Insurance Policies Purchased Abroad

By:Rene Cacheaux

Cacheaux Cavazos & Newton

Mexico City, Mexico

Is it possible to acquire insurance outside of Mexico for property casualty, life, health and medical expenses and any other type of insurance in order to cover risks or casualties arising in Mexico? This issue arises every day and has its complications and legal limitations. The general rule is that all insurable risks arising in the Mexican territory must be covered with insurance policies issued by insurance companies authorized to sell insurance in Mexico. Nevertheless, this general rule has a few exceptions, which are similar to those that apply to international reinsurance coverage. The general rule is, therefore, that it is illegal for foreign insurance companies to issue insurance policies covering risks arising in Mexico or for a casualty that may occur in Mexico. There is a secondary market, which stretches the current law, in which foreign insurance companies cover risks that arise in Mexico, mostly regarding life, healthcare and hospital expenses insurance. The purpose of such insurance arises from the need or preference of individuals to obtain medical and hospital services outside of Mexico. In the countries where such insurance policies are issued, such coverage and insurance policies are legal and perfectly valid. However, no claims for default or breach of the terms of such insurance policies can be brought in Mexico. A person acquiring an insurance policy issued in a foreign country will be subject to the existing legal provisions in that country, and, if there is a default, such individual should consider hiring attorneys licensed in the country where such insurance policy was issued. Another relevant topic in the insurance industry pertains to the issuance of global insurance policies for large corporate groups and international companies, especially those insurance policies that cover property casualty and liability to third parties. In these instances, a foreign insurance company acquires insurance policies issued by Mexican subsidiaries or under the scope of existing international agreements between insurance companies of different countries. Therefore, it is important to verify that the brokerage company or the foreign insurance company offers and delivers an insurance policy issued by an insurance company that is authorized to sell insurance in Mexico. There are also certain foreign investment restrictions for foreign insurance companies doing business in Mexico, whether directly or indirectly through subsidiaries or joint ventures. Mexico protects its insurance industry through such restrictive legislation. Nevertheless, the free trade agreements that Mexico has signed with other countries include some exceptions to the restrictions mentioned above.

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