Importance of a legal framework

In Haiti, there are about ten insurance companies. They have already met to stress the importance of a legal framework for this sector, which is so important to the economy. A law, which they believe will organize the sector through an audit institution. The Ministry of Economy and Finance has already invited them to work on the drafting of a law to this effect. I still wonder why we firmly believe that there is no law to organize insurance companies in Haiti. Is it because the law is too old? It’s quite possible. Or because it is inapplicable?  It would take a legal sociology study to confirm that. For me, it would be better to talk about modernizing the insurance companies act. Because the law has been in existence since 1956, it is the law of July 13,1956, modified by the decree of March 20,1981 organizing the control of insurance companies in Haiti. This law celebrated its sixtieth anniversary this year, do you see how old it is? So, what’s she talking about?

The decree of March 20, 1981, which organized the supervision of insurance companies in Haiti

The law of 13 July 1956, as amended by the decree of 20 March 1981 organizing the supervision of insurance companies in Haiti, was drafted for three reasons: firstly, to protect savings and encourage investment in Haiti; secondly, to organize the supervision of insurance companies; and thirdly, to repeal the law of 22 February 1948 imposing a special duty on insurance premiums. One more argument to support my position that there is no legal vacuum in the insurance sector. Since 1948 the Haitian state had been aware of the existence and importance of insurance companies. Eight years later, he went back and repealed the law, finding that it was inadequate or no longer suitable for the first two objectives mentioned above.  

Get this recognition

The law of 13 July 1956, as amended by the decree of 20 March 1981, recognizes all Haitian insurance companies that have complied with the general formalities for the registration of companies. It also recognises the functioning of foreign insurance companies once they have complied with the formalities prescribed by the law of 16 August 1955 on limited liability companies with branches or agencies domiciled in Haiti. Haitian or foreign insurance companies must necessarily be limited companies. To obtain this recognition by Order of Approval, companies must submit:
  • A bond deposit certificate;
  • The insurance contract templates they intend to use;
  • Premium amounts and all other operational forms of the companies;
  • Copies of reinsurance and other treaties.
At the end of each year, from December 1st to 31st, Haitian or foreign insurance companies established in Haiti must submit a certified copy of their balance sheet to the Ministry of Commerce and Industry. They are required to inform the Ministry of Commerce of any changes in their statutes or operating methods, change of agents or representatives within 30 days.

The social capital

The law sets the share capital at a minimum of 1,250,000.00 euros. In the 1980s, the Haitian government only wanted this provision for large companies, since at the time it was already quite a large sum of money.

The guarantee

The guarantee is for HTG 75,000.00 and must generate interest of about 2? % which the company can use at its convenience. This amount will be returned to the company in the event of refusal of its request for approval or in the event that it ceases to operate within one month of the Ministry of Commerce’s notification that the said insurance company has ceased to operate.

Premium values

Foreign insurance companies are subject to variable bonding between HTG 75,000.00 and 1,000,000.00. Variability is calculated on the basis of the gross sum of the premium values received by each company. It is distributed as follows: 
  • HTG 0 to 150,000.00 premiums, the guarantee will be HTG 75,000.00;
  • HTG 150,000.00 to 250,000.00 premiums, the guarantee will be of HTG 125,000.00;
  • HTG 250,000.00 to 500,000.00 premiums, the guarantee will be HTG 375,000.00;
  • HTG 5000000000 to 75000000 of premiums, the surety bond will be HTG 625,000.00;
  • Above 750,000.00 euros in premiums, the guarantee will be 1,000,000,000,00 euros.
Insured persons regularly pay a sum in exchange for risk coverage by insurance companies known as insurers, this sum is called the premium. These premiums are subject to a special duty (generally a tax) of 5% on life insurance contracts and 10% on other insurance contracts. These fees will be collected by the company for the benefit of the State and will be paid to it between the 1st and 20th of each month for the previous month (for example, May is paid in April). The Ministry of Commerce and Industry and the General Tax Administration (DGI) may at any time verify the books and records, documents relating to the insurance company’s financial situation and the collection of premiums, as well as all transactions carried out by them.

Premium paid special

In the case of fire, auto, inventory and equipment, agricultural and group insurance, industrial accident insurance, all individuals or companies who have taken out such insurance with a company not established in Haiti must pay a special 30% of the premium paid. Such contracts shall not be enforceable against third parties, nor shall they be relied upon as evidence before the Haitian courts, nor shall they guarantee letters of credit with Haitian banks. They must inform the Ministry of Commerce 8 days after signing the contract and will pay the fees to DGI on a regular basis. Failure to comply with this obligation is considered as an offence of category offense which results in a fine ranging from HTG 2,000.00 to HTG 10,000.00. Special rights can be revised to 10% if individuals or companies prove to the Ministry of Commerce that it is more advantageous to contract outside of the insurers established in Haiti. The value of the premiums collected by insurance companies that have to be transferred abroad will be subject to an exit tax of 3%.

Insurance broker or agent

Anyone wishing to become an insurance broker or agent of an insurance company must have an annual renewable licence issued by the Ministry of Commerce at the request of the insurance company in question.

There is no legal vacuum in the control of insurance companies

Do you agree with me now? There is no legal vacuum in the control of insurance companies. The Ministry of Commerce and Industry and the Ministry of Economy and Finance are the control authorities for this sector. It monitors compliance with the provisions of the Act of 13 July 1956, as amended by the Decree of 20 March 1981. They are entitled to proceed with the delivery and withdrawal of the license of these companies in case of non-compliance with the law and the Correctional Court can order them to pay a fine of between HTG 2,000.00 and HTG 10,000.00.  However, I recognize that everything must be reviewed to modernize the legality of the sector. We must repeal this 60-year-old law, which was amended 25 years later, and rejuvenate the sector to give more confidence to insurers and policyholders alike.
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