Insurance in Peru
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Premiums per Insurance Company
(Expressed in thousands of dollars)
|
|
TOTAL PREMIUM DICIEMBRE 2001 |
TOTAL PREMIUM DICIEMBRE 2000 |
Variation |
||||
|
COMPANY |
Amount |
% |
Rank |
Amount |
% |
Rank |
% |
|
PACIFICO
PERUANO SUIZA |
123,055 |
34.0 |
1 |
108,372 |
31.0 |
1 |
13.5 |
|
RIMAC-INTERNACIONAL |
81,247 |
22.5 |
2 |
66,437 |
19.0 |
2 |
22.3 |
|
WIESE
ATENÍA |
30,035 |
8.3 |
3 |
27,109 |
7.8 |
5 |
10.8 |
|
LA POSITIVA |
27,986 |
7.7 |
4 |
26,602 |
7.6 |
6 |
5.2 |
|
GENERALI
PERU |
27,827 |
7.7 |
5 |
27831 |
8.0 |
4 |
(0.0) |
|
ROYAL SUNALLIANCE |
27,659 |
7.7 |
6 |
25,478 |
7.3 |
7 |
8.6 |
|
MAPFRE PERU |
25,235 |
7.0 |
7 |
19,576 |
5.6 |
8 |
28.9 |
|
SUL
AMERICA |
16,445 |
4.5 |
8 |
13,592 |
3.9 |
9 |
21.0 |
|
SECREX |
2,037 |
0.6 |
9 |
1,509 |
0.4 |
10 |
35.0 |
|
POPULAR
Y PORVENIR |
- |
0.0 |
10 |
33,105 |
9.5 |
3 |
NA |
|
|
|
|
|
|
|
|
|
|
TOTAL |
361,526 |
100 |
|
349,613 |
100 |
|
3.4 |
COUNTRY INFORMATION: PERU
Cities with SEGURNET Offices Lima
Capital Lima
Currency New
Sol
INDIGENOUS NATURAL
HAZARDS
Earthquake
Seaquake
Tsunami
Flood
/ in certain areas
Population Approx. 25 million
GENERAL INFORMATION
Broker of Record Letter Required
by Local Insurers
Cancellation Requirements Per
written notice according to policy conditions.
Long-Term
Agreements LTA's are negotiable
in property and casualty lines. Policy
periods are generally of annual duration.
Non-Admitted Insurance Allowed,
subject to tax (19%). See below.
Reinsurance Issues Freely
negotiable with Peruvian Insurance Companies.
Reinsurers or Reinsurance Broker must be registered.
Tariffs All insurance rates may be freely
negotiated.
TAXES AND / OR STAMP
DUTIES
All
insurance premiums 19%
LEGISLATIVE AND
REGULATORY CONTROLS
The
Superintendency of Banks and Insurance exercises control over the insurance
market.
COMPULSORY COVERAGES
All
employers must purchase Group Life insurance coverage of 16 times current
income, with conversion rights on termination of employment. Double indemnity for accidental death.
Aviation
insurance is required for passengers and crew, third party bodily injury, and
property damage losses.
Automobile:
During 2002 obligatory insurance (SOAT) being introduced in respect only of
bodily injury to all third parties (including passengers) for pre-established,
low, limits.
Reporters:
personal accident coverage equivalent to 40 times
the monthly salary.
Benefit
provisions for trainees establishes that employees must purchase AD & D and
health coverage for all trainees.
COVERAGES
Automobile Complementary
Third Party (Material Damage), higher limits and Own Damage coverage are
available.
Boiler
and Machinery Boiler and
Pressure vessel, explosion, and machinery covers (excluding boiler explosion)
are available on European forms.
Business Interruption Both
LOP and BI forms are available
C.A.R. / E.A.R. Insurance
"All -Risk" coverage follows the Munich Re forms.
Crime Available.
General/Products Liability Comprehensive
GL forms are available.
Life/Personal Accident and
Medical Benefits All
available
Aviation Available
Employers' Liability and
Workers'
Compensation EL may be insured
under a separate policy or may be included in a GL policy. Employers are required to provide benefits
for all permanent working employees either with the National Bureau of Workers'
Social Security or, in part with one of the registered private Health Service
Providers (E.P.S’s). Choice depends on majority vote of beneficiaries (staff).
Coverage
provided by EPS does not include temporary or permanent (weekly) benefits and
may also exclude certain major illness Benefits which remain as responsibility
of Social Security Hospitals.
However,
as from early 1990’s onwards employers have increasingly used systems of, fixed
term, contracting of fee-paid rather (than salaried) staff – thus reducing
total wage costs - including W.C. and
Pension Insurance.
For
similar motives in recent years has proliferated number of Worker’s
Co-operatives which firms engage to obtain labour services and short-term
contracts at reduced overall costs.
Marine
and Transit Forms and
rates follow that of the London market.
