Norm for the Authorization and Operation of Insurance Auxiliaries

1 Resolution No. CD-SIBOIF-934-1-MAR18-2016 Dated March 18, 2016

NORM FOR THE AUTHORIZATION AND OPERATION OF INSURANCE AUXILIARIES

The Board of Directors of the Superintendence of Banks and Other Financial Institutions.

CONSIDERING

I That Article 4 of Law No. 733, General Law of Insurance, Reinsurance, and Suretyship, published in La Gaceta, Official Gazette No. 162, of August 25, 2010, establishes that the Superintendence will authorize, supervise, and audit the companies and natural persons referred to in said Law; therefore, the activity of insuring, reinsuring, and suretying can only be exercised by legal entities, public, private, or mixed, authorized to operate as such by the Superintendence in accordance with the provisions of the aforementioned Law and other applicable regulations.

II That Article 115, final part, of the aforementioned Law, establishes that no natural or legal person may exercise the functions of insurance intermediaries or auxiliaries, external or internal, without prior authorization from the Superintendence and registration in the corresponding registry.

III That Article 116 of the same Law 733, in its relevant parts, states that insurance intermediaries and auxiliaries are subject to the supervision of the Superintendence and their activities are subject to the provisions of said Law and to the regulations issued by the Board of Directors with general character, with the Superintendent being responsible for granting authorizations to operate as insurance intermediaries or auxiliaries. Likewise, that such authorizations shall be non-transferable and must be registered in the registry kept by the Superintendence for such purposes.

IV That in accordance with the foregoing and based on the powers provided for in Article 5, numeral 1) and Article 6, numerals 9) and 11) of the aforementioned Law 733; and Article 3, numeral 13) of Law 316; Law of the Superintendence of Banks and Other Financial Institutions, and its reforms.

In exercise of its powers,

RESOLVES

CD-SIBOIF-934-1-MAR18-2016

To issue the following Norm:

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NORM FOR THE AUTHORIZATION AND OPERATION OF INSURANCE AUXILIARIES

CHAPTER I CONCEPTS, OBJECT, AND SCOPE

Article 1. Concepts.- For the application of this Norm, the concepts indicated in this article, whether in uppercase or lowercase, singular or plural, shall have the following meanings:

a) Actuary: A person registered with the Superintendence, graduated in the actuarial field, professionally qualified to solve financial, technical, mathematical, and statistical aspects related to insurance operations, by applying actuarial sciences. For the purposes of this norm, they shall be responsible for preparing, evaluating, certifying, and signing technical actuarial studies, actuarial balances, technical notes, product design, and the reserves of insurance companies, in accordance with what is established in Article 37 of the General Insurance Law.

b) Adjuster or Claims Liquidator: A natural or legal person authorized by the Superintendent and registered with the Superintendence, with special theoretical and practical knowledge to investigate the causes producing losses and the valuation of damages caused, so that the insurance company, based on their report, determines the amount of the corresponding indemnification, in accordance with what is established in Article 3 of the General Insurance Law.

c) Insurance Auxiliaries: External and internal insurance auxiliaries established in Article 115 of the General Insurance Law.

d) External Insurance Auxiliaries: Natural or legal persons authorized by the Superintendent to provide services as an actuary, adjuster or claims liquidator, private insurance investigator, loss or damage appraiser, risk evaluator, and appraising expert.

e) Internal Insurance Auxiliaries: Natural persons authorized by the Superintendent to work in insurance companies under labor contracts and perform functions typical of adjusters or claims liquidators, loss or damage appraisers, risk evaluators, actuaries, and appraising experts.

f) Days: Calendar days, unless it is expressly stated that they refer to business days.

g) Risk Evaluator: In accordance with what is established in Article 3 of the General Insurance Law, it is the natural or legal person, authorized by the Superintendent and registered with the Superintendence, specialized in conducting studies through a scientific methodology to determine within a specific period of time the probability that personal damages or material losses will occur, as well as their quantification as a prior action to the insurance process, with the object that the insurance company appreciates the risk to be covered.

