of non-compliance, and in general all the information necessary to better illustrate their decision;
3) Comply with the provisions of this Law, the rules of the Board of Directors and instructions of the Superintendent, as well as their own ethical rules or code of conduct;
4) Intermediaries shall provide insurance companies with all information within their knowledge about the risk or liability to be assumed, so that they may form a judgment on its characteristics that allows them to determine the conditions under which they should issue the policies;
5) Protect the interests of the insured and of the insurer to an equal degree;
6) Permanently update their knowledge in insurance, by taking training courses or seminars to fully understand the insurance products they offer and the new products existing in the market, which enable them to respond technically and efficiently to the requirements of the insurance policyholders or contracting parties and insureds;
7) Immediately and in writing communicate to the policyholders or contracting parties and/or insureds, the rejection or modifications of coverage of the proposed risk, made by the insurance companies;
8) Deliver to the insured the contracted insurance policy, within three (3)
days following its date of receipt, verifying that it is in accordance with what was requested from the insurance company, and must return to the latter the copies, endorsements and other documentation requiring the signature of the insured within a period no greater than three (3) days, following the date of receipt by the insured;
9) Immediately and in writing communicate to the insurance companies any modification of the insured risk that signifies an aggravation or diminution thereof, which could affect its insurance conditions;
10) Assist the insured, with due diligence and promptness, in the event of a claim, managing the corresponding claim before the insurance company and following up on it until its conclusion;
11) Remit to the insurance companies, within a period no greater than three (3)
days, the sums received from clients as premiums;
12) The others that the Board of Directors establishes by general rules, without prejudice to the instructions that the Superintendent may issue according to particular circumstances of this service.
Communications made by an insurance broker to the insurer, in the name of the policyholder of a policy, shall have the same effects as if made by the policyholder himself, unless otherwise indicated by the latter. In any case, the express consent of the policyholder shall be required to enter into a new contract or to modify or terminate the current insurance contract.
Art. 120 Functions and Duties of Claims Adjusters.
The functions and duties of claims adjusters are:
1) Verify that the value of the insured objects is the same as established before the occurrence of the loss, in the event that it was covered by the policy;
2) Examine, investigate and determine the known or presumed causes of the loss;
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3) Qualify, inform and opine whether the loss is covered by the conditions of the policy;d
4) Establish the amount of the losses or damages covered by the policy;
5) Indicate the amount that corresponds to indemnify in accordance with the conditions of the policy;
6) Establish the value of the salvage to deduct it from the figure of damages, or its commercialization by the insurance company;
7) The others that the Board of Directors establishes through general norms;
without prejudice to the instructions that the Superintendent may issue according to particular circumstances of this service.
The adjuster's appraisal does not bind the parties and is independent of them.
Art. 121 Functions and Duties of Risk Evaluators.
The functions and duties of risk evaluators are:
1) Examine and qualify a good, a liability or an operation, as a prior action to the insurance process, in order that the insurance company may assess the risk to be covered;
2) Alert about the possibility that a damage or a loss occurs, recommending actions to avoid or reduce one or the other;
3) The others that the Board of Directors establishes through general norms, without prejudice to the instructions that the Superintendent may issue according to particular circumstances of this service.
Art. 122 Errors and Omissions Insurance Policy or Bonds for Intermediaries and Auxiliaries.
No natural or legal person may engage in the activities of intermediaries or auxiliaries, if their performance has not been guaranteed through an errors and omissions insurance policy or a bond. The requirements of the errors and omissions insurance policy and of the bond shall be established by means of a general norm issued by the Board of Directors based on the volume of business and the class of risks operated by the intermediary, in order to guarantee compliance with the responsibilities incurred before the insured, the beneficiaries and the insurance company.
The provisions of the preceding paragraph shall not be applicable in the case of internal insurance agents and auxiliaries of the insurance companies; in this case said companies shall be liable for their actions.
Art. 123 Relationship between Insurance Companies and their Agents and between Brokerages or Agencies with Subagents.
The relationship between insurance agents and the institution that hires them shall be of a labor nature and shall be governed in accordance with the terms of the respective contract and by the provisions of the Labor Code. The relationship between subagents and insurance brokerages or agencies shall be of a commercial nature and shall be governed by the provisions of the Commercial Code.
The relationship between insurance companies and insurance brokers or agencies shall be of a commercial nature and shall be governed by the provisions of the Commercial Code.
Art. 124 Registry of Mass Insurance.
Every insurance company that wishes to include a product within the category of mass insurance must request the approval of the Superintendent to do so. It corresponds to the Superintendent to qualify a product as mass insurance. This qualification may be revoked when the product ceases to comply with the functions and characteristics of a mass insurance.
The subscription of this type of contracts by the representative of the insurance company may be effected through the use of facsimile, prior resolution of its respective Board of Directors approving it and establishing the regulations regarding the security and handling of this procedure.
Art. 125 Registry of Mass Insurance Marketers.
Legal persons who wish to market mass insurance policies issued by insurance companies must obtain the approval of the Superintendent and register in the registry of mass insurance marketers, in accordance with the general norm issued for that purpose by the Board of Directors.
Art. 126 Contribution to the Maintenance of the Superintendency.
Individual brokers, brokerages, insurance agencies and mass insurance marketers shall contribute resources to cover the annual budget of the Superintendency. Said contribution shall be one half of one percent (0.5%) of their total annual income from commissions, calculated as of 31 December of the immediately preceding year.
TITLE VI SURVEILLANCE AND FORCED LIQUIDATION
Chapter I Preventive Measures and Normalization Plans
Art. 127 Inspections.
The inspections that the Superintendent carries out on insurance companies in the exercise of its attributions may be comprehensive or specific. Comprehensive inspections may extend over all businesses and operations of the inspected company, while specific inspections shall comprise only a certain class of businesses or operations. In any case, the Superintendent may carry out its inspections and examination in all books and files of the respective company.
Art. 128 Inspection Report.
The result of the comprehensive inspections referred to in the preceding article shall be reported in writing to the board of directors and to the general manager or principal officer of the insurance companies subject to them. The result of the specific inspections may be reported to the general manager or to the board of directors as determined by the Superintendent. The result of both inspections shall be sent at the latest within the following fifteen (15) business days after the definitive conclusion of the inspection.
Art. 129 Objective of the Inspections of the Superintendency.
The inspections shall be carried out on all insurance companies and branches of foreign insurers in accordance with the programs prepared by the Superintendency, taking into account the general situation of the sector, the economic and financial environment, or particular cases that warrant it. The purpose of the inspections shall be, according to the priority and planning of the Superintendency, the following: to review, verify, check and evaluate the resources, obligations, equity, as well as the operations, functioning, control systems and, in general, everything that could affect the financial and legal position, that is or should be recorded in the records, in order to ensure compliance with the provisions governing them and sound practices in the matter.
Art. 130 Obligations of Insurance Companies with Inspecting Analysts.
