Captive insurance regime applicable to aviation
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What is the Captive insurance regime applicable to aviation in Panama?
International aircraft carriers and airport concessionaires are obliged to obtain insurance coverage for damages to third parties on the ground, crew members, passengers and any other parties that may suffer harm as a result of their operations.
Maritime insurance regulations are also applicable to aviation insurance, to the extent that they are pertinent and compatible. Pursuant to article 153 of Law 12 on Insurance (2012), it is mandatory for entities, companies and persons domiciled in Panama to enter into contracts with insurance companies authorised to do business in Panama with respect to all insurance on assets and persons located in Panama.
Foreign insurers may not cover assets or persons located in Panama, unless there is a fronting arrangement with a local insurance company or if any of the following exceptions apply:
there is a breach of any treaties or international agreements entered into by Panama;
the insurance coverage does not exist in the Republic of Panama; or
it is impossible to obtain insurance owing to rejection of coverage by the licensed insurers in Panama.
The superintendency, prior to verification that it is not possible to obtain such insurance in Panama, may authorise its contracting abroad if all legal requirements, among which the withholding and payment of income tax as provided by the Fiscal Code, are fulfilled. The companies, entities or persons must register the authorisations granted in this connection with the superintendent.
Reinsurance may be placed with local or foreign licensed reinsurers.
Under Panamanian law, captive insurance may apply to any foreign risks, including aviation-related risks. Captive insurance activities undertaken in Panama may not cover risks located in Panama.
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- An extract of the Aviation Finance & Leasing Guide 2021, originally published by Getting the Deal Through / Lexology