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General Information - Insurance Companies and Insurance Intermediaries General Information - Insurance Companies and Insurance Intermediaries

General Information - Insurance Companies and Insurance Intermediaries

General Information


In the present document the reader will find a useful and practical guide on how the insurance activity is organized in Colombia. This document provides the regulatory information necessary to understand what is essential about the general structure of the insurance activity in our Country and to guide the way on how local insurance entities operate. Throughout the document you will find hyperlinks for easy referral to the main rules and regulations on the topic of insurance in Colombia.

Legal and administrative regulations of a general nature that govern the operation of the insurance business in Colombiabia.

Supervision Authority of Insurance Institutions

Insurers, reinsurers and brokers operating in Colombia are supervised by the Financial Superintendency of Colombia, an independent and technical body attached to the Colombian Ministry of Finance and Public Credit, through which the President exercises the inspection, oversight and control of the persons that carry out financial and insurance activities in Colombia (Article 325 FINANCIAL SYSTEM ORGANIC STATUTE).

Restriction to carry out insurance activities in Colombia

The Political Constitution sets forth that the insurance activity is of public interest, this is why it can only be exercised by means of prior State authorization (Article 335 Political Constitution).
Therefore, any person wanting to develop an insurance or reinsurance activity in Colombia must obtain prior authorization of the Financial Superintendency of Colombia (Articles 39 and 108 of the Financial System Organic Statute). In order to perform insurance related activities in Colombia, a stock corporation (Sociedad Anónima) or cooperative organization must be incorporated once prior authorization of the Finance Superintendency has been obtained.
In this sense, foreign insurance companies not authorized to perform insurance activities in Colombia may not operate or enter into insurance agreements in the country. To do so, they must incorporate a subsidiary in Colombia in accordance with the provisions established in the Political Constitution and the law.

Incorporation and authorization procedure

In order to obtain authorization of the Financial Superintendency of Colombia to incorporate an insurance entity, the requirements set forth in Chapter I, Part III of the Financial System Organic Statute and Paragraph 1, Chapter One, Title I of External Circular 007 of 1996 must be previously met.

Restriction to obtain foreign insurance

When obtaining insurance on vessels, aircraft and vehicles registered in the country and such property is located in Colombian territory, insurance shall only be acquired with companies legally established in Colombia or with insurance companies from abroad that have obtained prior authorization of the Financial Superintendency. The insurance of residents in the country, in terms of their responsibilities, is subject to the same principle unless they are in international travel. (Article 188 FINANCIAL SYSTEM ORGANIC STATUTE).

Corporate Purpose

The corporate purpose of insurance cooperatives and companies shall be to carry out insurance operations under the modalities and lines of business expressly authorized, aside from those specially stipulated by the law. Besides, they may perform reinsurance operations according to the terms established by the National Government.
The companies whose purpose includes the performance of individual life insurance operations shall exclusively have this purpose and their activities may not be extended to another type of insurance operation, except when they refer to complementary ones.
The corporate purpose of reinsurance companies shall exclusively consist of the development of reinsurance operations

Possibility to manage pension retirement and disability funds

Insurance institutions in Colombia can manage pension retirement and disability funds, with prior authorization of the Financial Superintendency of Colombia, which may be granted if the entity accredits technical capacity in accordance with the nature of the fund which is intended to be managed. (See article 183, paragraph 3 FINANCIAL SYSTEM ORGANIC STATUTE).

Capital and Patrimony rules

Minimum Capital and Patrimony regulation

  • Solvency ratio and technical patrimony: Insurance corporations and cooperatives must maintain and accredit to the Financial Superintendency of Colombia a solvency ratio and a technical patrimony in observance of the minimum requirements as set forth by the National Government. (Article 82, paragraph 2 FINANCIAL SYSTEM ORGANIC STATUTE).
    The solvency ratio is determined by the annual amount of the premiums or the average claims ratio of the last three (3) years; taking into account the greater value between the mentioned criteria (Paragraph 2.1.1, Chapter 2, Title Sixth of Legal Circular (C.E. 007 OF 1996).
    Computable technical patrimony for these purposes comprises original and secondary capital in accordance with balance sheet items defined under paragraph 2.1.2, Chapter 2, Title Sixth of the Legal Circular (C.E. 007 OF 1996).

Technical Reserves

Insurance institutions in Colombia must constitute the following reserves: (Article 186 Financial System Organic Statute).
a) Current risks reserve is a value to be deducted from the withheld net premium in order to protect the risk portion of the unearned premium.
b) Mathematical reserve is defined as the difference between the present value of the future risk assumed by the insurer and the present value of net premiums assumed by the policy holder.
c) Reserve for outstanding claims, is intended to establish appropriate cautions to ensure the payment of claims that have occurred but have not been paid or informed during the accounting year.
d) Deviation reserves, to cover unknown accident rates, highly fluctuating, cyclical or catastrophic risks


Technical Reserves investment limits

Insurance Policy

Prior approval of insurance policies and fees by the Financial Superintendency is only required in the events of initial authorization to an insurance institution or regarding the operation of a new business line (Article 184 of the Financial System Organic Statute).

Insurance Policy Deposit

A draft of an insurance policy including its annexes must be filed by insurance entities before the Financial Superintendency prior to the offering of such policy. Likewise, if amendments are made to such drafts a full copy of the resulting document must be filed.

The Financial Superintendent maintains a well-ordered deposit which is classified by institution and business lines in chronological order. (See paragraph Chapter Two, Title VI of External Circular 007 of 1996) .

Premium financing and portfolio provisioning

Insurance entities may finance the payment of issued insurance contract’s premiums, subject to the following conditions, provided that such payment does not exceed seventy per cent (70%) of the total value of the premium and without exceeding the individual borrowing limits set forth in Decree 2360 of 1993.
The funds with which the payment of premiums is financed must derive from equity or other resources different than technical reserves. Financing mechanisms may not be applied to premiums corresponding to life insurance contracts that did not previously agree on such payment scheme. (Paragraph 3, article 183 Financial System Organic Statute and paragraph 1.5., Chapter Two, Title VI of External Circular 007 of 1996).
In the events that the premium has been paid through this financing system, these credits are assimilated to consumer loans, therefore, must be categorized according to the criteria established for such credit category as provided in Chapter II of External Circular 100 of 1995.
Insurance premiums not collected during the payment period or not financed in accordance with above mentioned terms and conditions, must be earmarked according to current legal standards.
Portfolio assignment
Insurance entities may transfer their insurance contracts, total or partially, to another entity that runs the corresponding business line. When the assignment is performed over twenty-five percent (25%) or more of the portfolio of a same business line, prior approval of the Financial Superintendency is required. To provide authorization, the Financial Superintendency verifies payment of claims submitted by the insured or beneficiaries before the transferor company. The assignment of insurance contracts shall be previously informed to policy holders and under no circumstances the conditions under which the transfer is made can aggravate the rights or modify contracted guarantees. (See article 70 of the Financial System Organic Statute).


    Last updated : 18/12/2015
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