Colombia is among the world's most dynamic insurance markets, attracting leading global companies to compete against strong local players.2 During the past year the industry maintained a healthy growth rate of almost 9 per cent, outpacing the general economy and benefiting from stable political and economic policies. This year the insurance sector is likely to see growth of between 8 and 10 per cent.3
Following this trend, the Colombian legal system has undergone a very substantial process of improvement to satisfy the growing demand of business. The Colombian regulator is recognised as one of the most advanced in the region, gearing towards the establishment of international solvency standards,4 while a new body of consumer protection laws will lift the industry's domestic reputation and stimulate local demand. With the entry into force of a new infrastructure law and special regulations, the government has cleared the way for much-needed infrastructure projects.5 Dispute resolution procedures have been fundamentally improved by the introduction of an arbitration law in October 2012 and a new Civil Procedure Code is set to enter into force gradually over the next few years.
i The insurance regulator
Insurers, reinsurers and brokers operating in Colombia are supervised by the Financial Superintendency (FS), an independent body attached to the Colombian Ministry of Finance and Public Credit.6
The main regulatory framework is contained in the Organic Statute of the Financial System (EOSF),7 and other regulations including:
a Decree 2555/2010, which sets reserving and minimum asset requirements and contains the regime applicable to insurance intermediaries;
b Law 1328/2009, which regulates access to the Colombian market by foreign non-domiciled insurers and contains consumer protection rules specific to financial products;
c Law 1480/2011 on general consumer protection;
d Title VI of External Circular 007/1996 of the FS, which develops the regime applicable to general insurance operations, some special lines of insurance, solvency requirements, risk management procedures and the registration rules for foreign non-domiciled insurers, reinsurers and brokers; and
e the Colombian Commercial Code.
ii Position of non-admitted insurers
Unregulated insurance and reinsurance activity is prohibited in Colombia.8 Contracts made with unauthorised entities are void and the unauthorised insurer may be required to return all premiums received.9 It may also be subject to further sanction in the form of fines, compulsory dissolution and disqualification.
Colombian residents are generally free to purchase insurance outside of Colombia, in which case the contract will fall outside the scope of Colombian regulation. Colombian insurers may cede 100 per cent of their written risks abroad by way of reinsurance. However, certain policies must be purchased from a regulated entity within Colombia:10
a insurance that is compulsory under...