Resolution SBS No. 02352-2022: Modification of Title VII of the Compendium of Regulatory Supervision Standards for the Private System of Pension Fund Administration, regarding Benefits

Los Laureles Nº 214 - Lima 27 - Perú Telf. : (511)6309000 Lima, July 27, 2022 Resolution S.B.S.
No. 02352-2022
The Superintendent of Banks, Insurance and Private Pension Fund Administrators CONSIDERING:
That, by Supreme Decree No. 054-97-EF, the Single Text of the Ordered Law of the Private System of Pension Fund Administration was approved, hereinafter the SPP Law; That, by Supreme Decree No. 004-98-EF, the Regulation of the aforementioned SPP Law was approved, hereinafter the Regulation; That, within the framework of Law No. 29903, Law of Reform of the Private Pension System (SPP), the coverage of the disability and survivorship insurance and burial expenses was redesigned, through a collective policy giving rise to the new model of disability, survivorship and burial expenses insurance (SISCO), whose award process was developed based on a procedure designed in accordance with the provisions of articles 51 and 52 of the SPP Law; That, in accordance with articles 51 and 52 of the SPP Law, the risks of disability, survivorship and burial expenses must be administered by insurance companies, under a collective insurance policy, for which a bidding process organized and carried out jointly by the Private Pension Fund Administrators (AFP) is conducted, which is subject to the provisions issued by the Superintendency; That, by Resolution No. 232-98-EF/SAFP, Title VII of the Compendium of Regulatory Supervision Standards of the Private System of Pension Fund Administration, referred to Benefits, hereinafter Title VII, was approved, in which the award process of the SISCO is regulated, as well as its characteristics, obligations, responsibilities and guarantees; That, paragraphs m) and n) of article 262 of the aforementioned Title VII regulate the conditions and clauses of the risk administration contract for disability, survivorship and burial expenses, under the collective insurance policy, and in particular, the extension of the SISCO collective contract, in case there is no award or it is partial; establishing that the insurance companies in charge of administering the risks of disability, survivorship and burial expenses under the SISCO collective insurance policy continue to provide coverage of said risks on identical terms until the entry into force of the next contract; That, therefore, it is necessary to evaluate measures and/or alternatives in the regulation that provide a solution to the scenario of a potential non-award or partial award of the fractions at the end of the SISCO contract that mitigates the risk of extending it until a new award that assigns the entire portfolio of affiliates; in such a way that the uncertainty associated with a potential extension of the current SISCO contract is reduced, without this having as a counterpart an adjustment in the premium rate that reflects the market loss experience, even more so considering circumstances of increased loss experience, such as that caused, exceptionally, by a pandemic; That, based on the experience of the bidding processes carried out, improvements have been identified that can be applied in future bidding processes in order to be carried out under conditions of greater
suitability, efficiency and simplicity for the participants, so that the operational risks of the process are mitigated, in aspects such as the determination of the reference premium rate and requirements that the actuarial firm and the personnel in charge of preparing it must meet, criteria for the selection of insurance companies, implementation of remote channels for the bidding process, duration of the contract and deadline for its resolution, among other aspects; That, in order to collect the opinions of the general public regarding the proposals for modification to the SPP regulations, the prepublication of the present draft resolution on the matter was ordered on the electronic portal of the Superintendency, in accordance with what is established in Supreme Decree No. 001-2009-JUS; Having the approval of the Deputy Superintendencies of Private Pension Fund Administrators, of Insurance and of Legal Advice; and, In exercise of the powers conferred by numeral 9 of article 349 of the General Law of the Financial System and of the Insurance System and Organic Law of the Superintendency of Banks and Insurance, Law No. 26702 and its amendments, and paragraph d) of article 57 of the Law of the Private System of Pension Fund Administration; RESOLVES:
Article First.- Modify Title VII of the Compendium of Regulatory Supervision Standards of the Private System of Pension Fund Administration, approved by Resolution No. 232-98-EF/SAFP and its amendments, referred to Benefits, in the following terms:

• Modify paragraph k) of article 252, in accordance with the following text:
  “Article 252.- Conditions of the bidding process. The public bidding process referred to in articles 51, 52 and 53 of the Law is carried out complying with the following provisions:
  (...) k) Reference premium rate.- It refers to the pure risk premium, which does not incorporate the expense structure nor the profit margin of the insurance company. The AFPs jointly must include in the bidding bases a reference premium rate, indicating the denomination and/or name of the actuarial firm in charge of preparing and reviewing the report that supports the methodology for its determination, its correct application and the range or value proposed for consideration by the AFPs. This review must include the evaluation of the data, assumptions and parameters used for the calculation and estimation of the proposed reference rate. Likewise, it must be revealed in the report in case there are omissions, assumptions, underestimations or overestimations of some variables that required adjustment and that may have a material effect on the reference rate. In the case of assumptions, adequate technical support must be presented. The report must include sufficient detail so that qualified personnel in the matter can objectively evaluate the reasonableness of the work, as well as all relevant information for the determination of the reference rate, and must be sent by the AFPs to the Superintendency at least fifteen (15) calendar days before the date scheduled in numeral vi of paragraph b.2) of article 250 of this Title. This report must be delivered, upon request of the insurance companies, as part of the consultation process subject to the bidding process.”
