When the Dominican Republic enacted a new insurance law last summer, it affirmed its interest in having insurance companies from the United States and other countries operate in the Dominican Republic. The new law also makes clear what requirements insurers from the U.S. and elsewhere must meet to enter the Dominican market.
The law sets forth separate requirements for local insurers and for foreign insurers operating in the Dominican Republic.
A local insurer must be established as a commercial company, in accordance with the Dominican Commerce Code, and must be devoted exclusively to insurance operations, reinsurance, or both, and to other operations that normally are related to those activities.
The minimum paid-in capital of insurance companies is RD$8,500,000, or its equivalent, in Dominican pesos, of US$500,000. Up to 10 percent of the minimum capital may be used to create a guarantee fund, which will serve to compensate for unexpected accidents as well as a means of financing in cases of significant financial loss. The Superintendent of Insurance is empowered to adjust, in consultation with insurers and reinsurers, the minimum subscribed and paid-in capital required of insurers as well as the portion that may be used for the guarantee fund.
The law also requires that the stock structure of domestic insurance companies must have at least 51 percent of the amount of its paid-in capital held by Dominicans. Similarly, a majority of stock must be owned by Dominican individuals.
Foreign insurers must meet all of the requirements applicable to local insurers. In addition, foreign insurers should:
have operated in their country of origin for more than five years,
file a certification from the appropriate authorities from their country that states that they meet the requirements necessary to operate as insurers in their country of origin, and
must demonstrate that at least 51 percent of their paid-in capital was contributed by non-Dominicans.
Various provisions of the Dominican insurance law explain what may be included in an insurance contract. For example, it must be written in the Spanish language or, if written in another language, it must be accompanied by an official translation that will be relied on if needed to interpret the agreement.
Additionally, the law sets forth the content and extension of coverage that can be granted under each insurance line, and the conditions that may be established by the insurer in issuing the policy as well as the permitted exclusions. It also notes that an insurer...