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h) Loss or Damage Appraiser: A natural or legal person registered with the Superintendence who, at the request of a party, intervenes in the investigation or obtaining of data related to a loss, and must present to their principal the appraisal and report on the occurrences of the loss. For the purposes of this norm, the loss or damage appraiser refers to the loss investigator defined in Article 3 of the General Insurance Law.

i) Private Insurance Investigator: A professional dedicated to obtaining evidence and proofs, hired by an insurance company in order to allow it to know the truthfulness of information for the underwriting of risks to be insured and the handling of claims, to avoid the possibility of fraud and other acts contrary to morality and the laws.

j) General Insurance Law: Law No. 733, General Law of Insurance, Reinsurance, and Suretyship, published in La Gaceta, Official Gazette No. 162, 163, and 164, of August 25, 26, and 27, 2010.

k) Law of the Superintendence: Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions, and its reforms.

l) Appraising Expert: A natural or legal person authorized by the Superintendent and registered in the Registry of Appraising Experts (REPEV) of the Superintendence, who provides appraisal services for goods received as collateral, related to credit operations (loans, suretyships, guarantees, among others); for goods in use; for goods that have been adjudicated to them; and for goods in general; in accordance with what is established in the regulations governing the matter on appraising experts who provide services to institutions of the financial system.

m) Registry: Registry of Insurance Auxiliaries of the Superintendence.

n) Insurance Company or Company: An entity that operates in insurance, reinsurance, and suretyship, national or foreign, privately owned, state-owned, or mixed, in accordance with what is established in the General Insurance Law.

o) Superintendence: Superintendence of Banks and Other Financial Institutions.

p) Superintendent: Superintendent of Banks and Other Financial Institutions.

Article 2. Object.- This Norm aims to establish the authorization and registration requirements for natural or legal persons who dedicate themselves to, or are interested in providing services as insurance auxiliaries; as well as to regulate control aspects applicable to persons providing said services.

Article 3. Scope.- These provisions are applicable to the insurance auxiliaries referred to in this Norm and to insurance companies, insofar as applicable, except for appraising experts who shall be governed by the regulations governing the matter on appraising experts who provide services to institutions of the financial system.

CHAPTER II

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AUTHORIZATION AND REGISTRATION REQUIREMENTS FOR INSURANCE AUXILIARIES

Article 4. Registry of Insurance Auxiliaries.- Registry kept by the Superintendence of natural or legal persons who provide services to insurance companies, as an actuary, adjuster or claims liquidator, private insurance investigator, loss or damage appraiser, and risk evaluator.

For all legal purposes, it must be understood that the legal existence of the registry created pursuant to Resolution No. CD-SIBOIF-733-1-JUN20-2012, dated June 20, 2012, published in La Gaceta, Official Gazette No. 211 of November 5, 2012, and Resolution No. CD-SIBOIF- 866‐4‐DIC3‐2014, dated December 3, 2014, published in La Gaceta, Official Gazette No. 4 of January 8, 2015, has remained without interruption of continuity since the entry into force of the aforementioned resolutions.

Article 5. Minimum Qualifications of Interested Parties.- The natural or legal person interested in acting as an insurance auxiliary must meet the following minimum qualifications:

a) Possess specific knowledge in the subject matter and/or verifiable experience in the insurance and/or suretyship industry and in the specialty for which authorization is sought;

b) Not be subject to any of the impediments established in Article 13 of this Norm; and

c) Comply with the other requirements established in the following articles.

Article 6. Authorization Requirements for Internal Insurance Auxiliaries.- Insurance companies must submit an authorization request to the Superintendent, specifying the service specialty and line of insurance in which the interested party intends to act, attaching the following documentation:

a) Notarially reasoned copy of the interested party's identity card or resident card, or another legal document accrediting their nationality, in the case of foreigners;

b) Authorization request form to operate as an insurance auxiliary described in Annex 1 of this Norm, which forms an integral part of it, which must be signed by the interested party and by the legal representative of the contracting insurance company;

c) Curriculum vitae documented with academic and/or labor supports that accredit knowledge and/or experience in the insurance and/or suretyship industry and in the specialty for which authorization is sought.

In the case of actuaries, an academic degree in the actuarial field must be presented, as well as supports accrediting practices or internships in the actuarial line.

d) Current judicial and police background certificates issued by the corresponding national authorities at the date of submission of the request. In the event that the interested party has lived outside the country in the last five (5) years, certificates issued by the corresponding foreign authorities will additionally be required;

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e) Notarized declaration by the interested party of not being subject to the impediments established in Article 13 of this Norm;

f) Description of the equipment and other resources available to support the valuation function according to the specialty in which they wish to be authorized, if applicable;

g) Description of the methodology applied for the preparation of inspection and appraisal reports according to the specialty in which they wish to be authorized, if applicable; and

h) Letter in which the interested party authorizes the Superintendent to verify their report of obligations with financial system institutions, issued by the Risk Center of the Superintendence.