The companies subject to the inspection and supervision of the Superintendency shall be obliged to provide the inspecting analysts with all the support required of them, providing the data, reports, records, minute books, auxiliary books, documents, correspondence and, in general, the documentation, disks, tapes or any other processable data storage medium that the company has and that the inspectors deem necessary for the performance of their duties, and must have access to its computer systems, offices, premises and other facilities. In addition, they must be provided with adequate premises that offer privacy and security for the information and equipment of the inspecting analysts. The Superintendent may conduct inspections without prior notice and require immediate access for the inspecting analysts to the places or data storage and record systems mentioned above.
Art. 131 Situations that Generate the Application of Preventive Measures.
The Superintendent, based on the knowledge obtained about the situation of an insurance company, whether through the inspections referred to in the
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4657 27-08-10 164 previous articles, or through the analysis of the documentation and information available, may order, without prejudice to the corresponding sanctions, any of the measures authorized in the following
article, when said company incurs any of the following situations that represent danger to its insureds and creditors, or that compromises its liquidity and solvency without warranting the establishment of normalization or liquidation plans of the company as established in this Law: l:
1) Illiquidity that may compromise the payment of its obligations;
2) Capital losses, actual or imminent;
3) Administrative and managerial irregularities in the conduct of its business;
4) Infractions of the laws, regulations and other norms applicable to its activities, as well as the instructions and resolutions of the Superintendent;
5) Any other relevant fact detected by the Superintendent, that represents danger to its insureds and creditors, or that compromises its liquidity and solvency to such a degree that it does not warrant the establishment of normalization plans or the liquidation of the insurance company as established in this Law.
Art. 132 Applicable Preventive Measures.
Upon the occurrence of any of the situations enumerated in the previous article, the Superintendent, in accordance with the characteristics and circumstances of the particular case, may adopt any of the measures indicated below:
1) Amonestación;
2) Prohibition on issuing new policies and carrying out other operations;
3) Suspension of specific operations or order to cease or desist from the operations being carried out that the Superintendent considers unsafe;
4) Prohibition on decreeing and distributing profits;
5) Orders for the restitution of capital losses or capital adequacy;
6) Prohibition on opening new offices or branches;
7) Mandatory investment of new deposits in securities of the Central Bank of Nicaragua or in other securities previously designated by the Superintendent;
8) Require capital increases to overcome the deficit;
9) Designation of an official of the Superintendency to attend the sessions of the board of directors, committees and any other decision-making body;
10) Defer the payment of principal, interest or both, of subordinated obligations or other credit securities it has issued, or, as the case may be, order the early conversion into shares;
11) Any others that are necessary, in accordance with the Law and applicable regulations, to remedy the anomalous situation detected by the Superintendent.
Art. 133 Normalization Plans. Causales y Plazo.
When an insurance company is in any of the grounds indicated in this article, the Superintendent shall order the company to submit a normalization plan aimed at remedying the situation within a period that shall not exceed ninety (90) days, which may be extended by the Superintendent, with a prior favorable opinion of the Board of Directors, by means of a reasoned resolution justifying it, for a period strictly necessary to complete the fulfillment of the plan and which in no case shall be greater than another ninety (90) days:
1) Deficit in the constitution of its technical and mathematical reserves in accordance with the provisions of this Law and the regulations on the matter;
2) Shortfall in the coverage of the investments of its technical and mathematical reserves, in accordance with the provisions of this Law and the regulations on the matter;
3) Deficiency of capital necessary to cover the risk capital referred to in articles 32 and 33 of this Law;
4) Deficiency of the mandatory share capital in the terms provided in this Law;
5) Breach of the risk capital ratio for a period exceeding two consecutive months, for amounts that do not warrant its liquidation in accordance with this Law;
6) If the company submits to the Superintendency any information that is deliberately untrue or contains false data, without prejudice to the sanctions that the Superintendent may apply to its authors and their superiors, including removal for those who are responsible;
7) If the company breaches three consecutive times or six non-consecutive times during one year, legal provisions applicable to it, rules or instructions issued by the Board of Directors or the Superintendent respectively, on the same matter;
8) If the company's relations with other members of its financial group make it susceptible to suffering damages to its financial situation or reputation;
9) If the Superintendent determines by any means that the company has engaged in inadequate practices in the management of significant risks of any nature that endanger its financial situation, including deficiency in provisions for such risks, or in the valuation of assets;
10) If the company's external auditors abstain from issuing an opinion on its financial statements, or such opinion is adverse, or when the company omits the publication of the external audit report;
11) Any other relevant fact detected by the Superintendent that represents danger to the insured and creditors of the company, or that compromises its liquidity and solvency to such a degree that does not warrant the liquidation of the company.
Art. 134 Presentation and Approval of the Normalization Plan.
The normalization plan, prior to its presentation to the Superintendent, must be made known to the regulatory comptroller and be approved by the board of directors of the company. Subsequently, it must be presented by the general manager or by the principal executive of the respective company for consideration by the Superintendent within a term no greater than fifteen (15) days, counted from the date of notification of the decision ordering its presentation.
The Superintendent may extend the established term by up to seven more days, when there is a founded request from the respective company. In both cases, the failure to present the plan will be grounds for liquidation of the company. The plan must include the administrative, financial and any other measures that the company will adopt to correct the deficiencies that originated the detected irregularity.
The Superintendent shall have a period no greater than fifteen (15) days to grant approval to the plan with the modifications deemed necessary to incorporate. Once a normalization plan is approved by the Superintendent and the company is notified of this decision, it shall be mandatory compliance for the company. Responsibility for the execution of the normalization plan shall fall on the board of directors of the company.
Once a normalization plan is approved, the Superintendent may modify it or leave it without effect, according to the circumstances in each case.
Art. 135 Measures of the Normalization Plan.
Without prejudice to the measures proposed by the company in its plan, the Superintendent may require that some or all of the measures established in article 132 of this Law be included. Likewise, one or all of the measures indicated below:
1) The capitalization program that, if applicable, requires the solution of the detected problem;
2) The specific objectives pursued by the plan and the detailed schedule of activities for its execution;
3) Capitalization of capital reserves and/or profits;
4) Restructuring and negotiation of liabilities and assets;
5) Absorption of losses against equity accounts;
6) Reduction of administrative expenses;
7) Closure of offices, agencies or branches;
8) Commitment not to enter into new service contracts, or renewal of existing ones;
9) Sale or merger of the company, with prior approval of the Superintendent;
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10) When the company is a member of a financial group: sale or liquidation of any of its subsidiaries if the Superintendent determines that one of its subsidiaries is in danger of becoming insolvent, and also presents a significant risk to the company, or is likely to cause a significant reduction in its assets or earnings;
11) Removal of administrators, directors, advisors and other officers;
12) Appointment of delegated officers of the Superintendent with powers to verify the plan, as well as veto and revoke operations that contravene it;
13) Reduce totally or partially the issuance of policies or retention of premiums and the acceptance of reinsurance operations to levels compatible with the company's capital resources;
14) Defer the payment of principal, interest or both, of subordinated obligations or other credit instruments it has issued, or, if applicable, order early conversion into shares;
15) When the plan has been required due to capital insufficiency and contemplates deferred capital contributions throughout the plan's execution period, the Superintendent will evaluate the viability of such contributions and require the presentation of real and/or personal guarantees from the company's shareholders in order to ensure faithful compliance with the normalization plan. The Board of Directors, by general rule, shall establish the procedure to calculate the amount, the conditions of this guarantee, as well as matters related to its execution; and
16) Any other measure that in the judgment of the Superintendent, either ex officio or, upon proposal of the company's board of directors, is necessary to correct the situation that motivates the normalization plan.
