market bulletin

Ref: Y5073

Title

Coverholder Registration Requirements in Mexico

PurposeTo provide clarity on the registration requirements for coverholders and service
companies in Mexico.

Type

EventFrom

Yael Chen, Senior Manager, International Regulatory Affairs

Date

16 March 2017

Related links

Mexican Insurance and Bond Circular (Circular Única de Seguros y deFianzas)

Background
Lloyd’s is registered as a Foreign Reinsurer in Mexico. This registration enables Lloyd's
underwriters to write reinsurance business on a cross-border basis, through local
coverholders1 or managing agents’ delegates via the General Representative Office.
However, coverholders (locally known as ‘suscriptores facultados’) have to be registeredwith the Mexican regulator, the Comisión Nacional de Seguros y Fianzas (CNSF).
This Market Bulletin aims to clarify the registration requirements for:1. Coverholders based in Mexico
2. Coverholders underwriting Mexican business from abroad
The requirements are outlined on the Mexican Insurance and Bond Circular (Circular Únicade Seguros y de Fianzas, CUSF), which implements the Law on Insurance and Bonding
Institutions (Ley de Instituciones de Seguros y de Fianzas, LISF). Please see Annex 1 for a
copy of the regulatory framework in original Spanish and free English translation.
1In Mexico, intermediaries who have been granted authority to act on behalf of foreign reinsurers are known
as ‘suscriptores facultados’. Where reference is made to ‘coverholders’ throughout this bulletin, the term
shall be interpreted to include Lloyd’s coverholders, as well as service companies.

Coverholder Trading Status and Registration Requirements in Mexico

Lloyd’s is authorised under the Financial Services and Markets Act 2000

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Coverholders based in Mexico
Lloyd’s underwriters may grant a binding authority (including the ability to bind businessonshore) to Mexican brokers registered with the CNSF as local reinsurance intermediaries.
Locally registered reinsurance intermediaries that have been granted a binding authority tooperate in Mexico on behalf of foreign reinsurers must be able to evidence their authority to
the Mexican regulator, the Comisión Nacional de Seguros y Fianzas (CNSF) and/or to theceding company.
They are required to submit copies of all of their active binding authority agreements to theCNSF, and further to notify the CNSF of any changes or revocations of the authorities
granted.
According to Articles 35.3.8 and 35.5.6 of CUSF, the submission of the binding authority
agreements and notification of any revocations shall be part of the reinsuranceintermediary’s “Regulatory report about reinsurance intermediation (RR-12)”, as establishedin Article 38.1 of CUSF.
The documents have to be submitted in Spanish or in English with an appropriate officialtranslation. For details on the formality requirements for these translations, please refer toArticle 35.5.6 of CUSF.
In case of regulatory audits, the coverholders themselves, as well as other reinsuranceintermediaries that place business with the coverholders, are required to hold a copy of thebinding authority agreement. This requirement applies irrespective of whether a copy of thebinding authority agreement has already been submitted to the CNSF in accordance withthe requirement detailed above.
Managing agents are advised to ensure that their coverholders located in Mexico complywith this requirement.
Coverholders based outside Mexico
Lloyd’s coverholders based outside Mexico are permitted to write reinsurance businessfrom Mexico under Lloyd’s foreign reinsurance licence, provided they have been registeredwith the CNSF. To this end, Chapter 34.2 of CUSF, implementing Article 107 of LISF, statesthat the reinsurer (Lloyd’s) must notify the CNSF of their intention to appoint a coverholder,submitting a request which must include the following information:

scope of the authority granted;
period of validity of the binding authority agreement;
territorial scope;type of risks and operations covered; andlimitations of liability.

Lloyd’s is authorised under the Financial Services and Markets Act 2000
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Following the submission, the coverholder will be allowed to underwrite Mexican businesson behalf of the concerned reinsurer. The CNSF has 20 days from the date of receipt of theoriginal submission to provide a response requesting additional information or clarification of
the information provided, and an additional 180 days from the date of the full submission toprocess its final response to the application.
Registration Process
To initiate the process, Lloyd’s coverholders based outside Mexico that intend to transact
Mexican business are required to contact Lloyd’s Representative Office in Mexico (contentdetails provided below) and request to be registered with the CNSF. This request should
include a copy of their binding authority agreement in Spanish (if available) and English andthe details of a point of contact who will be subsequently contacted throughout the processof registration.
The registration is valid for the duration of the binding authority agreement and must berenewed each time the agreement expires, or when it is changed or cancelled. Therefore,
registered coverholders are required to notify Lloyd’s Mexico of any changes to the binding
authority as soon as possible to ensure their registration is updated and remains incompliance.
To ensure continuous compliance with the registration requirements, coverholders should
contact Lloyd’s Mexico to request registration renewal as soon as possible following theestablishment of a new binding authority agreement. In the event that the binding authority
is cancelled, Lloyd’s Mexico should be notified immediately so that the coverholder’sregistration can be cancelled.
For more information about how to register as a suscriptor facultado in Mexico, please see
Lloyd's coverholder registration process for Mexico.
Further Information
If you have any queries relating to this bulletin please contact:
Lloyd’s International Trading Advice
Lloyd’s Desk, Ground Floor, Underwriting Room
Telephone: +44 (0)20 7327 6677
Email: LITA@Lloyds.com
www.lloyds.com/crystal
Or
Lloyd's Mexico Representative Office
Torre Siglum, Insurgentes Sur 1898,
12th and 14th floors, cp 01020, Mexico City
Phone: +52 (55) 91711168
mxcoverholders@lloyds.com