• Modify paragraph d) of article 258, in accordance with the following text:
  “Article 258.- Criteria for the selection of insurance companies. For the purpose of determining the award, the committee must follow the criteria established in the bidding bases, taking into consideration the following selection criteria:
  (...) d) In case the award of 100% of the offered fractions is not achieved in a first round of the process, the AFP may carry out successive rounds within the same award process, as many times as it considers necessary, and/or carry out a new process only for the unawarded fractions, within a maximum period of thirty (30) calendar days. The conditions of the new bidding process are established by instruction of the Superintendency.”
  Article Second.- Incorporate article 252-A, article 259-B and article 263-B into Title VII of the Compendium of Regulatory Supervision Standards of the Private System of Pension Fund Administration, approved by Resolution No. 232-98-EF/SAFP and its amendments, referred to Benefits, in accordance with the following texts:
  “Article 252-A.- Requirements of the actuarial firm in charge of calculating the reference premium rate.
  The report supporting the reference premium rate must be prepared and reviewed by an actuarial firm that meets the following requirements:
  a) It must have international presence, having carried out work or consultancies in at least five (5) countries. b) It must have experience of at least ten (10) years in actuarial rating or underwriting of life insurance and in the calculation of reserves for losses incurred but not reported (IBNR).
  The personnel in charge of preparing the report and calculating the reference premium rate must meet the following requirements:
  c) It must have experience of at least five (5) years in rating or underwriting projects of life insurance and in the calculation of reserves for losses incurred but not reported (IBNR). d) It must have accreditation from some actuarial association affiliated with the International Actuarial Association (IAA). The report must include the support for the requirements of the actuarial firm and of the personnel in charge of calculating the reference premium rate.” “Article 259-A.- Implementation of remote channels for the bidding process. The AFPs or the Association grouping them may opt to carry out the activities of the bidding and/or award process in a non-presential or remote manner, using the means or tools that allow the process to comply with the characteristics stipulated in article 3-A of this Title. In case the AFPs opt to use remote channels, they must inform the Superintendency and the potential bidding insurance companies of the mechanisms and tools to be used. Likewise, they must implement a direct channel with the Superintendency that allows constant supervision of the process.” “Article 263-B.- Optional treatment in case a fraction remains unawarded in the bidding process. In the scenario where a fraction remains unawarded, the AFPs, regardless of what is established in article 258, paragraph d), are empowered to award said fraction to the insurance companies that had obtained the award, distributed proportionally, according to the number of fractions that had been awarded up to the last process and at the same value of the premium rate awarded in the last process in which they participated. In such circumstances, the application of the maximum number of fractions referred to in article 252, paragraph d) of this Title is waived.”
  Article Third.- Incorporate the Fiftieth Final and Transitional Provision into Title VII of the Compendium of Regulatory Supervision Standards of the Private System of Pension Fund Administration, approved by Resolution No. 232-98-EF/SAFP and its amendments, referred to Benefits, in accordance with the following texts:
  “Fiftieth.- Exception measures for the SISCO VI bidding process. The AFPs may adopt, in a reasoned and documented manner before the Superintendency, exception measures, for the design of the bidding and award process. The document that supports said measures must be part of the competition bases. The AFPs are empowered to incorporate the following exception measures:
  a) Determinable mobile rates: that offered premium rates that are not fixed for the entire risk administration contract period are admitted, for which the scope of what is established in articles 254 paragraph c), 258 paragraph a) and 262 paragraph m) is relaxed. A premium adjustment plan within the period to be bid may be admitted as part of the offer, in case the assumptions established by the AFPs materialize, taking into consideration aspects such as:
  i. Definition of selection criteria in such a scenario;
  ii. Premium adjustment methodology for the established assumptions;
  iii. Sub-periods of validity;
  iv. Mechanisms for review and monitoring of said indicators;
  v. Other selection and/or contract execution criteria, in accordance with the principles contained in article 250.
  b) Determined mobile rates: that offered premium rates by sub-periods, within the period to be bid, taking into account the paragraphs referred to in paragraph a), relaxing the scope of articles 254 paragraph c), 258 paragraph a) and 262 paragraph m). c) Maximum number of fractions awardable to an insurance company: depending on the behavior of the loss experience, the AFPs, from a second bidding process, may directly establish the number of fractions and the maximum number of fractions, relaxing the scope of article 252, paragraphs c) and d), under the conditions established in paragraph d) of article 258. For the present SISCO, the first process starts with a number of fractions of 7 and the maximum number of fractions per insurance company corresponds to 2. d) Others, of a similar nature, regarding the bidding process, as well as the execution of the contract. In any case, the AFPs must ensure that the information to be published in accordance with article 259 of this Title, after the award, specifies the validity period of the offered premium rate, and the following adjustment periods, if applicable. Likewise, during the validity of the contract, the awarded insurance companies that request the resolution of the contract may do so within a period that cannot be less than four (4) months from its entry into force and the resolution of the contract after two (2) months of notification to the other party and to the Superintendency, relaxing the temporal conditions provided in article 262-A. In such circumstances, the insurance company with which the contract is resolved is obliged to continue with the renewals of the fidelity bond guarantee until the period of three (3) years following the resolution of the contract.”
  Article Fourth.- This resolution enters into force the day after its publication in the Official Journal “El Peruano”.
  Register, communicate and publish.
  MARÍA DEL SOCORRO HEYSEN ZEGARRA
  Superintendent of Banks, Insurance and AFP