The normalization plan shall also establish the goals and measurement indicators to verify the adequate compliance with the established measures, specifying those that must be achieved gradually during the execution of the plan. The plan shall contain a commitment to constant information by the company's internal control bodies to the Superintendent regarding the evolution of the company and the execution of the plan, including their pronouncements on the status of the causes that motivated said plan.
Art. 136 Obligation of Monitoring by the Regulatory Comptroller.
The regulatory comptroller must monitor the normalization plan authorized by the Superintendent, and must keep the company's board of directors and general manager, as well as the Superintendent, informed of its progress.
Art. 137 Execution and Conclusion of the Normalization Plan.
While the execution of the normalization plan lasts, the Superintendent may establish an exceptional regime for compliance with certain prudential limits by the respective company, provided that at the end of the term of the plan or its extension, such compliance is fully restored. Except as provided in this article, the Superintendent may not establish exceptional treatment for compliance with prudential limits by any company.
If during the execution of the normalization plan, other situations than those indicated in article 133 of this Law arise, adjustments to the plan shall be made, but in no case shall its compliance exceed the terms provided in said article, counted from the date of approval of the original plan by the Superintendent.
When the Superintendent requires the granting of the guarantees referred to in the previous article in order to ensure compliance with the normalization plan, the pledge of the company's shares may not be offered as guarantee. In case of non-compliance with the plan, the Superintendent shall execute the guarantees applying the executed amount to cover the company's equity deficiencies. When it is a normalization plan for the branch of a foreign company, the Superintendent shall communicate it to the parent company, which must remedy any equity deficiency that said branch presents, and contribute as corresponds to the compliance with the other measures stipulated in the plan.
The Superintendent shall consider the normalization process concluded by means of a reasoned resolution as soon as the causes that gave rise to the plan have disappeared, or when the company fails to comply with said plan or when there are sufficient reasons to indicate that its compliance within the term and in the manner provided therein is not possible, or if the causes that give rise to the forced liquidation of the company occur.
Chapter II Dissolution and Liquidation
Art. 138 Causes.
The Superintendent, by means of a resolution issued for that purpose, shall request a Civil District Judge of Managua to declare a insurance company in a state of forced liquidation, when it has incurred in one or several of the following causes:
1) Being in a situation of cessation of payments due to non-compliance with liquid, due and payable obligations or that present indications of an imminent state of suspension of payments;
2) If the company does not submit the normalization plan;
3) If the company fails to comply with the normalization plan in accordance with the corresponding regulations;
4) If the company has losses that reduce its capital to less than the mandatory social capital established by this Law;
5) In the cases indicated in article 165 of this Law or when, while the execution of a normalization plan is in force, serious situations are evidenced that reveal the impossibility of achieving the recovery of the company;
6) If the company persists in infringing the provisions of this Law, those of its social incorporation deed or its own bylaws or regulations, the rules issued by the Board of Directors, as well as the instructions and resolutions of the Superintendent or if it persists in administering its business in a manner not authorized by the Law;
7) If the competent body does not meet or does not adopt the corresponding agreements within a term of ten (10) days, counted from the date on which it ordered the referred removals to which article 165 of this Law refers;
8) If after a term of thirty (30) days counted from the date of notification of the resolution referred to in the previous numeral, the situation that gave rise to the adoption of the corresponding removal measure has not been modified;
Only the Superintendent shall have the power to request the Judge for the declaration of forced liquidation, with the sole exception of the case in which the rule contained in numeral 13) of article 10 of the Law of the Superintendence has been applied. The liquidation process shall be conducted in accordance with the provisions of the following articles of this Law.
In the event that a state-owned insurance company incurs in any cause that merits its dissolution and forced liquidation, the Superintendent must inform these facts immediately to the President of the Republic so that he orders what corresponds, this being a prior and indispensable condition to promote and execute any of the provisions established in this chapter.
Art. 139 Judicial Declaration of Forced Liquidation.
Once the request is submitted, to which a relation or report of the company's situation and of the actions taken by the Superintendent must be accompanied, a Civil District Judge of Managua without further procedure must declare the state of forced liquidation of the referred company.
The declaration of compulsory liquidation of an insurance company immediately renders its authorization to operate ineffective, which must be recorded in the respective order and shall have the same effects as bankruptcy.
The order declaring the state of compulsory liquidation of an insurance company shall be appealable with devolutive effect; the judge shall retain jurisdiction
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4659 27-08-10 164 solely for the admission of the appeal, if applicable, and to give possession of the office to the Liquidator, who shall be exclusively responsible for executing and concluding the liquidation process. All acts carried out by the Liquidator in the exercise of his duties shall remain fully valid.
Art. 140 Publication of the Judicial Declaration of Compulsory Liquidation.
The declaration of compulsory liquidation of an insurance company must be published in a newspaper of national circulation, without prejudice to its publication in La Gaceta, Diario Oficial. The publication shall serve as notification for legal purposes and the legal term shall be counted from the date of publication in any of the media mentioned in this
article.
Art. 141 Subjection to this Law and other Common Laws.
For the conduct of the compulsory liquidation of insurance companies, proceedings shall be in accordance with the provisions of this chapter and the common laws insofar as they are not contradictory to those.
Art. 142 Appointment of Liquidator.
Upon decreeing the state of compulsory liquidation of an insurance company, the Superintendent shall appoint a Liquidator or a liquidation board with no more than three (3) members, indicating, in the latter case, the person who shall preside over it. The appointees shall take possession of their office before the judge who declared the liquidation. Such authority shall proceed to give them possession of their office without further formality than the request made by the Superintendent. In the event that a liquidation board is appointed, it shall take its decisions with the approval of the majority of its members. The sessions shall be convened by the president of the board.
In the successive provisions, both the appointment of a Liquidator and that of a liquidation board shall be referred to under the designation of “the Liquidator”. The Liquidator must be a person of recognized honorability and professional competence for the exercise of the entrusted office, comply with the requirements of article 43 and not be subject to the grounds of article 44 of this Law. The Superintendent may remove and replace the Liquidator from his office, when he does not fully comply with his duties, and must inform the judge before whom he took possession of the office. The general shareholders' meeting and the board of directors as governing and administrative bodies of the company, as well as its chief executive, shall cease in their functions, which shall be assumed in accordance with the powers provided in the articles of incorporation, by the appointed Liquidator, who shall hold the legal representation of the company.
The Liquidator shall conduct an inventory of all assets in the possession of the company and shall take possession of its correspondence and accounting and minute books, placing after the last entries appearing in the books a note signed by him, recording the state in which they were at the time the compulsory liquidation was declared, and shall proceed to formulate a provisional list of creditors, indicating the preferences and privileges that correspond to them.
Art. 143 Suspension of Interest on Obligations Charged to the Insurance Company.
