{"id":2481,"date":"2017-07-22T14:03:19","date_gmt":"2017-07-22T14:03:19","guid":{"rendered":"http:\/\/nhg.mx\/?p=2481"},"modified":"2020-01-02T11:44:42","modified_gmt":"2020-01-02T17:44:42","slug":"nader-hauyaux-goebel-contribute-to-the-in-house-lawyers-comparative-guide-to-insurance-insurance","status":"publish","type":"post","link":"https:\/\/www.nhg.mx\/en_gb\/nader-hauyaux-goebel-contribute-to-the-in-house-lawyers-comparative-guide-to-insurance-insurance\/","title":{"rendered":"The In-House Lawyer&#8217;s comparative guide to Insurance &#038; Insurance"},"content":{"rendered":"<p style=\"text-align: justify;\">Head of Nader, Hayaux &amp; Goebel&#8217;s <a href=\"http:\/\/nhg.mx\/services\/insurance\/\">Insurance and Reinsurance practice<\/a>, <a href=\"http:\/\/nhg.mx\/team_member\/yhl\/\">Yves Hayaux-du-Tilly<\/a>, contributed the Mexican chapter in The In-House Lawyer&#8217;s comparative guide to Insurance &amp; Insurance. This country-specific Q&amp;A gives a pragmatic overview of the law and practice of insurance &amp; reinsurance law in the Mexico.<\/p>\n<p style=\"text-align: justify;\">It addresses topics such as contract regulation, licensing, penalties, policyholder protection, alternative dispute resolution as well as personal insight and opinion as to the future of the insurance market over the next five years.<\/p>\n<p style=\"text-align: justify;\">This Q&amp;A is part of the global guide to Insurance &amp; Reinsurance. For a full list of jurisdictional Insurance &amp; Reinsurance Q&amp;As visit the website of\u00a0<a href=\"http:\/\/www.inhouselawyer.co.uk\/index.php\/practice-areas\/insurance-reinsurance\">The In-house Lawyer.<\/a><\/p>\n<p style=\"text-align: justify;\">The chapter can also be downloaded as PDF <a href=\"http:\/\/nhg.mx\/wp-content\/uploads\/2017\/11\/Mexico_-Insurance-Reinsurance_IHL.pdf\">here<\/a>.<\/p>\n<p style=\"text-align: justify;\"><strong>1. How is the writing of insurance contracts regulated in the\u00a0jurisdiction?<\/strong><\/p>\n<p style=\"text-align: justify;\">Mexican insurance contracts are governed by the Insurance Contract Law (\u201cLCS\u201d). The\u00a0LCS applies to all insurance contracts, except for maritime insurance governed by the\u00a0Navigation and Maritime Commerce Law (\u201cLNCM\u201d) published in the Official Gazette of\u00a0the Federation (Diario Oficial de la Federaci\u00f3n) (\u201cDOF\u201d) on 1 June 2006.\u00a0The insurance contract is formed through the consent of the parties. According to Article\u00a021.1 of the LCS the insurance contract comes into effect when the insured receives a\u00a0confirmation that the insurance company accepted his request for insurance coverage, regardless of whether any written evidence such as an insurance policy or certificate is issued. The effectiveness of an insurance contract may not be subject to the condition that the respective insurance policy or any other document evidencing its acceptance is issued nor to the condition that the respective premium is paid.<\/p>\n<p style=\"text-align: justify;\"><strong>2. Are types of insurers regulated differently (i.e. life companies,\u00a0reinsurers)?\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\">Insurance companies are regulated by the Insurance and Surety Companies Law\u00a0(\u201cLISF\u201d). Reinsurance companies are insurance companies whose operations are limited\u00a0to take or cede risks in reinsurance. Article 25 of the LISF classifies the following\u00a0insurance operations and lines of business, each of which is subject to specific\u00a0regulations:<\/p>\n<ul style=\"text-align: justify;\">\n<li>I. Life operations. These are insurance contracts that cover risks affecting the insured&#8217;s existence.<\/li>\n<li>II. Accidents and health operations. These consist of:\n<ul>\n<li>1. Personal accidents. Insurance contracts that cover injuries or disabilities affecting the insured&#8217;s personal integrity or health;<\/li>\n<li>2. Medical expenses. Insurance contracts that cover medical, hospital and other expenses considered necessary for the recovery of the insured&#8217;s health;<\/li>\n<li>3. Health. Insurance contracts that cover services to prevent and restore the insured&#8217;s health.