Thursday, August 13, 2020

Puerto Rico: Insurance Facts

By on July 2, 2017

SAN JUAN — In Puerto Rico, insurance companies include any person engaged in the business of making insurance contracts as defined in the Puerto Rico Insurance Code. The Insurance Code and regulations issued by the island’s insurance commissioner establish the requirements regarding funds, deposits, capital or surplus, and investment in Puerto Rican securities, among others.

In addition to domestic insurance companies, Puerto Rico’s International Insurer & Reinsurer Law provides for the creation of international insurers and reinsurers. International insurers are also granted tax-exemption decrees by the insurance commissioner and the Economic Development & Commerce secretary; the decrees are considered a contract among the parties, detailing the special tax treatment provided under the law.

Generally, an “international insurer” is one that provides direct insurance only for risks outside Puerto Rico, although it can provide surplus-lines coverage and reinsurance for risks located in Puerto Rico.

International insurers, branches and international insurer holding companies are given quite attractive tax treatments and they are not required to file tax returns, with the revenues they distribute to nonresident shareholders being exempt from taxation. Act 98 of 2011 facilitates the establishment of entities that export insurance and reinsurance services, allowing Puerto Rico to compete with jurisdictions such as Bermuda, Cayman Islands and Vermont.

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