According to section 53 of the Insurance Act the insurance intermediary is only empowered with respect to the transaction in which it takes part to:

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1 Argentina MANZANO, LÓPEZ SAAVEDRA & RAMIREZ CALVO Martin Manzano and Ignacio Shaw 1. Insurance intermediation activities 1.1 Is the distribution of insurance products (hereinafter referred to as insurance intermediation activities or insurance intermediation ) limited to insurance intermediaries in your country? Yes. As described below, the distribution of insurance products is limited to insurance brokers and agents. Only brokers are formal intermediaries under Argentinean law. 1.2 What does the term insurance intermediation include? Is there any definition set forth by statutory or case law? In any case, please indicate which activities/services are included in the above definition, for example, presentation or proposal of insurance products, assistance or consultancy aimed at drafting the agreement. Are collaboration activities that relate to the administration or execution of the contracts drafted, even in the case of accidents, included in the definition? Does the drafting of contracts or insurance agreements in a collective form on behalf of insured individuals also form part of insurance intermediation activities? Insurance intermediation activity in Argentina is mainly governed by the Insurance Companies Act (Law No. 20,091) and the Insurance Intermediaries Act (Law No. 22,400). Only three sections of the Insurance Act (Law No. 17,418) deal with intermediaries and agents. As mentioned above, only insurance brokers are considered intermediaries under Argentinean law. Section 1 of the Insurance Intermediaries Act defines brokers activity as promoting the agreement of insurance contracts, advising the insured parties. The fact that under Argentinean law agents act as representatives (as attorneys-infact) of an insurance company, leads local scholars to conclude that agents are not intermediaries under the abovementioned definition of insurance intermediation set forth in section 1 of the Insurance Intermediaries Act. Insurance brokers advise the potential insured, verify and control the status of the risk, and report any modification of the risk to the insurer (section 10, Insurance Intermediaries Act). Brokers have an active role not only in the negotiation of the insurance policy but also when a loss occurs, as they usually channel the communications between the insured and the insurer. According to section 53 of the Insurance Act the insurance intermediary is only empowered with respect to the transaction in which it takes part to: receive proposals to formalise and modify insurance contracts; deliver the instruments issued by the insurer referring to contracts or their extension; accept the payment of the premium if the broker is in possession of a receipt of the insurer. 1.3 Are insurance intermediation activities allowed as ancillary activities to other professional activities (eg, travel or rent-a-car services, etc) and to what extent? Furthermore, are there exceptions that allow actors, other than

2 insurance intermediaries, to carry out insurance intermediation activities? Is it a matter related, for example, to the risk covered, the duration or the cost of the policy premium, etc? It is possible to act as an insurance agent as an ancillary activity to other professional activities. In the Argentinean insurance market, banks are a usual example of this, offering life insurance and other types of insurance to their clients. Travel agents, rent- a-car services and, in general, other retailers willing to provide insurance agency services as an ancillary activity to their main activity may also act as agents of one or more insurers, subject to the requirements established by the National Superintendency of Insurance (the NSI ). The extent of the powers granted to the agent can be defined by the insurer. Pursuant to section 54 of the Insurance Act, the power granted to enter into insurance contracts authorises the agent to agree, amend or extend insurance contracts, as well as receive notifications and draw up declarations of rescission, unless its powers have been expressly limited by the insurer. If the agent is appointed for a specific geographical area, the powers granted are limited to the area (this includes assets located in or persons who have their usual residence in this area). 2. Insurance intermediaries requirements 2.1 In order to act as an insurance intermediary, is there need for an authorisation and/or to be enrolled in a register? If yes, what are the requirements to be authorised/enrolled in the register as an insurance intermediary (individual or legal entities, integrity and/or professional requirements, etc)? Briefly explain how it works. Brokers (insurance intermediaries) and legal entities acting as agents as an ancillary activity must be registered with the National Superintendency of Insurance (NSI) in order to carry out activities in Argentina. Brokers must also register with the Insurance Intermediaries Registry (Law No. 22,400) and legal entities willing to act as agents must register with the Agents Registry (Resolution No. 32,052). Both registries are overseen by the NSI. Individual brokers and brokerage companies may be appointed as agents, but they cannot exercise both activities simultaneously (section 8(e) of the Insurance Intermediaries Act; section 5, NSI Resolution No. 38,052): if a broker accepts a mandate from an insurer, it can only operate as an agent. In this case, the agency mandate granted to the broker must be registered with the Public Registry of Commerce and reported to the NSI. Pursuant to section 4 of the Insurance Intermediaries Act, brokers must: a) have their residence/main domicile in Argentina; b) not be engaged in any of the incompatible professions outlined in the regulations (eg, adjusters, NSI officers, directors of insurance companies); and c) pass the relevant exams coordinated by the NSI and pay the registration fee. With reference to agents, only legal entities with at least two years experience in their line of business may apply for registration in the Agents Registry. The application to the registry must be completed with all the relevant documents required by the NSI pursuant to section 4 of Resolution No. 38,052: certified copy of the company s bylaws and their registration with the Public Registry of Commerce;

