Law governing the performance of the insurance companies in the Principality passed by Hon. General Council in its session of May 11 day Sancogesma 1989 exhibition of illustrations and the activity of insurance and risk coverage in the Principality, in regime of free competition, has continued, in recent years, an ascending evolution, parallel to the economic and demographic development of the country to acquire a notable importance.

The legislation in force, fragmentary and incomplete, is clearly insufficient for the Organization of this sector, both with regard to the conditions for carrying out the activity, such as in what refers to the protection of the interests of policyholders. This law aims to provide answers to both questions, respecting, well understood, the existing regime of free competition.

The fundamental aspects that regulates the text articulated are the following: a) the determination of the necessary requirements for insurers and insurance mediators, both of Andorra as well as abroad, to be able to operate in the Principality, while foreseeing reciprocity in favour of Andorran companies.

b) the attribution to the Government of the college courses to authorize and to revoke the aforesaid establishment, as well as to adopt precautionary measures, in certain cases, when constatin irregularities.

c) the definition of the procedure for obtaining the necessary authorizations for the performance of the insurance activity.

d) the forecast of guarantees, in the form of bank deposits, along the lines followed by the European legislation, both in general for all insurance companies, as with special character or complementary in terms of the life insurance branch.

e) the establishment of penalties applicable in the event of defaults in the performance of the insurance companies or its organs of management or representation which endangers the interests of the policyholders.

f) fixing a reasonable period because the entities that currently operate in the valleys can adapt to the requirements of the new law.

The General Council is aware that, with these provisions, the warranty will not be achieved fully still desirable in the field. For this forecast to be complemented with a review of the various compulsory insurance currently required, extending the assumptions, for example, in the construction and public health, and extending them to other fields, such as may be the activities of sport and leisure, and the liberal professions in general. This task is entrusted to the Government, in one of the final provisions of the law.

Indispensable complement of the compulsory insurance is the creation of a guarantee fund that operate when the required to purchase the insurance had breached that duty. Also in this matter the Government has entrusted the preparation of a Bill, which will be examined, your day, by the Legislative Assembly.

To complete the legal framework of insurance in the Principality, it will be still pending the regulation of another event, the catastrophic risk, which, in our House, presents a special difficulty because of the small scale, geographical and economic, that are at stake. Once achieved the goals set out in the previous sections, you must strive to find a solution to this issue, in order to meet the "standards" on insurance of the countries that surround us.

But, in the meantime, and to backup the tweaks or modifications that the practice could advise, this law comes to fill a major loophole in our positive law, and responds to a need live felt by broad sectors of the Principality.

Chapter i. General provisions Article 1 Purpose this law is intended to establish the requirements and the necessary guarantees for the exercise of the activities of insurance and risk coverage in the Principality.

Article 2 Scope of application 1. The rules of this law are applicable to all the insurance companies established or to be established in Andorra, Andorra or foreign, and are those persons, physical or juridical, whatever their nationality, who made or who want to carry out operations in the Principality of mediation in the field of the production of insurance of private law.

2. Remain outside the framework of this law: a) all social security scheme b) reasseguradores entities, provided they do not carry out any activity of direct insurance in Article 3 Insurance 1. For the purposes of this law, it is understood by one insurance contract by which a person is obliged, in return for a pecuniary benefit or premium, to compensate the other, within the agreed limits, the damage caused by the event of a risk which is the subject of coverage, or to meet a capital, a fixed-income, or other benefits.

2. The contract or insurance policy must be drafted in such a way that it is easy to understand and understanding for the insured. The obscure or difficult agreements understanding may not prejudice the insured.

3. In the compulsory insurance will be considered URnul.les and without any effect the terms that, by its content, copywriting or intentionality, tend to exclude risks included in the legal provision that established, or to exclude the determining character for people not involved in the corresponding policy. However, you won't have ever considered a third one that had suffered damage, personal or material, being himself the author liable or participant of a crime or is missing.

4. The Andorran Courts will have always to hear all the issues and actions arising from insurance contracts subject to this law, without prejudice to the right of the parties involved to go to the courts of the country in which the defaulting party has his domicile or residence, or there are radiquin their property. The law applicable to the bottom will be, in any case, the Andorran banks.

Article 4 Insurer Insurer or insurance company, Is that entity constituted in the manner provided for by articles 9 and 10 which, duly authorized, is dedicated to the practice of insurance operations and coverage of risks.