Lloyd’s is authorised under the Financial Services and Markets Act 2000
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Annex 1: Regulatory framework (Circular Única de Seguros y de Fianzas) in original
Spanish and free English translationCAPÍTULO 34.2. DE LOS SUSCRIPTORESFACULTADOS

CHAPTER 34.2. OF THE
COVERHOLDERS

Para los efectos del artículo 107 de la LISF:

For the purposes of article 107 of LISF:

34.2.1. Las Reaseguradoras Extranjeras
informarán a la Comisión de los Suscriptores
Facultados por las mismas. Para tal efecto las
Reaseguradoras Extranjeras remitirán a laComisión una comunicación firmada por su
representante legal en la que informen de sus
Suscriptores Facultados, señalando el alcancede las facultades que les hayan otorgado,
indicando su vigencia, así como su territorialidad,
tipo de riesgos u operaciones y límites deResponsabilidad. Las Reaseguradoras
Extranjeras deberán comunicar a la Comisión
cualquier modificación o la revocación de dichas
facultades. En el caso de que el documento con
el que se acredite el representante legal sea
otorgado en el extranjero, deberá presentarse
con su correspondiente legalización y apostille.

34.2.1. Foreign Reinsurers shall inform theCNSF of the coverholders qualified by them. To
this end, Foreign Reinsurers will send to theCNSF a communication signed by their legal
representative informing them of theircoverholders, stating the scope of the powers
granted to them, indicating their validity, as wellas their territoriality, type of risks or operations
and limits of responsibility. Foreign Reinsurers
must notify the CNSF of any modification orrevocation of such powers. In the event that thedocument with which the legal representative isaccredited is granted abroad, this must bepresented with its corresponding legalisation andapostille.

La información a que se refiere esta Disposición
deberá presentarse en los términos señaladosen el Anexo 34.2.1, y su entrega se apegará alprocedimiento señalado en los Capítulos 39.1 y39.6 de las presentes Disposiciones.
34.2.2. La información proporcionada a laComisión en términos de la Disposición 34.2.1,
por parte de las Reaseguradoras Extranjeras
respecto a sus Suscriptores Facultados, se da aconocer en los Anexos 34.2.2-a y 34.2.2-b.
Asimismo, la información a que se refiere esta
Disposición se da a conocer a través de laPágina Web de la Comisión.

The information referred to in this Provision must
be presented in the terms indicated in Annex
34.2.1, and its delivery shall follow the procedure
indicated in Chapters 39.1 and 39.6 of thepresent Provisions.
34.2.2. The information provided to the CNSF interms of Provision 34.2.1 by Foreign Reinsurers
with respect to their coverholders is disclosed inExhibits 34.2.2-a and 34.2.2-b. Likewise, theinformation referred to in this Provision isdisclosed through the website of the CNSF.

ANEXO 34.2.1. FORMA Y TÉRMINOSPARA EL ENVÍO DE INFORMACIÓN
SOBRE SUSCRIPTORES FACULTADOSANNEX 34.2.1. FORM AND TERMS FOR
THE SUBMISSION OF INFORMATION ON
COVERHOLDERS

La Información que deben presentar a esta
Comisión aseguradoras y reaseguradores
extranjeras es la siguiente:1.
El representante legal de la aseguradora

The information that foreign insurers andReinsurers must submit to the CNSF is asfollows:
1. The legal representative of the foreign insurer

Lloyd’s is authorised under the Financial Services and Markets Act 2000
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MARKET BULLETINo reaseguradora extranjera deberá presentar
escrito firmado en el que informe de losSuscriptores Facultados y el alcance de lasfacultades otorgadas, el cual contendrá lainformación que a continuación se cita, mismaque deberá venir en idioma español:•
Vigencia (Sólo se publicarán vigenciasanuales; en el caso de contar con vigencias
indefinidas, deberá confirmarse anualmente quelas facultades otorgadas siguen vigentes).
•Territorialidad.
•
Tipo de riesgos u operaciones.
•
Límites de responsabilidad.
•
Otros datos relevantes.
2.
En caso de que las aseguradoras oreaseguradoras extranjeras modifiquen orevoquen dichas facultades, deberán comunicar
tal hecho en forma inmediata a esta Comisión.
3.
La información a que se refiere este
anexo deberá entregarse en apego alprocedimiento señalado en los Capítulos 39.1 y39.6 de las presentes Disposiciones.

or reinsurer shall submit a signed written
document in which (s)he notifies of thecoverholders and the scope of the powers
granted to them, which shall contain the following
information, which must be in Spanish:• Validity (Only annual validities will be published;in the case of having indefinite validities, it must
be confirmed annually that the powers granted
remain valid).
• Territoriality.
• Type of risks or operations.
• Limits of liability.
• Other relevant data.
2. In the event that foreign insurers or reinsurers
modify or revoke said powers, they must
immediately report this fact to the CNSF.
3. The information referred to in this annex shallbe submitted in accordance with the procedure
set forth in Chapters 39.1 and 39.6 of these
Provisions.

Lloyd’s is authorised under the Financial Services and Markets Act 2000
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