Agreement No. 01/2025 and the Modernization of the Foreign Reinsurance Registration in Panama

Published on Apr 1, 2025

Our lawyers in Panama, experts in banking, finance, and insurance, share this article on the new Agreement No. 01 of 2025 issued by the Superintendency of Insurance and Reinsurance of Panama, which introduces new requirements for foreign reinsurers and reinsurance brokers not established in the country and replaces Agreement No. 04/2012.

The insurance and reinsurance business plays a key role in a country's financial stability. Its proper functioning helps mitigate economic risks and ensures the fulfillment of contractual obligations in the event of claims. In Panama, the reinsurance market has historically been attractive to investors and insurers due to its strategic location and favorable regulatory framework.

However, the globalization of the sector has created a need to strengthen oversight and align regulations with more demanding international standards. Law No. 12/2012, in its Article 48, established the creation of a mandatory registry for foreign reinsurers and reinsurance brokers, requiring the annual submission of information to demonstrate solvency, liquidity, and track record, thus safeguarding the rights of insurers and reinsurers operating in Panama. However, the now repealed Agreement No. 04/2012 had certain limitations regarding supervision mechanisms and control procedures, leaving gaps that could lead to a lack of transparency and operational risks in the industry.

Agreement No. 01/2025 addresses the need to strengthen sector regulations by establishing a stricter framework that demands increased oversight of the solvency of entities operating outside of the country while ensuring compliance with more rigorous transparency and supervision requirements. Compared to Agreement No. 04/2012, Agreement No. 01/2025 introduces several improvements aimed at aligning the sector with international standards and providing greater legal certainty to insurers and reinsurers in Panama.

Key changes introduced by Agreement No. 01/2025:

Expanded documentation and financial requirements

The Agreement No. 04/2012 required only the submission of audited financial statements and credit ratings issued by an internationally recognized agency. However, Agreement No. 01/2025 significantly expands these requirements, incorporating additional elements such as:

Domicile and country of origin: Proof of regulatory compliance in the entity’s country of origin must be submitted.

Representation authority: Documentation must be provided to confirm who is authorized to act on behalf of the entity in Panama.

Regulatory compliance history: The entity must demonstrate that it has operated without significant sanctions in other markets.

These measures aim to ensure that only entities with strong financial standards and a transparent track record can register in the country, reducing the risk of insolvencies or non-compliance.

Mandatory local representation

While Agreement No. 04/2012 allowed foreign reinsurers to operate in Panama without a physical presence, Agreement No. 01/2025 emphasizes the obligation to have a resident representative in the country. This representative will have key responsibilities, including:

Receiving official notifications and acting as a liaison with the Superintendency of Insurance and Reinsurance.

Managing the renewal of the registration and ensuring compliance with regulatory requirements.

Addressing inquiries and requests in the event of audits or inspections.

This obligation allows for greater control and supervision over entities operating outside the Panamanian market, reassuring local entities, affirming a more effective response to eventual regulatory contingencies.

Specific regulations for reinsurance brokers

Another significant change introduced by Agreement No. 01/2025 is the clear definition of the role of reinsurance brokers. Under Agreement No. 04/2012, there were no clear provisions regarding their activities, which could create conflicts of interest in the market. Now, it is explicitly established that brokers may only act as intermediaries between insurers and reinsurers, without interfering in the contractual relationship between the insured and the insurer.

This regulatory adjustment aims to bring greater clarity and transparency to the role of reinsurance brokers, reinforcing trust in the sector's operations.

Stricter deadlines and sanctions

Agreement No. 04/2012 did not establish specific deadlines for the submission of information or clearly defined sanctions for non-compliance. Agreement No. 01/2025 introduces changes in this regard, including:

Specific deadlines for the submission of documentation and the correction of deficiencies.

A gradual sanction system, including warnings, temporary suspension, or permanent deregistration in case of non-compliance.

This contributes to a more efficient supervisory system aligned with international best regulatory practices.

Digitalization of the registration and renewal process

Previously, administrative procedures related to the registration and renewal of reinsurers and reinsurance brokers had to be carried out in person. Agreement No. 01/2025 allows for the electronic submission of documents, optimizing response times and reducing administrative costs.

This advancement represents a significant step toward modernizing the sector and facilitates regulatory compliance more efficiently. However, digital submission does not exempt foreign documents from requiring proper apostille certification and translation into Spanish if the original language differs from the local one.

In summary, Agreement No. 01/2025 is a milestone in the regulation of the reinsurance market in Panama, strengthening the regulatory framework and aligning it with international standards. With stricter requirements, enhanced supervision, and more efficient control mechanisms, the regulation seeks to establish a more transparent and secure sector for all stakeholders.

While implementing these new provisions presents a challenge for industry participants, it also offers substantial benefits by ensuring a more reliable and stable business environment. The inclusion of measures such as digitalized procedures, increased financial reporting requirements, and mandatory local representation reinforces the legal security of the Panamanian market, attracting investors and strengthening confidence in the industry.

For any inquiries or further information, please contact us at Financiero-Arias@ariaslaw.com