3 certified copy of the corporate resolution approving the application for enrolment in the Agent s registry; documentation relevant to the money laundering prevention regime; a certificate of good standing and infractions record (if the applicant company s main activity is a regulated activity); a description of the company s activity, attaching the last two financial statements; certified copy of the mandate instrument granted by an insurer; details of all branches and/or subsidiaries in which the company shall operate as an agent; a description of the company s organisational structure. The company must appoint a manager in charge of the insurance operations. This document must also provide details of the responsible officers in charge of insured customer service. 2.2 In what form can anyone access and verify the registration/authorisation or verify the fact that the insurance intermediary is a professional (eg, via the web)? The Insurance Intermediaries Registry can be accessed through the NSI s website: www2.ssn.gob.ar. However, while the Agents Registry cannot be directly accessed through the website, it is possible to obtain copy of the NSI resolutions that approve the enrolment of each agent (legal entities only). 2.3 Are insurance intermediaries with a registered office in another country allowed to operate in your country and how (eg, under the right of establishment or freedom to provide services in your country, as in the EU)? If yes, under what conditions? In such a case, are they bound by the same obligations as the insurance intermediaries with a registered office in your country? Please describe. Pursuant to section 4 of the Insurance Intermediaries Act, intermediation activities (brokerage) can only be carried out by authorised individuals or associations of brokers domiciled in Argentina. Many major brokers who operate internationally have registered Argentinean subsidiaries in order to operate in Argentina, or have associated with local brokerage companies. 3. Different types of insurance intermediaries 3.1 Please list the different types of insurance intermediaries acting in your country such as agents, brokers, banks, financial intermediaries or financial advisers. Brokers are the only type of formal insurance intermediary recognised under Argentinean law, as per the definition of intermediation established in section 1 of the Insurance Intermediaries Act: promoting the agreement of insurance contracts, advising the insured parties. Agents act directly in representation of the insurer, not as independent intermediaries between the insurer and the insured. Even if not formally considered to be insurance intermediaries, agents are also allowed to distribute insurance products (eg, those who act professionally and represent the insurers and those who provide insurance services as an ancillary activity to the main one). Brokers cannot act simultaneously as agents (section 8(e) of the Insurance Intermediaries Act; section 5, NSI Resolution No. 38,052).