Article 7. Requirements for External Insurance Auxiliaries.- Interested parties wishing to provide services as external insurance auxiliaries must submit an authorization request to the Superintendent indicating the service specialty and line of insurance in which they wish to operate, attaching the following documentation:

a) In the case of natural persons:

1. The documents required in Article 6 of this norm;
2. Original of the surety bond or insurance policy referred to in Article 122 of the General Insurance Law; and
3. Address of the location where the offices will be located, with indication of the telephone number, email, and website, if any.

b) In the case of legal persons:

1. Draft deed of incorporation of the company, or if it is a company constituted previously, a notarized copy of the testimony of the public deed of incorporation with its statutes, and its modifications, if any, with the registration note in the Commercial Registry;
2. Notarially reasoned copy of the identity card or resident card of the person who will act as legal representative, or another document accrediting their nationality, in the case of foreigners;
3. Authorization request form contained in Annex 1 of this Norm, which must be signed by the person who will act as legal representative of the company;
4. Opening Balance Sheet certified by an Authorized Public Accountant and signed by the person who will act as legal representative of the company. In the case of a company constituted previously, financial statements (balance sheet and income statement) of the last economic year;

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5. Notarially reasoned copy of the Unique Taxpayer Registry (RUC) certificate of the person who will act as legal representative of the company;
6. List of partners or shareholders, indicating their percentage of participation in the company's capital; as well as the composition of its board of directors;
7. Curriculum vitae of the proposed legal representative and of the persons who, on behalf or in representation of the company, will provide services as insurance auxiliaries, documented with academic and/or labor supports that accredit knowledge and/or experience in the insurance and/or suretyship industry and in the specialties for which they seek authorization.

For the case of actuarial services, the proposed legal representative of the firm or company and the persons who, on behalf or in representation of the same, will provide services as insurance auxiliaries, must present an academic degree in the actuarial field, as well as supports accrediting practices or internships in the line. 8) Judicial and police background certificates of the partners and the proposed legal representative, current at the date of submission of the request, issued by the corresponding national authorities. In the event that any of the aforementioned persons has lived outside the country in the last five (5) years, a certificate issued by the corresponding foreign authority will additionally be required; 9) Notarized declaration by the proposed legal representative of not being subject to the impediments established in Article 13 of this Norm; 10) Address of the location where the offices will be located, with indication of the telephone number, email, and website, if any; 11) Original of the surety bond or insurance policy referred to in Article 122 of the General Insurance Law; 12) Draft service provision contract to be signed with the insurance company; 13) Description of the equipment and other resources available to support the valuation function according to the specialty in which they wish to be authorized, if applicable; 14) Description of the methodology applied for the preparation of appraisals according to the specialty in which they wish to be authorized, if applicable; and

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15. Letter in which the proposed partners, directors, and legal representative authorize the Superintendent to verify their report of obligations with financial system institutions, issued by the Risk Center of the Superintendence.

Article 8. Deadline for Submission of Information.- Interested parties wishing to act as insurance auxiliaries shall have a period of thirty (30) days to complete or rectify the information required in the preceding articles, which shall begin to run from the date of submission of the respective authorization request. Once this period has expired without the complete information being presented, the request shall be considered withdrawn.

Interested parties whose request was considered withdrawn may submit a new authorization request up to one year after receiving notification of such status from the Superintendence.

Article 9. Authorization.- Upon meeting the requirements established in the preceding articles, the Superintendent shall resolve on the authorization request in accordance with the results of its analysis, notifying the interested parties of the approval or denial of the respective authorization within a period not exceeding twenty (20) business days, counted from the date on which the interested party completed all the information. In case of approval, the Superintendent shall notify the interested party of the corresponding authorization resolution and order their inscription in the Registry of Insurance Auxiliaries kept by the Superintendence for such purposes, prior to payment of the registry fee and presentation of the surety bond or insurance policy referred to in the following article.

Authorized insurance auxiliaries shall be inscribed in the Registry referred to in this norm. Such auxiliaries shall be identified in the Registry by an alphabetic code, which will indicate the category and specialty of the auxiliary in accordance with the Table contained in Annex 2 of this norm, which is an integral part of it.

