Browse Profiles > Peru > Insurance Core Principles
  Score Rank
Standards Compliance Index 35.83 out of 100 50
Business Indicator Index 8.82 out of 12 40
Peru

Insurance Core Principles

Summary
Peru's insurance industry is regulated by the Superintendence of Banks, Insurance (SBS), whose main insurance-related objective is to protect the interests of policyholders. According to Ruben Mendiolaza, Intendent of the SBS, in 2004 the SBS carried out a self-assessment on the degree of implementation of the Insurance Core Principles (ICPs) promulgated by the International Association of Insurance Supervisors (IAIS). According to the self-assessment, Peru observed 8 ICPs, whereas 18 ICPs were qualified as largely observed. ICP 22 Derivatives and Similar Commitments was found to be non-observed, and ICP 27 Fraud was only partly observed. Mendiolaza further stated that Peru intends to fully comply with international standards within the next coming three to four years. In 2004, the International Insurance Foundation undertook a technical assistance project to assist Peru in improving its ICP compliance. Its main recommendation was to move to a Risk Based-supervisory approach.

    General Overview

    According to the Superintendence of Banks, Insurance and Pension (Superintendencia de Banca, Seguros y AFP, or SBS) website, the SBS regulates the insurance industry with the primary objective of protecting the interests of policyholders. The SBS is a public institution whose functional autonomy is enshrined in the Constitution of Peru. Its objectives, functions and authority are established in the General Law of the Financial and Insurance Systems, Organic Law of the Superintendence of Banks, Insurance and Pension No. 26702, of 1996. As indicated on the website of the International Association of Insurance Supervisors (IAIS), the SBS is an IAIS member.
    In his presentation at the 2005 World Risk and Insurance Economics Congress, Ruben Mendiolaza, Intendent of the SBS, stated that in 2004, as a part of preparation to the International Monetary Fund's (IMF's) Financial System Stability Program, the SBS carried out a self-assessment on the degree of implementation of the Insurance Core Principles (ICPs) promulgated by the International Association of Insurance Supervisors (IAIS). According to the self-assessment, "Peru's supervisory process showed a good degree of compliance of international standards" (p. 11). Peru observed 8 ICPs, whereas 18 ICPs were qualified as largely observed. ICP 22, covering Derivatives and Similar Commitments, was found to be not observed, and ICP 27 on Fraud, was partly observed. Mendiolaza further stated: "Peru's self-assessment has been an honest, tough evaluation of where it is and needs to go with respect to core principle compliance. The main objective is to fully comply with these international standards in the next three to four years" (p. 10).
    Mendiolaza adds that, in order to improve Peru's compliance with international standards and to assess strength and weakness of on- and off-site examination and reserving, the International Insurance Foundation (IIF) undertook a technical assistance project in 2004. As a result, the IIF concluded that "SBS supervision is focused on a compliance approach since it relies more on the verification of transactions with little or less attention in the assessment of companies risk-management practices, the quality of management and controls in place" (p. 10). It was thus recommended to move to a Risk Based-supervisory approach.
    As far as the insurance market per se is concerned, Mendiolaza observes that there has been a significant increase in the insurance premiums, due mostly to the liberalization of the market in 1990s and the participation of foreign insurers. As of December 2004, there were 12 insurance companies, 8 of which were specialized.


    The Principles

    ICP 1 Conditions for effective insurance supervision

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 2 Supervisory objectives

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 3 Supervisory authority

    Peru's insurance industry is regulated by the SBS, whose main insurance-related objective is to protect interests of policyholders. The SBS is a public institution whose functional autonomy is enshrined in the Constitution of Peru. Its objectives, functions and authority are established in the General Law of the Financial and Insurance Systems, Organic Law of the Superintendence of Banks, Insurance and Pension No. 26702 of 1996, as noted on the SBS website. However, there is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 4 Supervisory process

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 5 Supervisory cooperation and information sharing

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 6 Licensing

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 7 Suitability of persons

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 8 Changes in control and portfolio transfers

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 9 Corporate governance

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 10 Internal control

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 11 Market analysis

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 12 Reporting to supervisors and off-site monitoring

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 13 On-site inspection

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 14 Preventive and corrective measures

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 15 Enforcement or sanctions

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 16 Winding-up & exit from the market

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 17 Group-wide supervision

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 18 Risk assessment and management

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 19 Insurance activity

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 20 Liabilities

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 21 Investments

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 22 Derivatives and similar commitments

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 23 Capital adequacy and solvency

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 24 Intermediaries

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 25 Consumer protection

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 26 Information, disclosure & transparency towards the market

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 27 Fraud

    There is insufficient information publicly available as to Peru's compliance with this principle.

    ICP 28 Anti-money laundering/ Combating the Financing of Terrorism

    There is insufficient information publicly available as to Peru's compliance with this principle.

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    Sources of Assessment

    Mendiolaza, R., "Insurance Regulation and Supervision in Peru: An RBS Framework for the SBS," Presentation at the World Risk and Insurance Economics Congress, Salt Lake City, USA, August 8, 2005. Available from World Risk and Insurance Economics Congress website. Accessed on September 5, 2007. (Mendiolaza 2005)

    Webb I., "Implementing International Standards in Emerging Markets: The Case of Peru," Presentation at the Symposium on International Solvency Standards and Financial Stability, November 2004. Available from International Insurance Foundation website. Accessed on September 5, 2007. (Webb 2004)

    Relevant Organizations

    Superintendence of Banks, Insurance and Pension - Superintendencia de Banca, Seguros y AFP (SBS) (website in Spanish only)



    Relevant Legislation/Regulation

    General Law of the Financial and Insurance Systems, Organic Law of the Superintendence of Banks, Insurance and Pension No. 26702, 1996 - Ley General del Sistema Financiero y del Sistema de Seguros y Orgánica de la Superintendencia de Banca, Seguros y AFP No. 26702, 1996

    Legislative Decree Approving the New Language for the General Law of Banking, Financial, and Insurance Institutions No 770, 1993 - Decreto Legislativo que Aprueba el Nuevo Texto de la Ley General de la Institutciones Bancarias, Financieras, y de Seguros No. 770, 1993 (in Spanish only)

    Law Modifying Different Articles of the General Law of the Financial and Insurance System, the Organic Law of the Superintendence of Banks, Insurance and Pension No. 27102, 1999 - Ley que Modifica Diversos Articulos de la Ley General del Sistema Financiero y del Sistema de Seguros y Organica de la Superintendencia de Banca, Seguros y AFP No. 27102, 1999. (in Spanish only)

    Law Modifying Different Articles of the General Law of the Financial and Insurance System, the Organic Law of the Superintendency of Banking and Insurance No 27331, 2000 - Ley que Modifica Diversos Articulos de la Ley Ley General del Sistema Financiero y del Sistema de Seguros y Organica de la Superintendencia de Banca y Seguros, No 27331, 2000 (in Spanish only)

    Law to Extend Coverage for the Insurance Deposit Fund and the Powers of the Superintendence of Banks, Insurance and Pension No 27008, 1998 - Ley que Amplia la Cobertura del Fondo de Seguros de Depositos y las Facultades de la Superintendencia de Banca, Seguros y AFP No 27008, 1998 (in Spanish only)

    SBS Insurance-related Rules and Regulations (in Spanish only)



    Supplementary Sources

    International Association of Insurance Supervisors website. Accessed on November 14, 2006. (IAIS website)

    Superintendence of Banks, Insurance and Pension website. Accessed on September 5, 2007. (SBS website)
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