For the purposes of the present Law are understood to insurance companies for the provision of services, those that are defined in its articles of Association, which, moreover, is stated in the Decree of authorisation to exercise their activities in Andorra, who cannot practice the risk of life insurance, accident, damage, illness or civil liability, and that limit


their activities to ensure the provision of services or technical assistance, healthcare, legal defense and coverage of expenses of death and burial.

Article 5 Executive Will Delegate or delegation of an insurance company that entity, authorized to operate in the Principality, produces and hires insurance for order and account and on behalf of an insurance company, which is invested in large and commercial powers enough to force it and represent it in the face of any third parties, authorities and courts.

Article 6 1 Mediators. Insurance Brokers are those natural or legal persons who, legally authorized, are dedicated to the promotion and preparation of insurance contracts, and advice from customers, intervening between the insurer and the future assured.

2. The mediators may act as Agents or Brokers: to) is that Agent that is linked with an insurance company authorized to exercise in the Principality by means of a contract of insurance agency and working under the reliance and responsibility of that.

b) is insurance broker that, without the agreement of Agency, working on their own and exercise their profession as a facilitator between companies authorised to exercise in Andorra and future policyholders.

Article 7 Risks located in Andorra 1. All the insurance they have to goods of any kind located in Andorran territory, or vehicles cars immatriculats in Andorra must hire necessarily with Andorran or Foreign Companies authorised to exercise in the Principality. Also must hire necessarily with these insurance companies who have to the responsibilities required in Andorra of the Andorran people and residents in the Principality.

2. Excepts of the provisions of the preceding paragraph, and may employ yourself abroad, insurance whose subject goods in international transport and the cases in which the risk cover is greater than the capacity of the Andorran market and it is not possible to contract the insurance in Andorra, for refusal of established companies. In the latter case, the interested party must take a written notice to the Government, accompanied by the relevant supporting documents.

Chapter II. Requirements and procedure for authorisation Article 8 prior authorization 1. The insurance companies, entities and foreign, who want to exercise their activities in the Principality, as well as those natural or legal persons, whatever their nationality, who want to carry out operations in the valleys of mediation in the field of the production of insurance of private law, must apply for and obtain prior authorization from the Government.

2. The Andorran companies who want to cover risks situated abroad, must apply for and obtain the authorization of the Government.

3. With regard to the foreign companies do not currently authorized to exercise in Andorra, the granting of the permit will be discretionary Government, on the basis of what exists or not between the country of origin of the company and Andorra agreements or, failing that, the criteria of reciprocity, allowing the same way to the Andorran companies professional practice, in the country concerned , of the production of insurance of private law.

4. requirements that have to fulfill and obtain the physical and legal persons professionally engaged in the production of insurance of private law, in order to be authorised governativament to operate in the Principality of Andorra, are those that, for each category, are set in the following articles.

Article 9 Andorran Companies 1. The Andorran Companies must comply with the following requirements: a) Be constituted under the legal form of company stock, or anonymous.

b) Have as exclusive object the practice of insurance operations and coverage of risks, with specification of the branches concerned, without spreading to any other activity.

c) have a minimum share capital of 100 million pesetas totally subscribed and desembossat, which will be credited by Bank certification incorporated into the deed of incorporation.

The minimum share capital of the insurance companies of the rendering of services, defined in article 4, will be fully subscribed, 40 million pesetas, desembossat and accredited.

of legal representatives of the company) that, administrators, managers or officers are registered in the register of companies.

e) Pay to the Government the security deposit or bank guarantees provided by this law.

2. The claim of permission, it will be sent to the Government by the legal representative of the company, and will have to go with the following documents: a) a copy of the deed of incorporation of the society with the articles of Association incorporated.

b) explanatory notes from the branches of insurance which intend to operate.

c) copy of the legal powers of the representatives of the company, with specification of the charges.

of Deposit or bank bonds) referring to article 16.

Article 10 Foreign Companies 1. Foreign companies must comply with the following requirements: a) Be made in accordance with the provisions in force in their country of origin, with a share capital, subscribed and desembossat, not less than that required for Andorra.

b) branches or insurance that want to develop activities in Andorra are legally allowed in their country of origin.

c) with an effective activity in insurance, in your home country, no less than five years.

d) That established a delegation of permanent character, where you keep all accounting and documentation of the activities they carry out in the Principality.

e) That State as a delegate for Andorra, Andorran foreign residence and a person or with the right to exercise the trade, with commercial powers enough to compel the company against all third parties and to represent it in front of all authorities and courts. The delegate must be registered in the registry of Commerce and industry.

f) Pay to the Government the bank bonds established in this law.

