On January 20, 2023, the President of the Republic issued Decree No. 649, amending the General Regulations to the Organic Law of the National Public Procurement System.
As follows, the relevant modifications:
• The public sector is obliged -before contracting an insurance and surety bonds- to require insurers to guarantee that their international reinsurers have a risk rating of at least “A”.
• The international risk rating agencies state that: “An “A” risk rating indicates that a reinsurance company has excellent credit quality. This means that the company will likely meet its financial obligations on time. It is also considered one of the highest and is regarded as a safe investment.”
• The amendment seeks to ensure that in the event of a claim, public entities shall be indemnified promptly by insurers, with the support of solid reinsurance companies.
• This reform implies a fundamental challenge for insurance companies, which will have to search at the international market for reinsurance companies with this rating, also willing to participate in business with the state.
For more information do not hesitate to contact our Insurance Practice Partner, René De Sola (email@example.com).
This publication contains information of general interest and may not constitute a legal opinion on specific matters. Any particular analysis, shall require legal advice from the Firm.