<\/li>\n<\/ul>\n<\/li>\n<li>III. Property and casualty operations. These include the following lines of business:\n<ul>\n<li>1. Civil liability and professional risks. Insurance contracts that cover indemnity payments that an insured must pay in favour of third parties, as a consequence of losses caused by specific situations;<\/li>\n<li>2. Maritime and transportation. Insurance contracts that cover indemnity payments\u00a0for damages and losses suffered on cargo, vessels and other maritime assets;<\/li>\n<li>3. Fire. Insurance contracts that cover damages and losses caused by fire, explosion,\u00a0fulmination or related accidents;<\/li>\n<li>4. Agriculture and animal. Insurance contracts that cover damages and losses\u00a0suffered by the insured due to the partial or total loss of expected profits from land\u00a0or by death, loss or damages of animals;<\/li>\n<li>5. Automobiles. Insurance contracts that cover damages and losses caused as a\u00a0consequence of the use of automobiles;<\/li>\n<li>6. Credit insurance. Insurance contracts that cover the insured&#8217;s losses suffered by\u00a0total or partial insolvency of commercial loan debtors;<\/li>\n<li>7. Mortgage insurance. Insurance contracts that cover damages caused by breach of\u00a0a mortgage loan debtor;<\/li>\n<li>8. Financial guaranty insurance. Insurance contracts that cover damages caused by\u00a0breach of issuers of securities;<\/li>\n<li>9. Miscellaneous. Insurance contracts that cover damages and losses suffered by\u00a0individuals or in property, caused by any other risk not contemplated in other lines\u00a0of business;<\/li>\n<li>10. Earthquake and other catastrophic risks. Insurance contracts that cover damages\u00a0and losses caused to individuals or property as a consequence of a non-predictable\u00a0event.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong>3. Are insurance brokers and other types of market intermediary\u00a0subject to regulation?<\/strong><\/p>\n<p style=\"text-align: justify;\">Intermediation in insurance contracts is reserved exclusively to insurance brokers as set\u00a0forth in Article 91 of the LISF.\u00a0An insurance broker requires the prior authorisation of the National Insurance and\u00a0Bonding Commission (\u201cCNSF\u201d) to intermediate. For purpose thereof, an application must\u00a0be filed with the CNSF.<\/p>\n<p style=\"text-align: justify;\">The CNSF may grant an authorisation to intermediate to either individuals with an employment relationship with the insurance company or individuals that are\u00a0independent from the insurance company and act through an agency agreement, or to legal entities (insurance brokers), which must be incorporated as limited liability stock\u00a0companies pursuant to the Regulation of Insurance and Surety Brokers. The authorisation granted by the CNSF to act as an individual insurance broker is valid for\u00a0three years and may be renewed. Insurance brokers incorporated as entities are\u00a0authorised to act as such for an indefinite period of time.<\/p>\n<p style=\"text-align: justify;\">Reinsurance intermediaries are the only entities authorised to provide reinsurance intermediation services as set forth in article 106 of the LISF. To incorporate and operate\u00a0a reinsurance intermediary, the prior authorisation of the CNSF is required and for\u00a0purposes thereof, an application must be filed with the CNSF. The application must\u00a0comply with the requirements set forth in the Rules on the Authorisation and Operation\u00a0of Reinsurance Intermediaries. The reinsurance intermediary must be incorporated as a\u00a0limited liability stock company and have its corporate domicile in Mexico.<\/p>\n<p style=\"text-align: justify;\">Under Mexican law, insurance claims adjusters require the prior authorisation of the\u00a0CNSF to perform activities related to the adjustment of insurance claims. The\u00a0requirements for such authorisation are those set forth in article 111 of the LISF.<\/p>\n<p style=\"text-align: justify;\"><strong>4. Is authorisation or a licence required and if so, how long does it\u00a0take on average to obtain such permission?\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\">Pursuant to the LISF, to incorporate and operate an insurance company in Mexico, an\u00a0authorization shall be filed with the CNSF. The application must comply with the\u00a0requirements set out in Article 41 of the LISF. The CNSF has discretional authority to grant the authorization or to deny it.