Chile Insurance Industry – Governance, Risk and Compliance

Chile Insurance Industry Regulation Overview

The insurance industry in Chile is regulated by the Commission for the Financial Market (Comisión para el Mercado Financiero – CMF). The other bodies that oversee the market are the International Association of Insurance Supervisors (IAIS), the Association of Insurance Supervisors Latin America (ASSAL), and the Insurance Association of Chile (AACH) among others.

The Chile Insurance Industry Governance Regulation report provides a detailed analysis of the insurance regulations for life, property, motor, liability, personal accident and health, and marine, aviation, and transit insurance. The report specifies various requirements for the establishment and operation of insurance and reinsurance companies and intermediaries. The report also gives insurers access to information on prevailing insurance regulations and recent and upcoming changes in the country’s regulatory framework, taxation, and legal system. It includes the scope of non-admitted insurance in the country as well.

Chile Insurance Industry – Key Regulators and Legislation

Commission for the Financial Market (Comisión para el Mercado Financiero – CMF): The CMF governs the Chilean insurance industry, under the Ministry of Finance. Insurance Law 1931 has been amended several times to develop the insurance industry and provide protection to policyholders. The CMF controls most regulations relating to the registration of insurance companies and intermediaries in Chile. The main functions of the regulator are providing registration to insurers, reinsurers, and intermediaries wishing to enter the industry, with the permission of the CMF. The functions also include supervising the fulfillment of the prescribed rules and regulations for insurers, reinsurers, and insurance intermediaries.

International Association of Insurance Supervisors (IAIS): The IAIS is a membership-driven global organization that represents insurance regulators and supervisors. It formulates and issues various global insurance principles, standards, and guidance, provides training and support on issues related to insurance supervision, and organizes meetings and seminars for insurance supervisors. The IAIS works closely with other financial sector standard-setting bodies and international organizations to promote financial stability.

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Chile Insurance Industry - Compulsory Insurance

Some of the key compulsory insurance required within the Chile insurance industry are:

• Motor Third-Party Liability Insurance
• Marine Liability Insurance
• Professional Indemnity Insurance
• Social Security Insurance
• Aviation liability insurance

Chile Insurance Industry Analysis by Compulsory Insurances

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Chile Insurance Industry - Company Registration and Operation

Article 4 of the Insurance Act, of 1931, insurers and reinsurers need to get authorization from the CMF to carry out business in Chile. In addition, intermediaries are not permitted to operate in the industry without first registering with the CMF. Companies must only incorporate as a special corporation or stock corporation limited by shares and have a minimum of seven members within its board of directors to establish an insurance or reinsurance company in Chile. Foreign companies have no restrictions in operating insurance or reinsurance business in the country supervised by their own country laws except in regard to capital, projects, and shareholders requirements. Foreign insurance or reinsurance companies can be established in the form of a branch of a foreign organization, a corporation, or a limited liability company.

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Chile Insurance Industry – Taxation

Tax is imposed upon insurance premiums within the insurance industry in Chile. The other taxes imposed are Corporate Income Tax, Corporate Capital Gains Tax, and Value Added Tax.

Corporate Income Tax: The tax applies to the overall income of resident and non-resident corporate entities. The tax applies to the overall income earned by resident corporate entities in or outside of Chile. In the case of a non-resident insurance company, the tax applies to the income earned inside Chile. The Income Tax Law of Chile, the tax also applies to compensation paid to non-resident insurers for services provided outside Chile is also taxable income. The taxable income does not include direct expenses of goods and services and other expenses in earning income.

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Scope

This report provides:

• Details of the insurance regulatory framework in Chile.
• Details of the rules and regulations governing insurance products and insurance entities.
• Lists and analysis of key trends and developments pertaining to the country’s insurance regulatory framework.
• Analysis of the rules and regulations pertaining to the establishment and operation of insurance businesses in the country.
• Details of the taxation imposed on insurance products and insurance companies.

Key Highlights

• The Commission for the Financial Market and the Chilean Insurance Association regulates and supervises the Chilean insurance industry.
• The provisions of the Insurance Act 1931 and the Code of Commerce govern the life and non-life insurance businesses in Chile.
• Composite insurance is not permitted in Chile.
• Insurance for motor vehicles and workmen’s compensation are mandatory, as is insurance for pension fund administrators to guarantee performance.
• Non-admitted insurers and intermediaries are not permitted to operate in the Chilean insurance industry.

Reasons to Buy

• Provides FAQ-style analytical insights comprising 129 knowledge elements on insurance compliance applicable to the country.
• Gain insights into the insurance regulatory framework in Chile.
• Track the latest regulatory changes and expected changes impacting the Chile insurance industry.
• Gain detailed information about the key regulations governing the country’s establishment and operation of insurance entities.
• Understand key regulations and market practices pertaining to various types of insurance products.