All debts and other obligations of an insurance company in favor of third parties, from the date of the judicial declaration of its compulsory liquidation, shall not accrue interest, nor be subject to maintenance of value, as applicable.
The assets of a company in compulsory liquidation are not subject to attachments, seizures, retentions or restrictions of any kind. Judges also may not process claims for obligations charged to a company in liquidation.
Any attachment, seizure or retention imposed on the assets of a company in compulsory liquidation shall be without any effect from its declaration.
Likewise, companies in liquidation shall be exempt from the payment of income tax on real property they transfer as part of the compulsory liquidation process, as well as from any fiscal or municipal tax that taxes such operations. Any act in contravention of the provisions of this article shall be null.
Art. 144 Surveillance and Auditing of the Liquidator. Its Resolutions.
The Liquidator in his actions shall be subject to the surveillance and auditing of the Superintendent in the same manner as the insurance companies themselves are, an official to whom he shall render account and present monthly and whenever required, a detailed statement of the liquidation.
The resolutions issued by the Liquidator in the exercise of his office shall be appealable with devolutive effect before the competent Court of Appeals.
Against the resolution of the Court no recourse shall lie, except that of clarification or reconsideration.
Art. 145 Legal Protection.
No judicial action may be attempted against the Liquidator and other natural or legal persons who collaborate under his direction, by reason of the decisions and agreements adopted by them or by the actions executed in compliance with the decisions and agreements of the Liquidator, without the action having previously been directed against the company in liquidation and the latter having been resolved favorably to the claims of the plaintiff or claimant by final judicial judgment. Without such requirement, judicial actions against said persons shall not be processed.
Art. 146 Duties of the Liquidator.
In addition to the provisions set forth in other articles of this Law, the duties of the Liquidator are:
1) Immediately notify all banks, natural or legal persons, domiciled in the country or abroad, that are debtors or hold funds or assets of the company in liquidation, so that they do not make payments without the intervention of the Liquidator, so that they return the assets belonging to the company and so that they do not assume new obligations on behalf of the company;
2) Notify the public registries for the annotations to which there may be place;
3) Notify by any means each of the persons who turn out to be owners of any asset delivered to the company, within the term of sixty (60) days counted from the date of the notification;
4) Notify by means of three consecutive notices published in La Gaceta, Diario Oficial and in a newspaper of national circulation, the creditors of the company, so that they legalize the obligations before the Liquidator himself, within the term of thirty (30) days counted from the date of the last publication and make a list protocolized by a Public Notary of the credits that have not been claimed within the indicated term;
5) Examine and approve or reject the duly claimed credits, according to whether the supporting documents are or are not satisfactory to the Liquidator, designating among the accepted credits those that have preference over the common ones;
6) Claim judicially or extrajudicially the matured credits in favor of the company;
7) Verify and rectify the lists of assets and liabilities presented by the company or form said lists, if they have not been presented;
8) Procure that the occupied or inventoried assets are duly safeguarded and kept in good condition and arrange for the sale of those that could not be preserved without prejudice to the liquidation or take the measures conducive to avoiding the prejudice;
9) Appraise the assets of the company and proceed to their sale, through the procedures established by the Consejo Directivo in accordance with a norm of general application. These norms must contain expeditious procedures for the sale of the assets;
10) Administer the credit portfolio in favor of the company while its sale is carried out, make payment arrangements and grant discounts for early payment when said policy contributes to a better recovery of the portfolio, with prior authorization of the internal regulations by the Superintendent;
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11) Deposit daily in demand deposits to its order in a bank the sum that it has received;
12) Convene meetings of creditors to learn what they have to allege regarding their credits, by means of a notice that will be published in La Gaceta, Diario Oficial and in a newspaper of national circulation, at least two consecutive times, there being required between the first publication of the notice in La Gaceta, Diario Oficial and the day of the meeting no less than fifteen
(15) days;
13) Formulate a distributive account each time there are sufficient funds to distribute at least two percent of the mass subject to liquidation among the creditors whose credits have been accepted;
14) Keep the accounting of the liquidation operations in order;
15) Terminate the employment relationship of the personnel of the company, as well as appoint the employees who are strictly necessary for the liquidation. Likewise, set the fees, salaries and other expenses, for approval of the Superintendent;
16) Make payments for administration expenses by means of checks;
17) Temporarily lease the assets in liquidation and take all measures to administer and preserve said assets, when their immediate sale is not possible. The Consejo Directivo may issue general norms in this regard;
18) Contract companies specialized in the liquidation of assets, through the payment of commissions consisting of a percentage of the realization price, when said procedure is more efficient, with prior approval of the Superintendent;
19) Give in dation in payment, partial or total, assets subject to liquidation, to the creditors with priority of payment, provided that they accept it and that the price is not less than the appraisal commissioned by the Liquidator. However, said appraisal may be reviewed and adjusted, with prior authorization of the Superintendent, when its value has suffered variation for any cause or when market conditions so demand;
20) If the financial situation of the affected company permits, request from the Superintendent authorization to carry out the transfer of the portfolio of policies to another authorized company. The transfer agreement must be approved by the Superintendent and fulfilled under its supervision. These transfers and those carried out voluntarily between two insurance companies with prior approval of the Superintendent, will be notified to the insured of the transferring company in order that they may cancel their contracts under the conditions stipulated therein, if they do not wish to continue them with the transferee company; and
21) Carry out all other acts that it deems convenient in order to carry out the liquidation in the best possible manner.
Art. 147 Legal Action Against Directors and Officers.
The Liquidator of an insurance company must, before the expiration of the legal terms of prescription of the action, initiate and pursue any necessary judicial action against directors, managers, administrators, normative comptroller, internal and external auditors, insurance auxiliaries, employees or in general, against any person who could be responsible for the situation that gave rise to said liquidation.
Art. 148 Formalities of the Meetings of Creditors.
In the cases referred to in numeral 12) of article 146 of this Law, the Liquidator shall have the power to determine the formalities to be observed in the meetings of creditors.
Art. 149 Cases Not Provided for in the Laws.
Acts involving the disposal of assets of a company in liquidation and not provided for in this Law or in the common laws shall be resolved by the Liquidator in consultation with the Board of Directors.
Art. 150 Order of Priority of Obligations.
In the liquidation of an insurance company, the following constitute privileged credits, in the order determined:
1) What is owed to workers for wages, salaries, indemnities and other benefits chargeable to the employer, up to the amount of the settlements made in accordance with labor legislation. Excepted are the amounts owed to the principal executive, managers, principal officers and auditors, until the Liquidator concludes his investigations regarding their responsibilities in the causes that gave rise to the forced liquidation of the company. Obligations chargeable to the company derived from labor contracts whose benefits differ from those normally contracted by the company shall not be considered privileged and shall be settled in accordance with the provisions of the Civil Code;
2) Obligations for claims pending payment in all lines, and the amounts of reserves of life insurance policies;
3) Obligations to insureds for unearned premiums;
4) Payment of premiums pending to reinsurers, which are protecting the current portfolio, for the duration of the liquidation period, or until the portfolio is transferred or liquidated;
5) Contributions pending payment to the Superintendency in accordance with the provisions of article 29 of the Law of the Superintendency;
6) Those owed for taxes, fees and contributions;
7) Those owed to other entities;
8) Then other credits shall be settled in accordance with the order and manner determined by the Civil Code.