2. The demand for authorization will be sent to the Government by the legal representative of the company, and will have to go with the following documents: a) the certificate delivered by the Chamber of Commerce or another official body of the country of origin, stating the legality of the company and an effective, activity in the field of insurance, no less than five years.

b) monetary authorities or governmental certificate of the country of origin stating that the company has been


authorised to operate in the Principality of Andorra, or that you do not need permission.

c) copy of the powers of the signatory.

d) letter of appointment of a delegate by resolution adopted by the governing body of the society with competence to do so.

e) copy of the commercial powers enough given the delegate.

f) sworn declaration of the delegate and forced her to keep in the delegation all the accounting and documentation of the operations that take place in the Principality.

g) explanatory notes from the branches of insurance that is intended to operate.

h) security deposit or bank bonds under the terms of article 16.

Article 11 Insurance Brokers 1. The mediators in the field of the production of insurance of private law, whether it is for agents and brokers who want to operate in the valleys, must meet the following requirements: a) if it were of individuals, must be of Andorran nationality or foreigners with the right to exercise the trade in the valleys.

b) if it were legal entities, will be, in any case, Andorran nationality, and they must be constituted in accordance with the provisions of article 9, point 1 above, with the exception of the minimum capital, which will be established by the regulation of commercial companies.

2. The request for authorization must accompany the following documents: a) in the case of individuals, the ones who prove their right to exercise the trade in the valleys and in the companies, a copy of the deed of incorporation, with the articles of Association incorporated.

b) explanatory notes of the activities intended to develop in the field of insurance, with an indication of whether it will operate as agents or brokers.

c) certification of the insurance company, authorized to exercise in Andorra, on behalf of which they have to act, with precision the quality of agent or broker.

of Deposit or bank bonds), under the terms of article 16.

3. The authorization of the agents can be processed in conjunction with the company on behalf of the who want to act.

Article 12 Opening of offices, offices and agencies 1. The user has write permission required by the previous articles, the insurance professionals, whether they are natural or legal persons, national or foreign, must apply for and obtain the relevant permits for local corporations and the Government, for the opening of their offices.

2. For obtaining these authorizations will be required to accompany the demand, in addition to the usual documentation, the proof of having obtained the permission to write to the professional exercise of the private law insurance in Andorra.

Article 13 Termination and replacement of Executive termination, change or replacement of the representative of a foreign company authorized to operate in the valleys and, in general, of proxies and corporate representatives, legal, social, national or foreign individual or authorized to operate in the field of the production of insurance of private law, must be reported to the Government and registered in the corresponding administrative registry. Without fulfilling these requirements do not produce effects against third parties.

Chapter III. Article 14 guarantees the Government's Powers 1. In order to look after the interests of the policyholders, this law gives the Government, that will play through the Ministry of finance, certain powers of control in relation to the State of solvency of insurance companies authorised to Andorra.

2. For the purposes mentioned above, the insurance companies authorised to operate in the valleys are forced to deposit at the Ministry of finance, within the first six months of each financial year, a social audit or external control comparable to its financial statements, made by a company or body of recognized solvency.

3. The powers of control of the Government do not take place in responsible for the activities and operations of the controlled entities.

Precautionary Measures article 15 1. The Government may adopt precautionary measures when an insurance company is not in any of the following situations: a) Treasury Difficulties that have led to, for delay or default on their payments, the enforcement against the bank deposit guarantee.

b) situations of fact, deducted from the audit, which evidenciïn danger to their solvency, the interests of the policyholders or the fulfilment of its obligations, as well as the inadequacy or irregularity of accounting or administration in such a way that impedes knowing the reality of the situation heritage of the organization.

2. On the basis of any of the above, the Government will have the power to take measures of control on the following aspects: a) The adequacy of the evaluation of the claims in progress.

b) the ability of subscription.

c) the adequacy of the risk reinsurance contracts signed.

d) solvency and good name of reasseguradores companies.

e) The control of the technical reserves.

3. Depending on each situation, provisional measures can consist of: a) Require the company to, within the period of thirty days, submit a plan of reorganization, approved by its Board of Directors, which will need the form, amount and terms of the monetary contributions sufficient to allow them to alleviate the situation subject to requirement. The plan may not have a duration of more than one year. If the Government approves the plan presented, will establish the frequency with which must be informed of their execution, and may suspend, for as long as it is run in accordance with the forecasts, the obligation imposed by paragraph 5 of article 16.

b) temporarily suspend the recruitment of new insurance, either in general or for certain branches.

c) request to the judicial authority that decreti, on preventive deployment ban on certain real property of the company or to make certain investments, payments or distributions of dividends assets.

d) request to the judicial authority, the Declaration of cessation of payments from the company, in accordance with the effects foreseen by the current legislation on the matter.