Legislation requires that all imports must be insured with local
insurance companies.
Pensions Obligatory
for all employees. In 1993 was opened
to Private Operators (A.F.P.'s) in competition with Government-owned Institute
(I.P.S.S.) under supervision of new Superintendency which in 2001 was included
under aegis of general Banking and Insurance Superintendency.
COUNTRY AND / OR
COVERAGE ISSUES
None
ADDITIONAL
INFORMATION
We would like to add the following to
the general information already provided regarding current legal requirements
in the area of the insurance of liabilities of employers to their staff.
WORKMENS’ COMPENSATION
This is compulsorily insured with the
State-owned “Instituto Peruano de
Seguridad Social” in respect of all “obreros” (blue collar workers). The benefits provided include medical attention
in payment of weekly benefits (based on 70% of current wage) and nominal
long-term disability. In respect of all work accidents, including occupational
diseases, there are no time-limits to the liability of the Institute to provide
these services.
Medical
Services are provides through the Institute’s own network of hospitals and
clinics aid by contract with private (or other publicly owned) entities where
the Institute does not have its own facilities.
The
situation of Mining Corporations with work-location in remote areas may involve
the necessity of special arrangements with I.P.S.S., which are interrelated
with the premium rate normally approximately 5% on wage roll, with regard to
the provision of joint medical
facilities.
These
matters must necessarily be the subject of negotiations with I.P.S.S. with
experienced advisors in Industrial Relations.
LIFE INSURANCE
All employees over four (4) years on any wage or salary-roll will must be covered with a local Registered Insurance Company for compulsory Life Insurance (D.L. 688/91) for a Capital Amount equal to 16 times current monthly earnings with Double Indemnity for Accidental Death from any cause, including work accidents. It is customary for employers to include all employees after three (3) months on any wage or salary-roll.
PENSION INSURANCE
According to a law promulgated Dec 1992, the implementation of which commenced in June 1993 all employees have the option of choosing between the long-established state-owned I.P.S.S. pension scheme and any of the six, new private Pension Fund Administrators. These schemes include benefits for disability of the employee and pension for widows and dependents (but excluding the work-accident risk).
EMPLOYEE LIABILITY
According
to Peruvian Civil Law an employee may
sue his employer for indemnity on the basis of negligence. It is usual for
Corporations to include this coverage as an extension of a general liability
program. However it is important to be aware of the general background of civil
liability jurisprudence in Peru. Traditionally the unconscionable delays,
procedural complications and inefficiency and corruption of the Judicial System
and Law level of resultant awards has generally dissuaded claimants from
pursuing this course of action. Additionally approx. 3 years ago the whole
judicial system, in a state of nearing total collapse, was declared in a state
of re-organization. This process which
has involved a re-constitution and re-nomination of judicial personnel - from
the National Council of Magistrates and the Supreme Court downwards is still in
course of implementation.
In
practice the Peruvian Insurance Market is not accustomed to provide G.L.
coverage for other than almost nominal amounts. It is noteworthy that general liabilities premiums represent less
than 1% of the Total Premium Income of the System. That tiny percentage also includes the Southern Peru Cooper
Corporation, one of the very few who have placed the risk here backed-up with a
major international facultative re-insurance.
It
is more usual for international corporations to cover the risk with a low limit
under a local policy ($1 million or less) and to include Peru in a
none-admitted global cover with a matching deductible.
FOREIGN STAFF
It is obviously most important for a
foreign direct investor in Peru to protect his ex-patriate staff with coverage
in its country of origin, the labour laws of which will likely be applicable
anyway to the contracts of the personnel involved.
STATE-OWNED SOCIAL SECURITY SYSTEM IN PERU
For
many years it was obligatory that all employees or blue-collar workers on any
salary or wage-roll be insured by their employers with the Instituto Peruano de
Seguridad Social (I.P.S.S.) which provided both pension and health-care
benefits (including, since 1971, Workmen’s’ Compensation Insurance).
The
old all-embracing “I.P.S.S.” has in recent times been divided into two separate
entities as follows:
ONP (National Pension Office)
This
entity attends to matters involving the payment of pensions after
retirement to wage-roll staff against a contribution of 15% of salary. Of this amount 2% is for the account of the
employer who must also retain and pay in the remaining 13% from the employee’s
salary
However,
since 1993, each individual employee has the right of totally opting-out of
ONP, always providing that instead he joins a privately-owned “AFP”
(Administrator of Pension Funds)
Additionally
ONP pays weekly benefits for employees and dependants in the event of work-related
accidents and occupational diseases i.e. the non-medical aspects of “Workmen’s’
Compensation”, but now only in respect of low-risk activities. Those firms whose activity is classified
“high-risk”(which includes Oil or Gas Production) must obligatorily take out a
complementary work-risk insurance – known as SCTR – PENSIONS with a private
insurance company in respect of all those employees who are actually exposed to
the high-risk factor.