The Board of Directors shall issue general rules on the manner in which the resources constituted in the provision and catastrophic reserves shall be liquidated.
Art. 151 Imputation of Payment.
The beneficiary of the preference referred to in this chapter who is in turn a debtor of the company in liquidation shall have it imputed to the credit, even if the latter is not due. If there is a balance in his favor, the corresponding difference shall be credited to him.
Art. 152 Form of Payment of Liquidation Expenses.
All expenses resulting from the liquidation of a company, the salaries and fees for employees and other persons employed therein, shall be chargeable to the mass of assets of the company in liquidation, shall be fixed by the Liquidator and must be approved by the Superintendent.
The fees of the Liquidator shall be fixed by the Superintendent and may not be less than one percent (1%) nor more than three percent (3%) of the audited result of the liquidation of the assets of the mass. The Board of Directors may issue rules regulating this matter.
Art. 153 Payment to Shareholders.
When the Liquidator has fully paid the obligations of the company and has complied with the provisions of the preceding article and provided that a surplus remains, and there are no contingent obligations for policies or bonds in force, he shall convene the shareholders' or owners' meeting so that they may agree on its distribution in proportion to their contributions.
Art. 154 Liquidation of a Branch of a Foreign Insurer.
If a company that has one or more branches in Nicaragua is liquidated abroad, these shall be placed in liquidation and the procedure established in the preceding articles shall be followed, to the extent applicable.
Art. 155 Conclusion of the Liquidation Process.
The liquidation of an insurance company must be concluded within a period of no more than one year, unless for justified reasons, the Superintendent decides its extension for a single time and for a period of up to another year.
Notwithstanding the foregoing, once the liquidation period has concluded and prior to the cessation of the legal existence of the company, the Liquidator must continue executing the legal acts that remain pending, or that correspond to him to execute by mandate of the Law in his capacity as legal representative of the company in liquidation. The powers granted by the Liquidator shall remain valid as long as the legal existence of the company in liquidation subsists.
Once the established procedure has been completed, all the assets of the liquidation have been disposed of or the surplus of the assets has been distributed to the shareholders, as the case may be, the
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4661 27-08-10 164 Liquidator shall present his final report on the state of liquidation to the Superintendent. Prior to this procedure, the Superintendent may request from the Liquidator all clarifications, additions or corrections that he deems necessary. Once the Superintendent approves said report, he must issue a resolution declaring the state of liquidation concluded and the cessation of the legal existence of the company. This resolution shall take effect once the protocolized certification thereof is registered in the competent Public Commercial Registry, whereupon the Liquidator shall cease in his functions.
In the event that the report referred to in the preceding paragraph is not approved, it corresponds to the Superintendent to carry out the pertinent actions to conclude the state of liquidation and the cessation of the legal existence of the company, as well as to attempt the necessary actions, in order to establish the responsibilities of the Liquidator and apply the appropriate sanctions.
If at the conclusion of the liquidation period there are assets that the Liquidator has not been able to sell and that have also not been accepted in payment by the creditors or by the shareholders, the Liquidator must deposit them with the competent judicial authority, and such deposit shall have the effects of payment and without any liability to the depositees.
TITLE VII
Sole Chapter Administrative Sanctions and Fines
Art. 156 Sanctions.
When an insurance company or insurance intermediary infringes the provisions of this Law or the regulations provided for therein or fails to comply with the measures consequently ordered by the Superintendency, and this results in the abnormal conduct of insurance activity or a reduction in the economic-financial capacity of the insurance company or a real obstacle to supervision, it shall be subject to the following sanctions, which shall be reasonably graduated according to the conduct of the insurance company, the seriousness and recidivism.
Art. 157 Graduation of the Sanction.
The sanction shall be graduated in accordance with the functions infringed, the seriousness of the offense and recidivism. The Superintendency may not apply sanctions other than those expressly set forth in this Law.
Art. 158 Value of the Fine Unit.
The value of each "fine unit" shall be the equivalent in national currency to one United States dollar, in accordance with the official exchange rate established by the Central Bank of Nicaragua, in force on the date of the imposition of the sanction.
Art. 159 Sanction for Noncompliance with Measures Concerning Normalization Plans.
In the event of noncompliance with the measures ordered by the Superintendent, in accordance with the provisions of the articles concerning the normalization plan of this Law, those who are responsible among the directors and the general manager, each of them, and in their personal capacity, shall be imposed a sanction of one thousand (1,000) up to fifteen thousand (15,000)
fine units. Such fine shall be imposed by the Superintendent, without prejudice to ordering the recommendation of their removal. :
Art. 160 Imposition of Fines and Sanctions on Directors in the Event of Conflict of Interest.
The Superintendent shall impose a fine of two thousand (2,000) up to sixty thousand (60,000) fine units on anyone who contravenes or consents to the contravention of the provisions of article 46 of this Law, relating to the prohibitions applicable to shareholders, directors or officers of an insurance company in the event of conflict of interest. This fine is applicable, without prejudice to the joint and several liability they bear for the damages and losses that may result to the company.
Art. 161 Imposition of Fines for Conducting Transactions with Related Parties in Violation of Legal Limits.
Companies that conduct transactions with their related parties and infringe the limitations contained in articles 71 and 72 of this Law shall be sanctioned by the Superintendent with an administrative fine adjusted to the importance of the offense, of five thousand (5,000) up to sixty thousand (60,000)
fine units. The Superintendent shall impose a similar fine on companies that fail to comply with the limit established in article 72 of this Law.
Art. 162 Sanction on Directors, Managers, Officers, Employees, Internal Auditors, Money Laundering and Terrorist Financing Prevention Officer and Regulatory Comptroller for Altering, Concealing, Destroying Information or Preventing It from Being Known.
The director, manager, officer, employee, internal auditor, money laundering and terrorist financing prevention officer and regulatory comptroller of insurance companies who alter or distort data or records in the balance sheets, books, accounts, correspondence or any other document or who conceal or prevent them from being known or destroy these elements, in order to hinder, divert or evade the supervision that the Superintendency is required to exercise in accordance with the law, shall be sanctioned, without prejudice to the corresponding criminal sanctions, with a fine equivalent to two (2) times their monthly salary. In the case of directors, the sanction shall be up to fifty thousand (50,000) fine units, in accordance with the seriousness of the offense. In the event of nonpayment, the amount of the fine imposed may be claimed by the corresponding instance, and the certification of the resolution issued by the Superintendent in that regard shall have executive force.
Art. 163 Sanctions Relating to the Money Laundering and Terrorist Financing Prevention Program.