4 3.2 Do insurance intermediaries need to enter into a written contract with the insurers (or receive a mandate from the insurers)? Brokers are not allowed to act as such if they accept a mandate from an insurer to enter into contracts. In this instance they may act as agents but are not regarded as intermediaries under Argentinean law. Agents must enter into written contracts with the insurers and fulfil other requirements set by the NSI in order to operate in the market (section 6 of NSI Resolution No. 38,052). 3.3 Can an insurance intermediary enter into a contract with the insurers (or receive a mandate from the insurer) and in turn enter into one or more agreements with other insurance intermediaries (the so-called horizontal distribution)? As mentioned above, brokers cannot receive a mandate from an insurer and continue to operate as a broker. If they accept their appointment they can only act as agents. Pursuant to section 7 of Resolution No. 38,052, agents cannot extend their mandate to other agents, so insurers appoint their agents directly. Brokers may liaise with agents in the negotiation and execution of an insurance contract. Depending on the agency agreement, the agent may also pay the broker s commission, as the agent shall act as an attorney in fact on behalf of the insurer. 3.4 The insurance intermediaries more in detail: The agent Does the role of insurance agent exist in your country? If yes, describe the agent s functions. Yes, insurance agents in Argentina act as representatives of an insurer under the rules of power of attorney. The NSI regulates their activity (contemplated in sections 53, 54 and 55 of the Insurance Act) through Resolution No. 38,052. Agents are either companies that commercialise insurance as an ancillary activity, or brokers who accept power of attorney from an insurer (and, therefore, cease to act as brokers). Pursuant to section 54 of the Insurance Act, the power granted to enter into insurance contracts authorises the agent to agree, amend or extend insurance contracts, as well as receive notifications and draw up declarations of rescission, unless its powers have been expressly limited by the insurer. If the agent is appointed by the insurer for a specific geographical area, the powers granted are limited to the area (this includes assets located in or persons who have their usual residence in the area) In particular, does an agent act on behalf of the insurer or the insured? Who pays the agent s remuneration? To what kind of remuneration is the agent entitled?

5 Agents act on behalf of the insurer, who pays their remuneration according to the terms specified in their agreement If an agent acts on behalf of the insurer, describe the type of work relationship with the insurer (eg, subordinate, para-subordinate or freelance, self-employed etc). Does the principal-agent model exist, that is, is one appointed by the insurer to manage a particular branch or subsidiary? The type of work relationship with the insurer depends on the terms and conditions of the agency agreement. Insurance agents in Argentina are not employees of an insurer. The principal-agent model in which an agent is appointed by the insurer to manage a particular branch or subsidiary does not exist in Argentina What type of organisation does the agent have? Can he have staff working for him (eg, sub-agents)? Agents, brokers and brokerage companies can have staff. Companies enrolled in the Agents Registry act as agents only as an ancillary activity, so there are no limitations in this matter. Agents can only appoint sub-agents if such power was granted by the insurer, but this is not typical Is the relationship between the insurer and the agent regulated by a collective bargaining agreement? If yes, what does it mainly cover? Can the relationship be exclusive to a particular area? Is the remuneration established by the collective bargaining agreement? Can the provisions be waived by the parties mutual agreement? As insurance agents in Argentina are not employees of an insurer, their relationship is not governed by collective bargaining agreements Does the termination of the work relationship between the agent and insurer provide for the agent s obligation to return the portfolio of contracts? In such a case, would the agent be entitled to an indemnity? The agents as they act as attorneys-in-fact create and manage some aspects of an insurance portfolio on behalf of an insurer. When an agent s appointment is revoked or resigned, the insurer-insured relationship is not altered. In such cases, the insurer must inform the insured that the termination of the agreement between the insurer and the agent through which the insurance contract was executed The broker Please describe the broker s services. In general terms, do the services consist of intermediation or are they similar to consultancy/advisory activities? Is the broker an independent actor? As mentioned in our answer to question 1.2, section 1 of the Insurance Intermediaries Act defines brokers activity (insurance intermediation) as promoting the agreement of insurance contracts, advising the insured parties. The role of intermediaries is to advise potential insured parties and provide insurance options, acting as independent actors between the potential insured and the insurers.