\u00a0As a general rule, the process to obtain the license to incorporate a new insurance\u00a0company takes between nine and twelve months from the date of the filing of a\u00a0complete application; and an additional four months to initiate operations after the\u00a0respective incorporation. Under the LISF, Mexican reinsurance companies and foreign reinsurance companies\u00a0must be registered with the General Foreign Reinsurance Registry to take Reinsurance and Rebonding in the Country (\u201cRGRE\u201d) to cede or take risks in reinsurance from and\u00a0with Mexican insurance companies. In order to register with the RGRE.<\/p>\n<p style=\"text-align: justify;\"><strong>5. Are there restrictions over who owns or controls insurers (including restrictions on foreign ownership)?\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\">There are currently no restrictions to foreign investment in insurance companies. In all cases, the CNSF must approve ownership and control of insurance companies\u00a0incorporated in Mexico. The respective application must include the following information:<\/p>\n<ul style=\"text-align: justify;\">\n<li>1. Nationality.<\/li>\n<li>2. Amount of shares they will acquire and source of the assets to acquire such\u00a0shares.<\/li>\n<li>3. Economic reports or financial statements for the last three years.<\/li>\n<li>4. Evidence of good credit reputation and financial capability.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">The CNSF must approve any purchase of more than 5% of the shares of an insurance\u00a0company. The respective application must include the information set forth above.\u00a0For purchases of 20% or more, the application should also include, inter alia, the\u00a0information set forth above and in additional, information on the candidates to be\u00a0appointed as directors, officers and manager of the insurance company.<\/p>\n<p style=\"text-align: justify;\"><strong>6. Is it possible to insure risks without a licence or authorisation?\u00a0(i.e. on a non-admitted basis)?\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\">As a general rule, Article 20 of the LISF provides that only those entities duly licensed by\u00a0the Mexican federal government through the CNSF to operate as insurance companies\u00a0may undertake active insurance operations within Mexican territory.\u00a0If a non-licensed insurance company operates in Mexico on a non-admitted basis and\u00a0carries out active insurance operations in Mexico, it shall be deemed to be breaching\u00a0Mexican law and the transaction shall be null and void. Furthermore, such conduct would\u00a0constitute criminal liability on the part of (i) the non-admitted foreign insurer; (ii) the\u00a0insurance intermediaries (broker or agent); and (iii) the officers, managers, directors,\u00a0representatives and agents of the entities referred to in (i) and (ii).<\/p>\n<p style=\"text-align: justify;\"><strong>7. What penalty is available for those who operate without appropriate permission?\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\">The CNSF has authority to suspend the operations or intervene companies or\u00a0establishments that carry out insurance activities without a license. According to article\u00a0495, those breaching articles 20 and 23 of the LISF and practicing active insurance\u00a0operations without a license or acting as intermediaries in insurance operations\u00a0performed without a license, may be subject to up to 15 years of imprisonment and a\u00a0fine of up to 20,000 and those offering directly or as intermediaries insurance without a\u00a0license may be subject to up to 10 years of imprisonment and a fine of up to 10,000. Such conduct constitute criminal liability on the part of (i) the non-admitted foreign insurer; (ii) the insurance intermediaries (broker or agent); and (iii) the officers,\u00a0managers, directors, representatives and agents of the entities referred to in (i) and (ii).\u00a0 In the case of those conducting Insurance Mediation Activities without a license may be subject to a fine of up to approximately US$ 7,080.<\/p>\n<p style=\"text-align: justify;\"><strong>8. How rigorous is the supervisory and enforcement environment<\/strong><\/p>\n<p style=\"text-align: justify;\">Insurance and reinsurance operations in Mexico are regulated by both the Ministry of the\u00a0Treasury and Public Credit (\u201cSHCP\u201d) and the CNSF.\u00a0The SHCP has authority to interpret, implement and execute the LISF for administrative\u00a0purposes.