The aforementioned resolution enables the insurance auxiliary, in accordance with the authorized specialty and line of insurance, to provide their services to insurance companies authorized in Nicaragua and to the insured persons of said companies.

In accordance with what is provided in Article 116 of the General Insurance Law, the authorizations granted to insurance auxiliaries shall be non-transferable. Every three (3) years, the registry of said auxiliaries must be updated, and these must provide the corresponding information.

Insurance companies and external insurance auxiliaries, legal persons, shall be jointly liable, as applicable, for the services provided by persons acting on their behalf and representation, which cause harm to the insurance company and/or insured persons, beneficiaries, or contractors. The external insurance auxiliary, natural person, shall be liable for their own actions.

Article 10. Payment of Registry Fees and Presentation of Surety Bond or Insurance Policy.- Once the authorization resolution referred to in the preceding article is notified, the interested party must present the following documents for their inscription in the Registry to proceed:

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a) Official cash receipt from the Superintendence proving payment of the initial or update registration fee referred to in Article 116 of the General Insurance Law, according to the amount detailed in the Registry Fees Table contained in Annex 3 of this norm, which forms an integral part of it; and

b) Surety bond or insurance policy with annual validity, referred to in Article 122 of the General Insurance Law.

When the aforementioned documents are not presented within the term of ten (10) business days counted from the notification by the Superintendent, the latter shall proceed to invalidate the corresponding authorization, except for cause duly justified by the interested party.

In the event of withdrawal of the request by the interested party, they may initiate a new authorization process; however, they shall not have the right to reimbursement or refund from the Superintendence of the registry fee paid, if applicable.

Article 11. Valuation Specialties.- The authorization of the valuation specialties granted to insurance auxiliaries providing these services shall be classified according to the nature of the goods to be appraised in accordance with the specialties described in Annex No. 4, which becomes an integral part of this Norm.

The insurance auxiliary requesting an expansion of specialties must do so in writing, indicating the new specialties for which they wish to be authorized.

Article 12. Accreditation Credential.- The Superintendence, through the Insurance Superintendence, shall grant an accreditation credential to authorized insurance auxiliaries, which shall contain the information described in Annex 5 of this norm, which is an integral part of it. Said credential shall be updated in accordance with the resolution issued by the Superintendent authorizing the renewal of the insurance auxiliary.

In the event of loss of the aforementioned credential, the insurance auxiliary must manage its replacement by submitting a written request to the Superintendent expressing the circumstances of said loss. It shall be the responsibility of the insurance auxiliary to assume the cost of replacement of said credential, paying into the cash area of the Superintendence the amount established in Annex 3 of this norm.

CHAPTER III

IMPEDIMENTS

Article 13. Impediments to be an Insurance Auxiliary.- The following persons shall not be inscribed, nor request an update of their authorization in the Registry:

a) Directors, managers, officials, or employees of other insurance companies and directors, managers, administrators, or employees of banking and financial institutions, as well as non-banking financial institutions.

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b) Insurance intermediaries provided for in Article 115 of the General Insurance Law.

c) Legal representatives or intermediaries of reinsurance companies.

d) Employees of the Superintendence.

e) Those who, as directors, managers, or employees of a legal person, public or private, have been sanctioned by administrative acts by the respective competent authority.

f) Those 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, to any financial institution subject to the supervision of the Superintendence, or who have been declared judicially insolvent, in bankruptcy, or forced liquidation.

g) Those who have been convicted of causing patrimonial damage to an entity supervised by the Superintendence.

h) Those who have been convicted of any crime against property (theft, fraud, swindling, etc.).

i) Those who have been convicted of causing damage to public faith, by altering financial statements of an entity supervised by the Superintendence.

j) Those sanctioned with revocation of their authorization to operate as an insurance auxiliary.

k) Those who have been sentenced to principal or accessory penalties, grave and less grave, in accordance with the current Penal Code.

l) Other cases that the Superintendent considers pertinent, by reasoned resolution.

If, while the insurance auxiliary is inscribed in the Registry, any of the impediments indicated in the preceding letters arise, the Superintendent, ex officio, shall proceed to suspend or cancel the respective authorization, as appropriate, without prejudice to its formalization in an official document. Regarding legal persons, they shall not be inscribed in the Registry if they or their current partners, directors, or legal representatives are subject to any of the impediments mentioned in this article.

CHAPTER IV

CANCELLATION OF AUTHORIZATION

Article 14. Grounds for Cancellation of Authorization.- The Super