This content is from: Local Insights

Foreign insurers and brokers able to underwrite agricultural insurance

Francisco UribeJulian Avila

The Colombian government has undertaken several initiatives to boost the growth of the country’s agricultural business in order for Colombia to become a world leader in food production.

The government is acutely aware that financial entities, such as insurance companies and brokers, will have to play an important role in this process and for that purpose the Colombian government has issued Law 1450 of 2011 which will permit foreign insurance companies to underwrite agricultural risks in the Colombian market and for foreign insurance brokers to promote in Colombia the purchase of agricultural insurance from foreign insurance companies. Such activity will not require incorporation of an entity in Colombia.

To underwrite or promote agricultural insurance in Colombia, foreign entities will have to be registered in the Registry of Foreign Insurance Companies and Insurance Brokers of Agricultural Insurance (RAISAX).

The registration proceeding with the RAISAX as a foreign insurance company or foreign insurance broker is similar to the proceeding required for the Registration of Foreign Reinsurance Companies and Reinsurance Brokers. Both registries are administered by the Superintendence of Finance and are governed by External Rule 007 of 1996 (Circular Externa 007 de 1996).

Essentially, the main purpose of RAISAX is to encourage the purchase of financial products, such as insurance policies, to allocate more efficiently the risks arising in the agribusiness to financial entities. The government believes that by furthering the relationship between the agricultural sector and the financial industry (banking, insurance and securities), the country will come closer to its goal of becoming a world leader in food production.

In addition, RAISAX is also the first step towards the authorisation granted by Law 1328 of 2009 which provides that, as of July 15 2013, the Colombian insurance market will be opened to foreign insurance companies who will be able to offer in Colombia certain insurance products. Colombian residents will also be able to purchase certain other insurance products directly from foreign insurance companies.

Francisco Uribe and Julian Avila

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