Actualidad Panama

Corporate governance practices for insurers

Resolution 02, 21st June 2016

Act 12/2012, article 20, paragraph 4, requires the Management Board of Panama’s Insurance & Reinsurance Supervisor, the Superintendencia de Seguros y Reaseguros, to include among its functions the approval of general regulations so that insurance and reinsurance companies adopt and put into practice Corporate Governance rules, in line with international principles and standards.

The main aim is to reinforce the overall effectiveness of the financial system by reducing transactional costs, generating liquidity and enabling economies of scale. This will ensure that the insurance market is more efficient, reliable, fair and stable, and should stimulate growth and competition in the industry.

Resolution 02, 21st June 2016, published in edition 28062 of the Official Gazette, sets out the minimum parameters for corporate governance, requiring regulated bodies to set up and implement an administrative and supervisory framework that operates in a stable and prudent manner, duly acknowledging and protecting the interests of all interested parties. It has introduced minimum guidelines, summarised below:


Applicable to all insurance and reinsurance companies that are regulated by Panama’s insurance and reinsurance supervisor, the Superintendencia de Seguros y Reaseguros.


  • To protect the insured party, by virtue of consolidating and stabilising the industry.
  • To achieve balance, transparency and due representation of all groups (shareholders, management, oversight, company management).
  • Setting up monitoring systems within the organisation to guarantee compliance with the strategies and decisions adopted by the Management Board.

Minimum Corporate Governance requirements for insurance and reinsurance companies

  • Existence of documents setting out and clearly demonstrating corporate values, strategic objectives, codes of conduct, as well as communication and disclosure at all levels of the organisation.
  • Setting up a mechanism for interaction and cooperation between the Management Board, senior management and the internal and external auditors.
  • Appropriate monitoring systems for risk management, so that approval is gained beforehand and there is follow up.
  • Direct supervision by each layer of the hierarchy in the organisational structure.
  • External and internal audits that are independent of senior management and the management board.

Rights and duties of shareholders

  • Access to information about the remuneration of members of the management board, emoluments paid to key executives, Corporate Governance criteria, choice of external auditors and shareholder remuneration schemes; together with voting rights in the relevant shareholder meetings.


  • Comprising at least five natural persons, with three years of experience in their respective areas. They will meet at least once a month, with the condition that they may not miss more than three consecutive months of management board meetings.
  • Directors may serve on a maximum of two Management Boards of companies with links to the insurance business.

Incompatibilities with Board membership

  • Directors may not demand or accept payment or other benefits for their decisions (travel allowances and/or fees are permitted).
  • They may not use for personal gain the business opportunities presented by the organisation. An interested party may not vote on subjects that may constitute a conflict of interest.

Supporting committees

  • At the very least, the following supporting committees will exist: the Audit Committee, Reinsurance Committee, Risk & Compliance Committee, Finance Committee, Investment Committee and any other that the Superintendencia may decide to create.
  • Each committee will have its own internal working regulations and must conduct a yearly performance assessment.

Senior management

  • The Board must be entirely independent from the day-to-day running of the firm, which is carried out by senior management.

Penalty system

  • Sanctions will be as stipulated in article 280 of Act 12, 3rd April 2012, which empower the supervisory body to impose fines of between one thousand (PAB 1,000.00) and a hundred thousand (PAB 100,000.00) balboas on regulated legal persons, as well as on their directors, chief officers, managers, proxies or any third party which directly or indirectly does not comply with the provisions of this law.
  • Companies that are regulated by Panama’s Superintendencia de Seguros y Reaseguros, will have one hundred and eighty (180) calendar days to adapt to the new standards, starting from when the agreement comes into force (21st June 2016).