CB_2018-02-08

Thursday, February 8, 2018 PUERTO RICO 9
only 8.93 percent state it creates a
minor impact.
Furthermore, the businesspeople
surveyed highlighted complaints
about the service and efficiency of
these insurance companies, as well
as an increase in costs to renew policies,
even for clients that have yet to
receive their disbursements.
For economist & professor at University
of Puerto Rico-Mayagüez,
José Alameda, the delay in payment
of the insurance policies of small
and midsize businesses is another
strong impact on an economy that
has been in an acute recession since
2006. According to Alameda, if this
stagnation in the disbursement of
money, in terms of insurance policies,
continues, it could send the island
into an economic catastrophe.
“This is going to delay the recuperation
of different businesses on the
one hand. On the other hand, businesspeople
are going to apply for
loans, whether with FEMA [Federal
Emergency Management Agency]
or private banking. But it is not going
to be easy for them to be given
a loan in the conditions they find
themselves, save that they already
have credit lines, but not every business
has them,” Alameda said.
“There are 5,000 businesses that
were interrupted, according to the
information I have seen, including
from CUD, and in the measure that
this is delayed, it could have negative
effects that could become a vicious
cycle. Not being able to continue
with their business, many of these
people, owners and employees, are
going to continue migrating to the
United States and that, in turn, is going
to continue affecting the government’s
revenue and delay even more
the recuperation process.”
Oversight continues
In recent weeks, the OCS announced
it issued 2,857 violation orders
on six insurance companies, for
a total of an additional $2 million in
fines to these companies.
As indicated by the government
agency, the imputations also correspond
to a breach of Article 27.162
of the Puerto Rico Insurance Code,
which implies there was a delay in
the resolution and payment during
the term established by law.
Prior to this announcement, the
insurance commissioner, Javier
Rivera Ríos, explained to Caribbean
Business that there were 350 fines
in the first round, for a total of
$380,000. The official added that
after issuing the fines, the matter
will continue to be addressed.
“Once the fine is issued, it does not
exempt them from payment, and
the order we established states they
have to provide immediate resolution
of the case. This being said,
they can challenge the fine, but it
does not exempt them from immediately
resolving the case. They
have to respond to the claim within
10 day after the fine is issued,” Rivera
Ríos said.
However, various entrepreneurs
have questioned the criteria used
to set the amount for the fines because
it represents a small reprimand
to multimillion-dollar companies
and such a low amount does
not create the necessary pressure
to make these companies act in favor
of the insured.
“What we want is for them to pay,
or at least to answer. There are
many reasons one takes into consideration
when it comes to contemplating
the amount for a fine.
Here, the mood is not one that destabilizes
the insurance industry by
irresponsibly issuing fines. This is a
process where there are some penalties.
Fines are not issued to create
a destabilization of the industry
that are abusive, nor is it about an
abuse of power,” said the insurance
commissioner while categorically
rejecting the idea that these companies
have a mitigation fund for fines,
We will not
tolerate any
insurance
company that has
unanswered claims
without just cause.
—P.R. Insurance Commissioner
Javier Rivera Ríos
which is why they do not yield the
expected results.
“The amount of the fine is up to
the OSC, and such a fund does not
exist in those companies. If each
insurance company makes an additional
operational fund, well, good
for them, but it is not that they
have a fund to pay for fines. What
there needs to be is a consequence
for not issuing the payment, and we
are in the stage of initially submitting
the complaints. The code sets
some parameters for the amount
of the fine, and it is the insurance
commissioner who determines the
amount,” he added.
Rivera Ríos also dismissed that the
delay from the insurance companies
is due to problems these firms may
have with their reinsurers.
“That is dismissed. It’s not for a
lack of money [the delay]; it is more
due to operational management and
internal administrative management.
But it is important they know
that we continue oversight. We will
not tolerate any insurance company
that has unanswered claims without
just cause. We gave them a reasonable
margin, everybody here was
equally affected by the hurricane,
but that is why we gave up to 120
days when the ordinary code states
90 days,” he said.