ESSALUD
This
is the State-owned Office, which provides medical attention to
all employees on payroll and to their direct dependants (wives and
offspring). However the staff is now
able to (partially) opt-out of
ESSALUD. The decision to opt-out must
be approved by the majority of an assembly of all the workers affected. The great majority of staffs take this
alternative because of the inferior service provided by the network of
hospitals owned and operated by ESSALUD
The
(obligatory) partial alternative to ESSALUD is a contract with an “EPS” (Health
Service Provider), which work principally with private clinics. The major Insurance Companies each have an
associated EPS. An EPS does not
provide weekly benefits nor certain major illness benefits, which remain the
responsibility of ESSALUD, who continue to collect three-quarters of the fixed
total cost (all paid by the employer) of 9%, i.e. 6.75%. The remaining 2.25% goes to the EPS
selected by the staff.
Likewise,
Oil Company, being high-risk, must also buy from his private insurer the SCTR –
HEALTH coverage in respect of medical attention to work-related accidents.- but
again only in respect of those employees really exposed to high-risk
OTHER BENEFITS COVERED BY PRIVATE INSURERS
OBLIGATORY
LIFE INSURANCE
This
is a Collective Temporary (Annual) Contract, which must include all payroll
staff commencing four years after starting service. The benefits are 16 current monthly salaries for death from
natural causes and 32 monthly current salaries in respect of death by accident
(whether work-related or not) or of total permanent disability from accidents.
It is however now customary for employers to include employees after only 3
months after starting work and some do so from the first day.
Employees
may continue their insurance upon termination of employment by paying corresponding
to his personal status
It
is also now general practice for insurers to include, without charge,
additional benefits for the equivalent of a number (between 2 and 5) of salaries
in the event of a whole series of medical or accidental contingencies, burial
and repatriation expenses, etc.
The
law also establishes maximum rates on payroll between 0,53% and 1.46% for
different types of employment. In
practice these rates can be reduced significantly.
EMPLOYERS LIABILITY INSURANCE
According
to Peruvian Civil Law an employee may sue his employer for indemnity caused by
negligence. It is usual for Corporations to include this coverage as an
extension of a general liability program. However it is important to be aware
of the general background of civil liability jurisprudence in Peru.
Traditionally the unconscionable delays, procedural complications and
inefficiency and corruption of the Judicial System and low level of resultant
awards have generally dissuaded claimants from pursuing this course of action.
Additionally recently the whole judicial system, in a state of nearing total
collapse, was declared in a state of re-organisation. This process is still in course of implementation.
In practice the Peruvian Insurance Market is
not accustomed to provide General Liability coverage for other than modest
amounts.
It
is more usual for international corporations to cover the risk with a low limit
under a local policy ($1 million or less) and to include Peru in a
none-admitted global cover with a matching deductible.
OTHER NOTES
·
Recently employers have increasingly used systems of
fixed-term contracting of fee-paid (rather than salaried) staff. By this method they avoid not only the
costs mentioned above but also the payment of annual bonuses (normally 16
2/3%), profit-sharing and severance payments (normally one-month salary for
each year of service.
For
similar motives in recent years the numbers of Workers’ Co-operatives which corporations
engage to obtain labour services under short-term contracts have proliferated.
·
Additional Benefits most frequently provided:
Improved
Medical Benefits The exact scope of the benefits provided
by an EPS naturally depends on the inter-relation between the level of salaries
which are generating premium at 2.25% and the composition and number of persons
which make up the list of Persons Insured.
Obviously, if the average salary is relatively high and the average
family size is low, then the EPS can afford to improve benefits. Alternatively there are occasions when an
employer and his staff wish to purchase the option of being attended abroad where
the level of medical costs is much higher than in Peru. This would almost certainly require
additional premium and this extra cost is frequently shared between employer
and staff
Increased
Life Insurance Benefits The Obligatory Life Insurance
Program as described above is frequently improved by increasing all the
benefits by 50% at pro-rata additional cost so that the basic sum assured for
death from natural causes goes up to the equivalent of 24 monthly salaries and
the other sums insured in proportion
·
Partial
Self Insurance for Medical Benefits
Although it could perhaps be premature for any Insured to use such an alternative immediately after starting-op business here, it should also be borne in mind that some large corporations exercise an option to use an EPS only as a fronting and administrator. On this basis the Insured effectively retains the premium (i.e. 2.25% of wageroll) and only reimburses the EPS for all medical expenses incurred plus, say, 15% as an administration fee. Such a scheme should obviously be complemented with a policy issued by the insurance company with a deductible, say, US$10,000.
·
Foreign
Staff
It
is obviously most important for a foreign direct investor in Peru to protect
his ex-patriate staff with coverage in its country of origin, the labour laws of
which will likely be applicable anyway to the contracts of the personnel
involved.
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