Article 16 Bank Deposit 1. The insurance companies, Andorra and foreign, in requesting the authorization governing mandatory to operate, must be set up and submit to the Government an irrevocable bank guarantee, established by an Andorran entity, for an amount of 100 million pesetas. When they try to operate on the branch life, must present, in addition, a supplementary bank deposit, under the same conditions, others 100 million pesetas.


2. bank deposit that, in the same conditions of the preceding paragraph, shall constitute and present the insurance companies to provide services, shall be an amount of 40 million pesetas.

3. The bonds will be irrevocably affected coverage and payment of all the liabilities from assets of the professionals backed, both against the insured, for the payment of the indemnity contracted or legally declared, as opposed to the administration by the payment of the penalties that appropriate, and, where appropriate, to the insurance of the risks in the event of termination of activities.

4. When, by reason of insolvency professionals guaranteed, the amount of his or her bonds prove insufficient for the eixugament of all its heritage responsibilities, payment of compensation shall be preferred to any sanctions imposed. Ultra it, and for the payment of indemnities, the bonds loaned by the same insurance company, or by a single mediator, will be understood solidarity among them.

5. When a deposit is executed in whole or in part, the entity or professional on behalf of which has been provided, you will need to replace it within a period of eight working days from that required by the Government to do so, under penalty of revocation of the authorization to operate in the valleys.

6. To cease their activities and in order to be able to URcancel.lar the security deposit or bank deposits, insurance companies and the mediators will have to demonstrate and so enough, before the Government, which do not have pending any payment of compensation or sanctions, or any file in the course of resolution, or outstanding risks of maturity. The Government will require regulations, documents proving necessary.

If you prove the existence of certified claims, sanctions, outstanding risks or expired, you can only obtain the cancellation of the securities loaned, replacing them by other enough for the coverage of the risks noted, or to the legal form of the relevant sums.

Article 17 Guarantees life branch 1. The insurance companies that want to operate in the life branch will have to carry a separate and independent accounting and management with respect to this branch.

2. It is understood for the life branch coverage of one or more of the following risks: Death Mixed Life life-death insurance premiums Against the aforementioned risks such Guarantees of one or more of the risks before fingers with coverage of sickness and disability arising from an accident the operations funded the operations of retirement pension or annuity Article 18 implementation of deposits 1. Be executed against bank deposits all the sentences responsible title is damning, firm principal, solidarity or subsidiary, dictated by the Andorran Courts when the condemned the payment not made within a period of eight working days from you is required to reliably do so.

2. The executing judicial authority is requested, accompanying the decision of judicial and Executive, of the requirement of payment expired and an indication of the Bank which must be addressed.

The latter information will facilitate, in each case, the Ministry of finance to the interested party.

3. strong governmental resolutions on imposition of sanctions will run through the same procedure.

4. partial execution of any security deposit the subsistent cease for the rest, up to the total of the initial amount, without prejudice to the obligation of replacement provided for in article 16 and of the consequences of any breach thereof.

Chapter IV. Professional liability Article 19 people responsible for the holders and proxies of the individual companies and managers, directors, managers and representatives of companies that operate in the Principality as insurance companies or as mediators in the production of insurance of private law, to grief or gross negligence run or allow operations that violate this law, will be personally responsible for the damages that they cause to the insured or to the company as a result of the infringement or actions and culposes defaults on the contract of insurance and assumption of risks, and in the management and administration of the company.

V. infractions and sanctions Article 20 Infractions 1. Infringements to the provisions of this law will be subject to administrative sanctions, without prejudice to the civil and criminal responsibilities that may arise from the same facts.

2. Are violations to the provisions of the present law: a) The carrying out of insurance operations and coverage of risks for a company not authorized, or the authorisation of which has been suspended or revoked.

b) the realization of operations of mediation in the field of the production of insurance of private law person or entity not authorized, or the authorisation of which has been suspended or revoked.

c) the realization of operations of mediation in the field of the production of insurance of private law for a company not authorized, except in the case provided for in paragraph 2 of article 7, or the authorisation of which has been suspended or revoked.

d) fraudulent alteration of the documentation that must accompany requests for authorisation.

e) the omission of the completion of the audit provided for in article 14.

f) delay in delivery to the Ministry of Finance of the audit carried out.

g) fraudulent alteration of the balance sheets and accounting documents of the company.

h) resistance or obstacles to the inspection activity of the Government, in the event that you have to adopt precautionary measures in accordance with article 15.

and) the delay in the replacement or upgrade of the bank deposits, when they are not imposed upon the revocation of the authorization to operate.

j) the delay or omission of communications to the Government envisaged by this law, and which is imposed by implementation of the letter a) of paragraph 2 of article 15.

