PRIIA issues warning on Puerto Rico legislation
The Puerto Rico International Insurers Association (PRIIA) has written to its members to warn them of the latest developments related to the International Insurers and Reinsurers Act in Puerto Rico, which is aimed at developing Puerto Rico as an international insurance centre.
The PRIIA said that on October 11, 2022, the Commissioner of Insurance of Puerto Rico, Alexander Adams, took the position that International Insurers were not allowed to reinsure risks in the US under the Act. As a result, Commissioner Adams issued a Cease-and-Desist Order prohibiting a life reinsurer authorized under the Act from continuing to assume reinsurance risks domiciled, resident, or to be executed in any state or territory of the United States.
According to the association the regulator has supported this action by arguing that certain provisions within Section 6 of Rule 80, which do not allow International Insurers to demand reciprocity treatment for licensing or other regulatory purposes in a US state or territory on account of Puerto Rico’s accreditation by the NAIC, precludes those International Insurers that are deemed as “multistate insurers” under the relevant NAIC definition from insuring or reinsuring business in the United States.
Moreover, on December 7, 2022, Commissioner Adams issued a Circular Letter directed at all International Insurers, adopting the same interpretation of Rule 80 as stated in the Order. This Circular Letter de facto extends the same limitations of the Order to all International Insurers.
PRIIA said that it has been working tirelessly to promote the International Insurance Center and Puerto Rico as a favoured jurisdiction for international insurance and reinsurance business.
It said: “PRIIA’s position is that Commissioner Adam’s interpretation of the Act and Rule 80 is both incorrect and contrary to law, and that his actions have resulted in creating great uncertainty, instability and lack of trust among licensed International Insurers and among prospects regarding Puerto Rico as an ideal jurisdiction to invest and from which to conduct insurance operations.
“As such, on November 18, 2022, PRIIA filed a request before the Office of the Commissioner of Insurance (OCI) to be allowed participation in the legal proceedings of the affected International Insurer as an Interested Party. However, the OCI denied PRIIA’s request to be included as an Interested Party on January 11, 2023. On January 31, 2023, PRIIA filed a motion to reconsider, which was flatly rejected upon 15 days of inaction by the OCI, and on March 17, 2023, within the applicable 30-day statutory period, PRIIA filed for Judicial Review at the Puerto Rico Court of Appeals. In the meantime, on March 30, 2023, without any formal notice to PRIIA, the OCI closed the administrative case against the affected International Insurer following a settlement stipulation entered with the latter.”
PRIIA interprets the still outstanding OCI’s Circular Letter as a legislative rule that interferes with acquired rights and obligations and was issued without proper compliance with the Puerto Rico Administrative Procedures Act, a law that establishes the requirements that administrative agencies must comply with when adopting legislative rules that may, precisely, affect acquired rights of interested parties. At this time PRIIA is considering possible measures to be taken in that respect.
PRIIA told its members that it will keep them updated on further developments.