\u00a0The CNSF has authority to grant and revoke authorisations to incorporate and operate\u00a0insurance companies in Mexico, register reinsurance companies with the RGRE to take\u00a0reinsurance from Mexican insurance companies.<\/p>\n<p style=\"text-align: justify;\">The CNSF is also responsible for supervising the operation of insurance and reinsurance\u00a0companies and has authority to supervise, inspect and issue regulations applicable to\u00a0the operations of Mexican insurance and reinsurance companies. All the applicable\u00a0regulations issued by the CNSF are compiled in a single circular (\u201cCircular\u201d).\u00a0The CNSF is rigorous in the supervision and enforcement of regulations applicable to the\u00a0operation of Mexican insurance companies. There are no significant precedents of\u00a0enforcement actions against entities or individuals conducting non-admitted insurance\u00a0operations on a cross-border basis or in certain activities that are deemed insurance\u00a0operations such as prepaid health services.<\/p>\n<p style=\"text-align: justify;\"><strong>9. How is the solvency of insurers (and reinsurers where relevant)\u00a0supervised?<\/strong><\/p>\n<p style=\"text-align: justify;\">The new LISF sets forth a new solvency regime different from the scheme established in\u00a0the former LGISMS. The new regime incorporates a similar mechanism to that under\u00a0Pillar I of Solvency II (quantitative requirements), which in general terms may be\u00a0considered as a \u2018tailored suit\u2019, allowing each insurance company to design an internal\u00a0actuarial model to calculate its solvency capital required and implement internal controls\u00a0to detect any change or variation to such requirement. Notwithstanding the selfregulation\u00a0right granted by the LISF, the implementation of the internal actuarial model\u00a0is subject to the prior approval of the CNSF.<\/p>\n<p style=\"text-align: justify;\">The LISF also establishes the obligation of insurance companies to develop an internal\u00a0policy for monitoring its solvency, operations and investments, in accordance with its\u00a0risk profile. This new system allows each insurance company to select and accept those\u00a0risks, according to their particular situation.\u00a0Moreover, the LISF sets forth the obligation of the insurance companies to carry out\u00a0stress tests on a regular basis to evaluate their capital adequacy. The results of such\u00a0tests shall be reviewed by the board of directors of each insurance company.<\/p>\n<p style=\"text-align: justify;\">The board of directors together with the company\u2019s top tier officers are responsible for\u00a0approving and implementing the guidelines required for the calculation and adequacy of\u00a0the capital solvency requirement and implements the necessary measures to maintain\u00a0such capital adequacy, including the provision of funds in case there is a capital\u00a0deficiency.<\/p>\n<p style=\"text-align: justify;\">The CNSF has the authority to settle regulations defining the form in which the insurance\u00a0companies will report and provide evidence of compliance with the solvency capital\u00a0requirements mentioned above, as well as the procedure to provide the CNSF the\u00a0information regarding the particular technical characteristics of the internal calculation\u00a0model adopted by the insurance company.<\/p>\n<p style=\"text-align: justify;\">The LISF adjusted the insurance and bonding legal framework by adopting surveillance\u00a0procedures similar to those established in the Securities Marker Law and in the Banking\u00a0Law, redefining the roles of the SHCP and the CNSF. In this regard, the LISF grants\u00a0specific authority on a \u2018macro\u2019 level to the SHCP with respect to the design and\u00a0operation of the insurance and bonding system, while the CNSF has the authority on all aspects related to the licensing and authorization procedures to insurance companies,\u00a0going from their incorporation and operation to the revocation of their license and liquidation. Within this redistribution of capacities, the authority of the CNSF is\u00a0broadened to grant such entity authority to issue general regulations aiming to regulate the insurance companies, which originally resided within the SHCP.