Article 21 Sanctions 1. The offences referred to in the previous article shall be sanctioned by the imposition of the following measures: to) companies: Fine up to 500,000 pesetas, and revocation of the authorization to operate, in the case provided for in paragraph 5 of article 16, or reiteration in the Commission of serious offences.

b) to individuals responsible for: Fine up to 100,000 pesetas, suspension or dismissal of administrators, directors or managers, or disable for professional practice in the field of the production of insurance of private law, for a period of time not exceeding three years.

2. fine sanctions to individuals and


suspension or disqualification, are compatible with each other and also with what is imposed on entities.

Article 22 the amount of disciplinary penalties, which are seeking to achieve temperature appropriate proportionality between the offence and the sanction, it will be the subject of regulatory development.

Not be able to impose any sanction without prior instruction from a file to the Ministry of finance and hearing of the interested parties, in accordance with the existing administrative procedure or established expressly for that purpose.

The governmental resolutions imposing any sanction will be recurribles in accordance with the same procedure.

Article 23 repeal of the authorisation 1. The Government revocarà the authorization granted to operate in the field of the production of insurance of private law, in the following cases: a) at the request of the individual or social company holder of the authorization.

b) as a penalty, a tenor of the provisions of article 21.

c) for judicial declaration of bankruptcy of the company authorized.

d) not to replace or upgrade the bonds, in the event of total or partial execution of the same, or review of the amount.

2. The Declaration of revocation will be immediately communicated by the Government in the judicial authority, in order that they adopt the appropriate precautionary measures to safeguard the interests of policyholders.

3. In any case, the Declaration of revocation will result in the immediate suspension of any new insurance contracts and, once firm that, the opening of the judicial procedure of liquidation of the company, individual or social, revoked.

4. Extinct or, in his case, insured the financial responsibilities of the company revoked, will proceed to the cancellation of their registration in the records and, to the extent where applicable, return and cancellation of bank bonds.

Transitional provisions the first physical and legal persons, domestic and foreign, which is currently authorised to operate in the field of the production of insurance of private law, will have a period of six months from the entry into force of the present law, to present to the Government the bank deposits required in article 16, with a refund and cancellation, as the case may , of the loaned previously.

Likewise, the Andorran and foreign companies currently authorised, will have a term of one year, in order to expand their social capital, in cases in which they have less than minimum, up to the planned to articles 9 and 10.

Second After the deadlines established by the previous transitional provision, the Government may withdraw the authorisation to operate, with all the consequences arising there from, those insurance companies and delegations that have not submitted timely deposits in the amount fixed in article 16, or who have not adapted their social capital to the minimum provisions of this law.

The revocation as determined by the procedure provided for in article 23.

Third from the entry into force of the present law, the new insurance policies and renewals and extensions of the currently by appointment, will have to adapt to the provisions of article 3.

In any case, will not put and will not produce any effect the terms of the new insurance policies that versus offline the provisions of said article 3. The same it is understood with respect to the policies currently in force, from the moment in which they are renewed or prorrogades.

Final provisions First abolishes all the provisions that contradict the precepts of this law.

Second, the Government will be able to submit, anyalment, to the General Council the revision and updating of the amount of bank deposits and pecuniary sanctions provided for in this law.

Equally, and by the same procedure, the Government may propose the extension of the minimum capital required in the companies dedicated to the production of insurance of private law, as insurance companies or mediators, when economic circumstances call for it.

Organizations and the professionals concerned, will enjoy the terms stipulated in the first transitional provision, to complete their bonds or, in your case, the share capital according to the revised amounts.

Otherwise, it will be applied the provisions of the second transitional provision.

Third, the Government will develop, through regulatory, the precepts of this law that require it.

Fourth is the Government entrusts to review and expand the case of compulsory insurance, in order to recognize them, to the extent in which it is possible, and saved the peculiarities of the Principality, with what is practiced in the countries of the stablished E.e.c.

It is recommended, in particular, the inclusion of compulsory insurance of occupants (drivers and passengers) in the insurance policies of automobile vehicles for private use.

At the same time, it rubs off on the Government that study and present to the General Council a bill for the creation of a Fund of guarantees, that subsidiary of payments of compensation for damage arising from the risks of which have to be covered by compulsory insurance.

Fifth of the present Law shall enter into force fifteen days after its publication.

Casa de la Vall, 11 May 1989, the Sub-Syndic General