For noncompliance with its duty to prevent the risks of money laundering and terrorist financing, according to the seriousness of the situation and exposure to the associated risks, among others: legal, operational, reputational and audit, the company and/or the responsible person, as the case may be, shall be sanctioned as follows:
1) With a fine of five thousand (5,000) up to sixty thousand (60,000) fine units, in the following cases:
a) When they do not adequately develop a comprehensive system or program for the prevention of the risks of money laundering and terrorist financing, in accordance with the laws and regulations on the matter, or such program does not adjust to the needs of the line of business and the risks of their business, or such program presents significant deficiencies in its content, especially in its administration and execution, in accordance with the technical criteria of the Superintendency;
b) When they fail to comply with the obligation to report to the competent authority, in accordance with the Law on the matter, the operations or transactions detected as unusual and qualified as suspicious of constituting money laundering and/or terrorist financing. The maximum of this sanction shall be applied when an ostensibly suspicious operation is not reported, in accordance with the technical criteria of the Superintendency.
2) With a fine equivalent to between four (4) and eight (8) times the respective monthly salary of the responsible person, without prejudice to removal from office and the corresponding criminal sanctions, in the following cases:
a) When the manager, vice-manager, officer, administrator of the Money Laundering and Terrorist Financing Risk Prevention Program, or any other employee of the company, discloses, alerts or informs the client or any other unauthorized person that their transaction or any other transaction was submitted in a suspicious operation report for money laundering or terrorist financing, or that it is being analyzed or considered for a possible report;
Digital Collection "La Gaceta" Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4662 27-08-10 164
b) When the administrator of the Comprehensive System or money laundering and terrorist financing risk prevention program of the respective company does not inform the Superintendent or hides information about facts that significantly impede the proper performance of their work, once they have not been resolved by the company's management despite requiring immediate attention, in accordance with the technical criteria of the Superintendency.
3) With a fine of five thousand (5,000) to fifty thousand (50,000) fine units, and without prejudice to removal from office and the corresponding criminal sanctions, in the following cases:
a) When the company's director discloses, alerts or informs the client or any other unauthorized person that their transaction or any other transaction was submitted in a suspicious operation report for money laundering or terrorist financing, or that it is being analyzed or considered for a possible report;
b) When the board of directors or the money laundering and terrorist financing prevention committee of the company does not attend to and respond to the requirements raised by the administrator of its Comprehensive System or money laundering and terrorist financing risk prevention program, regarding facts that significantly impede the proper execution of said program, in accordance with the technical criteria of the Superintendency;
c) When the manager or vice-manager of the company or branch of the foreign company obstructs the work and training of the administrator of its comprehensive system or money laundering and terrorist financing risk prevention program, or weakens the proper development of said program, in accordance with the technical criteria of the Superintendency.
The specific amounts of the fines within the ranges established by this Law may be graduated through regulations issued by the Board of Directors of the Superintendency, according to specific situations and their weighting as very serious, serious and minor.
Art. 164 Sanction for Non-Compliance with Mandatory Provisions and Reserves.
The Superintendent may suspend the annual distribution of dividends of insurance companies as long as the mandatory provisions and reserves corresponding to 31 December of the previous year have not been constituted. The distribution of profits, if applicable, shall only be made once the provisions of Article 38 of this Law have been satisfied.
Art. 165 Removal of Directors, Managers, Officers and Employees for Reluctance in Complying with Instructions of the Superintendent.
If an insurance company that has committed infractions of this Law, or has been imposed repeated fines, shows reluctance to comply with the instructions given by the Superintendent, carries out operations that foster illicit acts or has executed any serious act that raises fears for its stability, the Superintendent, by resolution, shall remove the members of the board of directors, the legal representative and any officer who are responsible and shall immediately request the competent body to make the appointment or appointments that may be appropriate.
If within three (3) days counted from the indicated request the competent body is not convened for the appointment of the new officers, the Superintendent shall proceed to convene it.
In the case of directors and officers of state-owned insurance entities, whose appointment comes from the President of the Republic, and who are involved in situations that warrant their removal, the Superintendent shall inform the President of the Republic about the situation so that they may order what corresponds.
Art. 166 Sanctions for Lacking Authorization.
Natural or legal persons who, without being duly authorized, carry out operations for which this Law requires prior authorization, shall be administratively sanctioned by the Superintendent with a fine of one hundred (100) to one hundred thousand (100,000) fine units and may not continue engaging in such business. For such purposes, the public force shall be obliged to provide the Superintendency with all necessary assistance, without prejudice to the legal responsibilities incurred by the infringers.
In cases of doubt regarding the nature of the operations carried out by any company, entity or person, it shall be up to the Superintendent to decide within eight (8) days whether the carrying out of such operations is or is not subject to prior authorization in accordance with this Law. In these cases, the operations under investigation shall be suspended until the final resolution.
The Superintendent shall impose the same sanctions as those established in this article on those who, without being previously authorized in accordance with this Law, use as the denomination or designation of their establishments or businesses whose operations are similar to those contemplated in this Law, the word insurance, insurer, reinsurer, bonds, bonding companies, insurance broker, insurance brokerage, reinsurance brokers, insurance intermediary, insurance marketer, insurance agency or any other similar or equivalent words, in Spanish or any other language, which in the Superintendent's judgment are similar to those referred to in this Law.
Art. 167 Sanctions for Intermediaries and Auxiliaries.
The Superintendent, in accordance with the grounds established in the corresponding regulation, may impose on insurance intermediaries and auxiliaries the following sanctions: warning, fines of one hundred (100) to five thousand (5,000) fine units, suspension of the authorization and revocation of the authorization.
The decision to suspend or revoke the authorization of an insurance intermediary or auxiliary shall be taken by the Superintendent after a hearing of the intermediary or auxiliary, of the company and of the affected person or persons, in order to hear the arguments in defense of their rights, proceeding in accordance with the principle of due process.
Art. 168 Destination and Debit of Fines.
Fines imposed by the Superintendent are in favor of the National Treasury, and if they are not paid within the period indicated by said official, they may be debited from the bank account that the sanctioned company or person has in any institution of the National Financial System. For such purposes, the Superintendent shall send an official letter to the depositary financial institution so that it proceeds with the corresponding debit and credit in a special transitory account therein and to the order of the Superintendent.
If the sanctioned party whose account has been debited in accordance with the preceding paragraph of this article files an appeal against the Superintendent's resolution and said appeal succeeds, the Superintendent shall instruct the return of the amount of the fine imposed; otherwise, and once the administrative resolution is final, the Superintendent shall instruct the transfer to the National Treasury account of the amount of the fine imposed with the corresponding specifications and details.
Art. 169 Publication of Sanctions and Overdue Credits.
The Superintendent shall publish in a newspaper of national circulation the sanctions imposed on directors, officers and companies and the reason for them. Likewise, it shall publish in the same manner the overdue loans owed by said directors, officers and related parties, when the latter have them in the same company.
Art. 170 Imposition of Fines for Infractions of Laws and Resolutions of the Superintendency.
When the Superintendent observes any infraction of the laws that the Superintendency is responsible for applying, including this Law, the norms and resolutions of the Board of Directors, as well as the orders, resolutions and instructions issued by the Superintendent, or irregularities
Colección Digital “La Gaceta” Digesto Jurídico Nicaragüense LA GACETA - DIARIO OFICIAL 4663 27-08-10 164 in the operation of an insurance company, or receives from them documents or reports that do not correspond to their true situation, it may impose an administrative sanction adjusted to the importance of the fault, of five hundred (500) up to fifty thousand (50,000) fine units.