<\/p>\n<p style=\"text-align: justify;\">The new structure intends to standardize the legal framework of insurance and bonding companies to that of other financial entities and regulators, which, in our opinion, creates an imbalance among the traditional authorities given to the SHCP as Ministry of State and regulator of financial activities, and the attributions now granted to the CNSF under the LSIF, which, from being a technical and surveillance authority becomes a\u00a0much more robust regulator of the insurance and bonding sectors, with new authorities\u00a0while maintaining its supervisory role.<\/p>\n<p style=\"text-align: justify;\"><strong>10. What are the minimum capital requirements?\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\">The following are the minimum paid-in capital requirements for insurance and\u00a0reinsurance companies in effect until 31 March 2016 determined by the SHCP in 2014 for each line of business:<\/p>\n<ul style=\"text-align: justify;\">\n<li>Life: 36.68 million pesos;<\/li>\n<li>Pensions: 15.67 million pesos;<\/li>\n<li>Accidents and health:<\/li>\n<li>Personal accident or medical expenses: 9.17 million pesos; and<\/li>\n<li>Health, including medical expenses: 9.17 million pesos;<\/li>\n<li>Property and casualty: one line: 27.51 million pesos;\u00a0two lines: 36.68 million pesos; three or more lines: 45.85 million pesos;<\/li>\n<li>Mortgage insurance: 65.65 million pesos; and Financial guarantee insurance: 178.65 million pesos; and<\/li>\n<li>Reinsurance:\u00a0one line: 19.66 million pesos;\u00a0two lines: 26.22 million pesos; and\u00a0three lines: 32.78 million pesos.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong>11. Is there a policyholder protection scheme?<\/strong><\/p>\n<p style=\"text-align: justify;\">The National Commission for the Protection and Defence of Users of Financial Services\u00a0(\u201cCONDUSEF\u201d) is the governmental body created to protect the interests and the rights\u00a0of the consumers. It is regulated by the Law for the Protection and Defence of Financial\u00a0Services Users (\u201cCondusef Law\u201d) (1999). Since the protection of the consumers is\u00a0considered to be a matter of public concern, the rights set forth in the CONDUSEF Law\u00a0may not be waived.<\/p>\n<p style=\"text-align: justify;\">The main purposes of the CONDUSEF are: the promotion, assistance, protection, and defence of the rights and interests of users of financial services against financial institutions, dispute resolution in an impartial manner, and the promotion of equity in the\u00a0relationship between consumers and providers of financial services.\u00a0Claims may be submitted within one year from the date on which the occurrence that\u00a0gave rise to the claim took place. Upon filing a claim, the statute of limitations is\u00a0suspended.<\/p>\n<p style=\"text-align: justify;\">Upon a presentation of a claim, CONDUSEF shall issue a notice to the insurance company within five business days following the receipt thereof, attaching to the notice, and a\u00a0copy of the claim submitted by the user, and copying the claimant on the notice. If the insurance company does not respond or fails to attend the hearing on the day and hour\u00a0set forth in the notice, CONSUDEF may impose a fine to the insurance company. The\u00a0insurance company shall deliver a response prior to or at the time of the conciliatory\u00a0hearing, answering each of the items cited by the insured. Such response must be\u00a0signed by a legal representative of the insurance company.<\/p>\n<p style=\"text-align: justify;\">The failure to present the response from the insurance company will not cause the\u00a0suspension or adjournment of the conciliatory hearing, and it will be deemed as\u00a0concluded, considering the facts claimed by the insured as true, regardless of the\u00a0penalties that may be imposed to the insurance company.\u00a0In addition to the protection of users of financial services through the CONDUSEF, the LISF and its regulation require all insurance companies to form a special insurance fund\u00a0(fondos especiales de seguros) for life, non-life and annuities, respectively, that may be\u00a0used in case they need financial support to comply with their obligations with contracting parties, insureds, and beneficiaries under insurance policies.<\/p>\n<p style=\"text-align: justify;\"><strong>12. How are groups supervised, if at all?