Volume 6, Number 1, Page 1

New Insurance Law in Bolivia

By Diego Rojas

Until Recently, Bolivian insurance and reinsurance activities lacked sufficient regulation due to the fact that the Bolivian Commerce Code was the only body of law regulating such activities. The Bolivian Congress addressed these issues by adopting Law No. 1883, the “Insurance Law,” partially closing the existing legal loopholes.

The Insurance Law regulates insurance and reinsurance activities with the primary objective of providing credibility and transparency to the insurance market, while guaranteeing an efficient, competitive market for all insurance companies. Towards this end, the law includes a detailed set of provisions setting forth the rights and obligations of insurance companies.

The most significant developments of the Insurance Law are the following:

-Clear definitions of legal terminology related to insurance activities.

-Mandatory automotive liability insurance for third party coverage in automobile accidents.

-Minimum capital requirements for the establishment of an insurance company.

-Differentiation between general insurance companies and personal insurance companies.

The Insurance Law identifies the Superintendency of Pensions, Securities and Insurance as the regulating body. This entity forms part of the Financial Regulating System, (SIREFI) which itself is part of the Sectorial Regulating System (SIRESE).

The SIRESE is regulatory mechanism effecting all sectors of the Bolivian economy through Superintendencies independent of the Executive Branch. SIRESE provides an administrative process for the resolution of conflicts and disputes between the involved parties. Each superintendency acts as the “Regulator” for a given sector with the authority to control, oversee and impose economic penalties for non-compliance of statutory provisions.

From a legal perspective, the new law has achieved the unification of the main provisions of the Commerce Code into a new specific legal instrument providing for special regulation of the those activities related to insurance.

As of now, the new Insurance Law still lacks a set of Regulations to more precisely regulate insurance activities under the law. Such regulations are likely to be adopted over the coming months.

Diego Rojas is an attorney with C.R.&F. Rojas, Abogados in La Paz, Bolivia