Art. 171 Recidivism. Regulatory Power of the Board of Directors.
For the second infraction of an act already sanctioned within a period of twelve (12) months, of the same nature as those indicated in the previous articles, the Superintendent shall impose a sanction equal to double the fine units imposed in the first infraction. The sanctions referred to in the articles of this title are without prejudice to the Superintendent's powers to apply other measures contemplated in this Law.
The Board of Directors of the Superintendency shall establish by general norms the amounts of the fines within the ranges established in this Law, adapted to the seriousness of the fault.
Art. 172 Criminal Sanctions.
The sanctions and fines established in this Title are without prejudice to criminal liabilities in accordance with the Criminal Code.
Art. 173 Payment of Fines Imposed on Directors, Managers or other Executives.
When fines are applied to the directors, managers or other executives of a company, they must pay them from their own assets and not with the company's resources. These companies are prohibited from reimbursing to the sanctioned persons the amount of the fines imposed on their officers.
TITLE VIII
Sole Chapter General Provisions
Art. 174 Exceptions.
Natural or legal persons domiciled in the country are prohibited from contracting in Nicaragua insurance with companies not authorized by the Superintendency, except in cases where it is demonstrated before the Superintendent that the specific insurance in question cannot be obtained in this country with any authorized company or that these do not have policies approved for those risks. The Superintendent, in such cases, must grant a special license for the contract with the foreign insurance company or enterprise that offers it, with the insured assuming the risks involved in this contract.
For the purposes of the provisions of this article, the interested party must submit a written request to the Superintendent attaching general information of the insurer with whom it intends to contract the insurance.
Art. 175 Additional.
Contracts entered into with insurance companies not authorized to operate, in contravention of the provisions of article 4 of this Law, shall not produce any legal effect, without prejudice to the right of the contracting party or insured to request the refund of the premiums paid and independently of the liabilities incurred by the person or company in question, vis-à-vis the contracting party, insured or beneficiary or their successors in good faith and of the sanctions that must be imposed on said person or company under the terms of this Law.
Art. 176 Insurance Companies Currently Existing.
Authorized Intermediaries and Auxiliaries.
Insurance companies that, on the date of entry into force of this Law, hold authorization to operate in accordance with current laws, may continue operating without the need for new approval from the Superintendency.
Likewise, insurance intermediaries and auxiliaries that, upon the entry into force of this Law, are authorized to operate, may continue doing so without the need for new approval and registration.
Art. 177 Voluntary Dissolution.
The early voluntary dissolution of an insurance company to operate in accordance with this Law shall require the prior authorization of the Superintendent and the respective liquidation shall be carried out in accordance with the provisions set forth for that purpose in this Law for forced liquidation, in all that is applicable. In these cases, the appointment of the Liquidator shall be made by the Superintendent, for which the general shareholders' meeting of the insurance company may propose candidates to the Superintendent.
Art. 178 Transporters' Insurers.
The legal entities referred to in article 81 of Law No. 431, "Law for the Vehicle Traffic Regime and Traffic Infractions", published in La Gaceta, Official Gazette No. 15, of 22 January 2003, shall be incorporated and operate as corporations in accordance with the provisions of the rule issued by the Board of Directors, and in accordance with the provisions of this Law insofar as they are applicable to them as insurance companies.
Art. 179 Insurance Companies under the Commercial Domain of the State.
State-owned or mixed-ownership insurance companies or entities shall be subject exclusively, just as the rest of the insurance companies are, to the provisions of this Law, to the rules issued by the Board of Directors, to the instructions of the Superintendent, and in a complementary manner and insofar as they do not contradict this Law, to their respective constitutive laws and their regulations. In the ordinary course of their commercial activity, such as the acquisition of goods and services necessary for the development of their activity, Law No. 323, "Law on State Contracting", published in La Gaceta, Official Gazette No.
1 and 2, corresponding to 3 and 4 January 2000 or the legal regime on this matter, shall not be applicable to them. As regards compliance with tax or municipal obligations, they shall be on the same level of equality as the rest of the insurance companies.
With respect to these companies or entities, the General Comptroller's Office of the Republic shall have competence to audit the execution of their budget, without prejudice to the regulations to which the directors or officials of these entities are subject in accordance with the law.
Art. 180 Premium Financing Companies.
There may be companies whose exclusive line of business is the provision of premium payment financing services to users of the insurance activity. The foregoing is without prejudice to the agreements that insurance companies may enter into with users on this matter. The Board of Directors may issue general rules on this matter.
Art. 181 Financial Groups.
The companies referred to in this Law must comply with the provisions on financial groups contained in Law No. 561, "General Law on Banks, Non-Bank Financial Institutions and Financial Groups" and the regulations on the matter, in those cases in which they form part of a group in accordance with the provisions of said Law, or when there is common control through ownership, management, use of corporate image or frequent assumption of shared risks between two or more insurance companies. The Board of Directors may issue general rules on this matter.
Art. 182 Appeal against Resolutions of the Superintendent.
The resolutions issued by the Superintendent shall be subject to the remedies and procedures contemplated in the Law of the Superintendency of Banks.
Art. 183 Organization Expenses.
The organization and installation expenses of any insurance company may not exceed twenty percent (20%) of the mandatory share capital and must be fully amortized within a maximum period of five (5)
years.
Art. 184 Kinship Impediment to be Employees.
Persons who are spouses or relatives of each other, up to the second degree of consanguinity, may not be officials or employees in the same insurance company
Digital Collection "La Gaceta" Nicaraguan Legal Digest LA GACETA - OFFICIAL GAZETTE 4664 27-08-10 164 subject to the supervision of the Superintendent, except where they hold positions that do not represent a possibility of collusion.
Art. 185 Distance or Electronic Contracts.
Insurance may be contracted at a distance or electronically, in which cases the simultaneous physical presence of the insured or contracting party and the insurer shall not be necessary. These contracts shall produce all the effects provided for by Law for in-person contracts, provided they comply with the requirements established by special laws on contracting and electronic signature. The Board of Directors may issue general rules on this matter.
Art. 186 Arbitration.
The disagreements that arise between the insurance company and the insured, the policyholder, or the beneficiary, as the case may be, may be settled through arbitration proceedings in accordance with the provisions of Law No. 540, "Mediation and Arbitration Law", published in La Gaceta, Official Gazette No. 122 of 24 June 2005.
The Board of Directors of the Superintendency may issue general rules regulating this matter.
Art. 187 Risk Centers.
The Superintendency may establish a registration system, called the Insurance Risk Center, which shall have consolidated and classified information on premiums receivable, claims experience, and other information that allows Insurance Companies to have relevant information for risk underwriting and fraud prevention, which the insurance companies must provide to it no later than the first fifteen days of the following month in the manner it determines. The corresponding information shall be available to the insurance companies authorized by the Superintendency. In the case of private risk centers, these shall be subject to the approval and regulation of the Superintendency, and shall be subject to confidentiality in accordance with the provisions of the General Banking Law.
The foregoing is without prejudice to the information that insurance companies may exchange among themselves on this matter.
Art. 188 Counter-guarantees.