<\/strong><\/p>\n<p style=\"text-align: justify;\">Group life insurance is defined in the LCS (Article 202) as the insurance in which the\u00a0insurance company is liable for the death or the length of the life of a specific person\u00a0based on the belonging to a particular group or company, in exchange of a periodic\u00a0premium. One of its particularities is that it does not request any medical requirement or\u00a0exam from the insured to be covered.<\/p>\n<p style=\"text-align: justify;\">In Mexico, group life insurance is regulated by the Rules for the Group Life Insurance and\u00a0Health and Accident Collective Insurance (\u201cRules for Group Life Insurance\u201d).\u00a0The Rules for Group Life Insurance provides the requirements for a \u201cgroup\u201d to be\u00a0deemed a \u201cgroup\u201d, that is, a group of people that belong to a same company or that\u00a0share a common, lawful, prior and independent interest or bond. The individuals that are\u00a0part of the insured group may contribute to the payment of the premium subject to the\u00a0terms established in the policy.\u00a0The insurance companies that offer group life insurance must have the written consent\u00a0from each member of the group, prior to their incorporation to the group and extending\u00a0insurance coverage.<\/p>\n<p style=\"text-align: justify;\">Such contract must consider at least what is the amount insured, or the manner in which\u00a0such amount shall be determined and whom are the beneficiaries, when it is nonrevocable.\u00a0The Rules for the Group Life Insurance set forth special requirements for group insurance\u00a0granted as part of an employment. In the case of life insurance, the insurance company,\u00a0only on one occasion, shall cover the member of the group who leaves indefinitely the\u00a0group, without requesting any medical requirement, in any of the life insurance products\u00a0that the insurance company offers, with the exception of term life insurance and subject\u00a0to the limitations of age set forth by the insurance company and compliance of the\u00a0requirements set forth by the Rules for the Group Life Insurance.<\/p>\n<p style=\"text-align: justify;\"><strong>13. Do senior managers have to meet fit and proper requirements\u00a0and\/or be approved?<\/strong><\/p>\n<p style=\"text-align: justify;\">According to Article 58 of the LISF, senior managers must be persons with a good credit record and honorability, and meet the following requirements:<\/p>\n<ul style=\"text-align: justify;\">\n<li>1. Be residents in Mexican territory in terms of the provisions of the Federal Tax\u00a0Code;<\/li>\n<li>2. Have served for at least five years in high-level decision-making positions,\u00a0Performance requires knowledge and experience in financial, legal or\u00a0administrative matters;<\/li>\n<li>3. Not fall under any of the impediments to act as advisers listed in article 56 of the\u00a0LISF;<\/li>\n<li>4. Not perform functions as regulator of insurance companies.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong>14. Are there restrictions on outsourcing parts of the business?<\/strong><\/p>\n<p style=\"text-align: justify;\">Insurance companies may contract with third parties, services necessary for their operation, in accordance with the general provisions issued by the CNSF, with the\u00a0authorization of the Governing Board. Chapter 12 of the Circular contains a list of those\u00a0services that may be outsourced, such as support services for the selection and analysis of risks, administrative services related to the acceptance of risk, risk management or\u00a0actuarial services.<\/p>\n<p style=\"text-align: justify;\"><strong>15. How are sales of insurance supervised or controlled?\u00a0<\/strong><\/p>\n<p style=\"text-align: justify;\">Pursuant Article 202 of the LISF, Insurance companies may only offer services within the insurance operations they are licensed, through insurance products that comply with the requirements set forth by the LISF.\u00a0As a general rule, insurance products must be registered with the CNSF.\u00a0As a general rule, intermediation must be made through insurance brokers that must be\u00a0licensed by the CNSF and are subject to the supervision of the CNSF (See 3 above).<\/p>\n<p style=\"text-align: justify;\"><strong>16. Are consumer policies subject to restrictions? If so, briefly describe the range of protections offered to consumer\u00a0policyholders.<\/strong><\/p>\n<p style=\"text-align: justify;\">Consumer policies are subject to certain regulatory provisions on sound practices that\u00a0restrict and limit the activities regarding the offer and commercialization of insurance\u00a0operations and products by insurance companies.