6 Insurance brokers must: respect the interests of both the insurer and the insured, giving the insured proper advice and detailed information, as well as fully complying with its obligations towards the insurer (section 10, Insurance Intermediaries Act); verify and control the status of the risk, advising the insured and reporting any modification of the risk to the insurer (section 10, Insurance Intermediaries Act); make sure that the proposal form and the terms of the insurance contract match correctly if there are any differences, such differences shall be considered accepted by the insured if no claim is made within one month of having received the policy (section 12, Insurance Act). Brokers have an active role in the negotiation of the insurance policy, but also when a loss occurs, as they usually channel the communications between the insured and the insurer Who pays for the broker s remuneration (please specify case by case for different services, if any)? Is the broker allowed to retrocede a portion of his remuneration to the insurer or to the insured? Pursuant to sections 5 and 6 of the Insurance Intermediaries Act, brokers shall be paid a commission agreed with the insurer, once the insurer receives payment of the premium. We have not seen agreements allowing brokers to retrocede a portion of their remuneration to the insurer or the insured, but there is no restriction to doing so Banks, financial intermediaries, financial advisers and others allowed to act as insurance intermediaries Can banks, financial intermediaries and/or financial advisers act as insurance intermediaries? Banks, financial intermediaries and financial advisers may register with the NSI in the Agents Registry in order to act as insurance agents ( agentes institorios ). As agents are representatives of an insurer that may enter into contracts on their behalf, their activity is not considered to be insurance intermediation as per the abovementioned definition of section 1 of the Insurance Intermediaries Act. As agents, their activity is governed by the general rules of power of attorney Please define a financial intermediary. Are there particular requisites for the profession of financial intermediary? Does the financial intermediary have to be enrolled in another register (eg, a register of financial intermediaries)? Pursuant to sections 1, 2 and 7 of the Financial Entities Act (Law No. 21,526), any public or private entity that operates as an intermediary between the supply and demand of financial resources shall be subject to the control of the Central Bank (including, without limitation, commercial banks, investment banks, mortgage banks, financial companies, mutual savings banks and credit unions). Financial intermediaries must be authorised by the Central Bank in order to carry out business in Argentina Please define a financial adviser. Are there particular requisites for the profession of financial adviser? Does the financial adviser have to be enrolled in another register (eg, a register of financial advisers)? In Argentina, there is no statutory definition of a financial adviser. This term may refer to various activities.

7 Can financial intermediaries and/or financial advisers distribute any insurance and/or financial products? If yes, under what conditions or with what limitations? Financial intermediaries and financial advisers can register as agents if they comply with NSI requirements (Resolution No. 38,052 as amended and complemented), in order to execute insurance contracts with their clients (as representatives of an insurer) With reference to insurance intermediaries other than agents, brokers, banks, financial intermediaries and financial advisers, as indicated under question 2.1 above (if any), please describe what kind of products they can distribute and under what conditions. Under Argentinean law, only brokers can formally act as insurance intermediaries. Agents do not act as intermediaries, but as representatives of an insurer by the general rules of power of attorney. 4. Rules of conduct and responsibilities 4.1 Are there rules of conduct that insurance intermediaries should comply with (eg, duties in relation to the obligation of utmost care, correctness, utmost good faith, information, adequacy, transparency, conflict of interests, filing of documentation, separate accounting or other accounting obligations)? Please describe the above duties, specifying if they apply to all types of insurance intermediary (eg, agents, brokers, banks, financial intermediaries, financial advisers, etc) and whether the content differs with particular reference to responsibility according to the type of actor/activity and person (insurer or insured) receiving the activity. The general rules of conduct for brokers are not jointly enumerated in the Insurance Intermediaries Act, although most of them can be found in section 10, among the general duties of intermediaries. The main rules of conduct applicable to brokers, based on the provisions of the Insurance Companies Act, the Insurance Intermediaries Act and other relevant insurance regulations, as well as the opinion of Argentine scholars, state that a broker must: perform their activity in accordance with all the applicable legal requirements (section 55, Insurance Companies Act); respect the interests of both the insurer and the insured, giving the insured proper advice and detailed information, as well as fully complying with its obligations towards the insurer (section 10, Insurance Intermediaries Act); verify and control the status of the risk, advising the insured and reporting any modification of the risk to the insurer (section 10, Insurance Intermediaries Act); make sure that the proposal form and the terms of the insurance contract match correctly. If there are any differences, such differences shall be considered accepted by the insured if no claim is made within one month of having received the policy (section 12, Insurance Act); comply with the advertising requirements applicable to insurers (section 10, Insurance Intermediaries Act); comply with all record-keeping requirements imposed by the NSI and general commercial law (section 10, Insurance Intermediaries Act); act in good faith, avoiding any practice which involves falsehood or exaggeration of the benefits and coverage provided by the insurer (section 12, Insurance Intermediaries Act; section 55, Insurance Companies Act); report to the NSI any circumstance which may imply an impediment to operate as an insurance broker (sections 8 and 10 of the Insurance Intermediaries Act);