The counter-guarantees constituted in favor of insurance companies, for the issuance of the different types of bonds, must be real guarantees, understood as such for the purposes of this Law, the mortgage, the pledge, the certificates of deposit, and any other that the Board of Directors determines by general rule.
Art. 189 Educational Campaign.
The insurance companies referred to in this Law shall be obliged, in addition to the provisions of the Single Chapter of Title III. Advertising and Consumer Protection, to develop educational campaigns for their clients regarding the financial services they offer them in order to provide them with elements of judgment that allow them to know the products offered. The Board of Directors may issue rules regulating this matter.
TITLE IX
Single Chapter Transitory Provisions
Art. 190 Validity of Provisions.
The rules issued by the Board of Directors and the resolutions of the Superintendent, provided they do not contravene this Law, shall continue to be mandatory while they are not revoked or amended by the Board of Directors or the Superintendent, as the case may be.
Art. 191 Existing Bonding Companies.
Bonding companies that were operating at the entry into force of this Law shall have a period of six months to adjust and comply with the provisions thereof, under penalty of not being able to continue operating. The Superintendent, by reasoned resolution and upon justified request of the interested party, may extend this period for a time equal to that indicated.
Art. 192 Transitory Periods.
With respect to the provisions regulating the minimum share capital and risk capital of insurance companies, the Board of Directors, upon proposal of the Superintendent, by generally applicable rules, may establish transitory periods for the implementation of the referred provisions.
The periods granted by the Board of Directors in the referred rules may not exceed three years counted from the entry into force of this Law.
Art. 193 Priority of This Law.
This Law, due to its special character, shall prevail over any other law on the same matter that contravenes it.
Art. 194 Repeals.
The following legal provisions are repealed:
a) Legislative Decree No. 1727, "General Law of Insurance Institutions", published in La Gaceta, Official Gazette No. 270 of 26 November 1970;
b) Law No. 227, Reform to the General Law of Insurance Institutions, published in La Gaceta, Official Gazette No. 150 of 12 August 1996;
c) Executive Decree No. 25-96, Regulations of the General Law of Insurance Institutions and its reforms, published in La Gaceta, Official Gazette No. 26 of 6 February 1997; and
d) The other legal provisions that oppose it.
Art. 195 Validity.
This Law shall enter into force from its publication in La Gaceta, Official Gazette.
Given in the city of Managua, in the Session Hall of the National Assembly, on the fifteenth day of the month of July of the year two thousand ten. Eng. René Núñez Téllez, President of the National Assembly. Dr. Wilfredo Navarro Moreira, Secretary of the National Assembly.
Therefore. Let it be held as Law of the Republic. Publish and Execute.
Managua, seventeen of August of the year two thousand ten. DANIEL ORTEGA SAAVEDRA, PRESIDENT OF THE REPUBLIC OF NICARAGUA.
MINISTRY OF GOVERNANCE Reg. 9809 - M. 9437410 – Value C$ 1,110.00 STATUTES "INTERDENOMINATIONAL APOSTOLIC PROPHETIC MINISTRY ASSOCIATION JESUS CHRIST IS THE SOURCE OF SALVATION" CERTIFICATE OF REGISTRATION The undersigned Director of the Department of Registry and Control of Associations of the Ministry of Governance, of the Republic of Nicaragua. CERTIFIES. That under perpetual number four thousand six hundred seventeen (4617), from folio number five thousand four hundred thirty-eight to folio number five thousand four hundred forty-six (5438-5446), Volume IV, Book: ELEVENTH (11th) that this Department is in charge of, the national entity named: "INTERDENOMINATIONAL APOSTOLIC PROPHETIC MINISTRY ASSOCIATION JESUS CHRIST IS THE SOURCE OF SALVATION" was registered. In accordance with authorization of Resolution of the eighth of June of the year two thousand ten. Given in the city of Managua, on the tenth day of June of the year two thousand ten. They must publish in La Gaceta Official Gazette, the statutes inserted in the deed number Nine (9), Authenticated by Licentiate Luis Omar Espinoza, on the seventh day of June of the year two thousand ten. (f) Dr. Gustavo A. Sirias Quiroz., Director. :
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The links and the sentences they come from (10)
- Supersedes
- Executive Decree No. 25-96Not in RegAlert · 1997
“Executive Decree No. 25-96, Regulations of the General Law of Insurance Institutions and its reforms, published in La Gaceta, Official Gazette No. 26 of 6 February 1997;”
- Law No. 227 dated 1996-08-12Not in RegAlert
“Law No. 227, Reform to the General Law of Insurance Institutions, published in La Gaceta, Official Gazette No. 150 of 12 August 1996;”
- Legislative Decree No. 1727, "General Law of Insurance Institutions"Not in RegAlert · 1970
“Legislative Decree No. 1727, "General Law of Insurance Institutions", published in La Gaceta, Official Gazette No. 270 of 26 November 1970;”
- Basis for
“and Articles 1, 2, and 5, numeral 5) of Law 733, "General Law of Insurance, Reinsurance, and Sureties," published in Gaceta No. 162, 163, and 164, of August 25, 26, and 27, 2010”
- Norm for the Authorization of Insurance Policies2016 · SIBOIF
“That Article 5, numeral 1), and Article 6, numeral 11) of Law No. 733, "General Law of Insurance, Reinsurance and Surety Bonds," published in La Gaceta, Official Gazette No. 162, 163 and 164, on August 25, 26 and 27, 2010 (General Insuranc…”
“That Article 39 of Law No. 733, General Law of Insurance, Reinsurance, and Surety... establishes that technical and mathematical reserves... must be backed by investments”
- Reinsurance, Fronting and Co-insurance Regulation2015 · SIBOIF
“That Title IV of Law No. 733, General Law of Insurance, Reinsurance and Suretyship, published in La Gaceta, Official Journal No. 162, 163 and 164, on August 25, 26 and 27, 2010, empowers the Board of Directors...”
- Norm on Transparency in Financial Operations2013 · SIBOIF
“That Article 86 of Law No. 733, the General Law of Insurance, Reinsurance, and Surety Bonds, published in La Gaceta, Official Gazette No. 162, 163, and 164, of August 25, 26, and 27, 2010, establishes that advertising and publicity conduct…”
“based on the authority conferred by Articles 116 and 117 of Law 733, General Law of Insurance, Reinsurance and Surety Bonds”
+1 more
“That Article 4 of Law No. 733, General Law on Insurance, Reinsurance, and Suretyship, published in La Gaceta, Official Gazette No. 162, of August 25, 2010, establishes that the Superintendence will authorize, supervise, and inspect the com…”
Mentions (2): 1 document this one mentions and 1 document that mentions it, without changing it
- Refers to
“Superintendency Law: Law No. 316, “Law of the Superintendency of Banks and Other Financial Institutions,” approved on 29 September 1999 and published in La Gaceta, Official Gazette No. 196 of 14 October 1999.”
- Referred to by
- Norm for the Marketing of Mass Insurance2017 · SIBOIF
“That Article 124 of Law No. 733, General Law of Insurance, Reinsurance, and Suretyship... establishes that any insurance company wishing to include a product within the category of mass insurance must request approval”
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