\u00a0Chapter 4.5 of the Circular contains clauses to be mandatorily included in the general\u00a0conditions of certain insurance policies to protect the interests of the policyholders, insureds or beneficiaries.\u00a0Also, there are recent judicial precedents in Mexico in which Courts have recognised that\u00a0insurance policies must be construed by applying a contra proferentem rule.<\/p>\n<p style=\"text-align: justify;\"><strong>17. Are the courts adept at handling complex commercial claims?<\/strong><\/p>\n<p style=\"text-align: justify;\">Insurance and reinsurance disputes are regulated by the Code of Commerce. If one of the parties breaches a contract, the non-defaulting party can initiate ordinary\u00a0commercial proceedings. This judicial process has four basic stages: (i) the filing of the claim by the plaintiff and response from the defendant; (ii) the submission and\u00a0presentation of evidence of any kind; (iii) the pleadings; and (iv) an award.\u00a0The parties can appeal any ruling to a higher tribunal, unless the aggregate amount is\u00a0less than 574,690.47 pesos.\u00a0Each party pays its own litigation costs and the losing party might be required to\u00a0indemnify the winning party, including for attorneys\u2019 fees, subject to certain established\u00a0thresholds and the decision of the court.\u00a0As a general rule, federal courts are prepared to handle complex commercial claims;\u00a0however, they lack experience in handling insurance and reinsurance cases. In the case\u00a0of local courts, there is uncertainty on whether a local judge will have the resources and ability to handle complex commercial cases.<\/p>\n<p style=\"text-align: justify;\"><strong>18. Is alternative dispute resolution well established in the\u00a0jurisdiction?<\/strong><\/p>\n<p style=\"text-align: justify;\">The parties to a reinsurance contract can freely agree the terms and condition by which\u00a0they will be bound.\u00a0Insurance claims may be resolved before CONDUSEF, before competent Courts or in\u00a0arbitration. Other forms, such as mediation or conciliation can be used.\u00a0CONDUSEF may be appointed by the parties as mediator in disputes whose quantum\u00a0does not exceed 6 million Mexican investment units (approximately 33.5 million pesos).\u00a0If the parties don\u2019t reach a settlement in the mediation and they agree to submit their\u00a0dispute to arbitration, the parties may request CONDUSEF to act as arbitrator or appoint\u00a0a third party as arbitrator.<\/p>\n<p style=\"text-align: justify;\">Reinsurance claims can be resolved in judicial proceedings before competent courts or\u00a0through arbitration. Other forms, such as mediation or conciliation can be used.\u00a0The Mexican Insurance and Bonding Law Association (Asociaci\u00f3n Mexicana de Derecho\u00a0de Seguros y Fianzas) (AMEDESEF), in its capacity as the Mexican Chapter of AIDA\u00a0(Association Internationale de Droit des Assurances) established the Mexican Chapter of\u00a0the Insurance and Reinsurance Arbitration Society (ARIAS Mexico), in a joint venture with\u00a0CAM (Centro de Arbitraje de M\u00e9xico), a well-known private institution specialised in the\u00a0administration of arbitration proceedings. Jointly, they promote arbitration to resolve insurance and reinsurance disputes managed by CAM, with the technical assistance of\u00a0AMEDESEF.<\/p>\n<p style=\"text-align: justify;\"><strong>19. What are the primary challenges to new market entrants?<\/strong><\/p>\n<p style=\"text-align: justify;\">As it has been explained, Mexico has lifted any limitations to foreign investment and any\u00a0foreign investor may access the Mexican insurance market. Therefore, there are no legal\u00a0or regulatory barriers of entry to new market entrants.\u00a0Notwithstanding the foregoing, new market entrants challenges include a market subject\u00a0to traditional distribution channels dependent on traditional brokers to place business or\u00a0in very high costs involved in developing a salesforce; low market penetration and a lack\u00a0of insurance culture; high operating costs due to excessive regulatory burdens; and a\u00a0large and diverse country subject to different risk exposure and needs.<\/p>\n<p style=\"text-align: justify;\"><strong>20. To what extent is the market being challenged by digital innovation?