8 provide registration documents, whenever these are requested (section 10, Insurance Intermediaries Act). 4.2 Does the insurance intermediary represent the insurer? By way of example, is the agent also the insurer s representative vis-à-vis the customer, and if so, does this also apply during trial before a court? Is there a matter of imputation of knowledge? What happens when a broker has information on matters relevant to the insurer s decision to insure which the broker fails to disclose to the insurer? Is the insured deemed to have breached its duty of disclosure in such circumstances? In which cases? Can the insurance intermediary be accountable for the contracts he executed on behalf of the insurer? As discussed, brokers are independent actors. Agents, on the other hand, act as attorneys-in-fact of an insurer. The mandate granted to agents is only referred to the commercial aspects of the insurance business. In practice, the insurer does not grant the agent any sort of judicial power of attorney. If an agent fails to disclose relevant information to the insurer, or if the agent in any other circumstance causes a loss to the insurer, the agent shall be liable to the insurer as per the general rules of power of attorney and contractual liability. The insurer is bound by the insurance contract executed by the agent acting on its behalf as if it were directly executed by the insurer. However, agents are liable for losses caused or aggravated by not complying with their obligations towards the insurer. 4.3 Is the insurer jointly liable for damages caused by the insurance intermediary, appointed by the same, when executing intermediary activities? Who is liable vis-à-vis the insured person? Is it always the intermediary or the insurer? In principle, the law does not establish the insurer s joint liability. The insurer is fully liable towards the insured, if a valid insurance contract is executed, without any regard to the intervention of brokers or agents. Depending on the circumstances of the case, brokers may cause damage (eg, wrongful advice, delay, errors or omissions) for which the insurer in principle shall not be liable towards the insured beyond its obligations under the insurance contract. In the case of agents, as they act in direct representation of the insurer, the insurer may be considered jointly liable towards the insured for the damages caused by the agent, depending on the circumstances of the case. The liability of the agent vis-àvis the insurer must be analysed under the rules of power of attorney. 4.4 Are there particular regulations or specific forms of compensation for damages caused to the insured person? No, the extent of liability is determined by the contract and the circumstances of each particular case. 5. Supervision and sanctions 5.1 Regardless of the requirement of an authorisation and/or enrolment, are insurance intermediaries subject to the control of supervisory bodies? Does the supervisory body have powers/duties of prudential supervision on the insurance intermediary s activities, and if so, in what way does it act?

9 The NSI supervises and controls insurance brokers and agents. Failure to comply with the regulations (Insurance Intermediaries Act and Resolution No. 38,052 on Insurance Agents, as amended or complemented by other regulations) may lead to the application of sanctions, ranging from a formal warning to fines and revocation of the authorisation to operate (up to five years) (section 13, Insurance Intermediaries Act; section 29 Resolution No. 38,052; and section 59, Insurance Entities Act, Law 20,091). 5.2 Are there fines for violations of the insurance intermediaries obligations? If yes, please describe. The NSI may apply fines to brokers/agents who fail to comply with their legal obligations and duties of good faith and due diligence (section 55, Insurance Entities Act). 5.3 Do sanctions also apply to foreign intermediaries who operate in your country? Argentinean law and, therefore, its sanctions are only applicable to local intermediaries or agents, and to foreign intermediaries authorised to operate in Argentina (eg, through a local subsidiary or in association with a local brokerage company. 5.4 Is there a consultation procedure with the insurance intermediary before the fine is applied? The insurance intermediary may challenge the sanction applied in an administrative proceeding. Sanctions imposed by the NSI can be appealed before the Commercial Courts (section 83, Insurance Entities Act). 5.5 Could the application of more fines, or the breach of particular regulations, result in the revocation of the authorisation or in the intermediary being struck off the register, or in the prohibition to act as an insurance intermediary? If yes, what are the most relevant circumstances? The revocation of the authorisation to operate (for up to five years) is the most severe sanction established in section 59 of the Insurance Entities Act, which is applicable to insurance intermediaries and agents (section 13, Insurance Intermediaries Act; section 29 Resolution No. 38,052; and section 59, Insurance Entities Act, Law No. 20,091). An infraction that usually leads to the revocation of the authorisation is the broker s/agent s failure to comply with the mandatory record-keeping requirements established under section 10, ll) of the Insurance Intermediaries Act and sections 11 and 12 of Resolution No. 38,052).

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