The first insurance regulation I had access to as a legal professional was Decree Law 17 of 1956. During my early years of professional practice until 1984, this was the regulation our firm used when advising insurance companies and brokers who required our services.
Due to space limitations, so as not to make this capsule endless and only as a historical summary, below we will give an account, not necessarily complete and comprehensive, of what insurance laws have regulated insurance brokers to date.
Decree Law 17 of 1956
In terms of insurance brokerage, this decree law devoted eighteen of the decree's ninety articles (arts. 57-75) regulating everything related to insurance brokers.
Among the most notable points it contained, many of which remain in force today, we can mention the following: a) Agents, as the legal representatives of insurance companies were called, could receive commissions for the sale of insurance without having broker licenses, but they could not share their commissions with persons who did not have broker licenses; b) Brokers were already considered mediators between insurers and insured parties, c) Brokers, legal entities, could only place policies through their brokers, natural persons, with a license. d) Brokers, natural persons, had to be Panamanians domiciled in the country, or foreigners with more than five years of residence in Panamanian territory, e) In order to obtain their licenses, brokers had to take exams (depending on the branch they would be working in) administered by the Insurance Brokers Examination Board, f) Brokers could not grant discounts or share commissions or any other benefits they obtained from the sale of policies with policyholders or persons who did not have an insurance brokerage license, g) The total or partial appropriation of premiums from policies sold was grounds for revocation of their licenses.
Cabinet Decree 344 of 1970
This decree amended and added provisions to Decree Law 17 of 1956. With regard to the regulations that Decree Law 56 originally devoted to brokers, Articles 59 on the requirements that brokers had to meet, 60 on the exams they had to take, and Articles 66 and 68 on the issuance, signing, and cost of broker certificates, which was the name given to the current brokerage license.
Law 55 of 1984
After Decree Law 56 had been in force for twenty-eight years, Law 55 was enacted in 1984, which, in relation to brokers, formally defined insurance brokers for the first time in Article 2, paragraph ch), preserving their role as mediators between insurers and insured parties.
From Articles 60 to 78 (18 in total), Law 55 already hints at what would be in future laws that would follow it, the rules applicable to brokers. Let's look at some of these: a) for the first time, there is mention of a broker's license instead of a certificate, b) the obligation of insurers to charge brokers' fees in premiums, c) The requirement to be a Panamanian citizen residing in the country remains, but there is a change regarding the practice of the profession by foreigners, who previously had to have been in Panama for at least five years, but now it refers to the provisions of Article 288 of the National Constitution on the practice of retail trade, d) additional requirements that were not included in Decree Law 17 are added, e) Exams are now approved by the Superintendency and not by the Examining Board, e) Brokers are now required to post a bond. f) disclosure to insurers of licensed brokers is established, g) the rights and obligations of brokers are expressly established and detailed in greater detail, and new obligations are imposed on them, which did not exist prior to this law.
Law 59 of 1996
This law, particularly in terms of definitions, maintains the same agents for the sale or placement of policies that existed previously.
For the first time, this law divides and separates in its regulation individual brokers (Arts. 86 to 104) from insurance brokerage companies (Arts. 105 to 109).
This legal body, apart from maintaining the nature of the broker, for the first time also a) formally and expressly imposes on them the obligation to “...protect the interests of the insured,” b) also imposes on them, for the first time, the prohibition of claiming to be considered employees of the insurers, except in cases expressly regulated by law (Art. 66, paragraph 3), c) As in Law 59, the requirement to be a Panamanian citizen domiciled in the country remains in place and, in the case of foreigners, to comply with the provisions of Article 288 of the National Constitution, d) The other requirements and examinations for obtaining a license remain more or less the same, except for a few minor additions, which are not worth mentioning here.
Law 12 of 2012
Our current insurance law (No. 12 of 2012) maintains the same structure as the previous insurance law in terms of separating individual brokers (Articles 164 to 176) from legal entities (Articles 177 to 182) and, in general, to summarize, it copies much of the previous laws, with one important difference, which is that it defines and regulates other agents who can also place insurance without necessarily being brokers, such as insurance sales agents and agencies, alternative marketing channels, and account or insurance sales executives; as well as allowing brokerage companies (legal entities) for the first time, except in the case of initial shareholders, who must be insurance brokers, to change the ownership of a brokerage company in favor of foreigners, provided that an international treaty allows it and that Panamanian brokers retain at least 49% of the shares. (Art. 181).
As readers will appreciate, after almost seventy years of evolution in insurance business regulations in Panama, brokers have always been extremely important players in the placement of insurance in our country, having to adapt at all times to legislative (laws) and regulatory (agreements) changes adopted by the Superintendency of Insurance and Reinsurance of Panama.
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