<\/strong><\/p>\n<p style=\"text-align: justify;\">Digital innovation is currently being used in preliminary stages within the insurance\u00a0industry, mostly by facilitating comparing different insurance products and placement of\u00a0insurance within the population; use of technology to facilitate sales and adjustment of\u00a0claims is starting to grow; the regulator is taking a cautious approach to the use of\u00a0technology and we have not seen aggressive approaches by the industry to try and test\u00a0the market. We certainly hope the use of technology helps improve penetration within\u00a0an underdeveloped market.<\/p>\n<p style=\"text-align: justify;\"><strong>21. Over the next five years what type of business do you see taking\u00a0a market lead?<\/strong><\/p>\n<p style=\"text-align: justify;\">The opening of the Mexican energy sector will require enormous insurance capacity for\u00a0the Mexican market and is a sector that will grow intensively, including in lies such as\u00a0maritime, civil and environmental liability, mandatory insurance coverage required by\u00a0Mexican agencies to operate, surety and transportation.\u00a0We also will see growth in cyber insurance related products, including insurance to\u00a0protect new risks such as privacy and data protection.\u00a0We will continue seeing growth in financial lines, D&amp;O insurance, in reps and warranties\u00a0and tax insurance products, fraud related products and surety.\u00a0There is tremendous potential and urgency to develop an efficient health insurance\u00a0sector; however, that will require better regulation and it is unlikely we will see the<br \/>\nchanges required in the regulation in the next three years.\u00a0We expect that life and health insurance will continue growing, and provided that the\u00a0financial stability is maintained, that life-saving products continue growing among the\u00a0ever growing middle class population.\u00a0Automobile insurance will also continue growing fueled by the mandatory automobile\u00a0liability insurance schemes currently implemented and hopefully, finally, being enforced.<\/p>\n<p>END.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<div class=\"pdfprnt-buttons pdfprnt-buttons-post pdfprnt-bottom-left\"><a href=\"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/posts\/2481?print=pdf\" class=\"pdfprnt-button pdfprnt-button-pdf\" target=\"_blank\"><img decoding=\"async\" src=\"https:\/\/www.nhg.mx\/wp-content\/plugins\/pdf-print\/images\/pdf.png\" alt=\"image_pdf\" title=\"View PDF\" \/><\/a><a href=\"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/posts\/2481?print=print\" class=\"pdfprnt-button pdfprnt-button-print\" target=\"_blank\"><img decoding=\"async\" src=\"https:\/\/www.nhg.mx\/wp-content\/plugins\/pdf-print\/images\/print.png\" alt=\"image_print\" title=\"Print Content\" \/><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>Head of Nader, Hayaux &amp; Goebel&#8217;s Insurance and Reinsurance practice, Yves Hayaux-du-Tilly, contributed the Mexican chapter in The In-House Lawyer&#8217;s comparative guide to Insurance &amp; Insurance. This country-specific Q&amp;A gives a pragmatic overview of the law and practice of insurance &amp; reinsurance law in the Mexico. It addresses topics such as contract regulation, licensing, penalties,&#8230;<\/p>\n<div class=\" [&hellip;]\"><a href=\"https:\/\/www.nhg.mx\/en_gb\/nader-hauyaux-goebel-contribute-to-the-in-house-lawyers-comparative-guide-to-insurance-insurance\/\">Read More<\/a><\/div>\n","protected":false},"author":9,"featured_media":2493,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[68,57],"tags":[105,85,106,107],"class_list":["post-2481","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insurance-and-reinsurance","category-publications","tag-in-house-lawyer","tag-insurance","tag-legal500","tag-yves-hayaux"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/posts\/2481","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/comments?post=2481"}],"version-history":[{"count":0,"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/posts\/2481\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/media\/2493"}],"wp:attachment":[{"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/media?parent=2481"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/categories?post=2481"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nhg.mx\/en_gb\/wp-json\/wp\/v2\/tags?post=2481"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}