A Financial System Assessment Program (FSAP) was carried out jointly by the World Bank and International Monetary Fund (IMF) in 2000. Subsequently, the Guatemalan authorities began a comprehensive reform of its financial sector with backing from the World Bank, the IMF, and the Inter-American Development Bank. As noted in the 2005 International Bank for Reconstruction and Development's (IBRD) Country Assistance Strategy Report, Guatemala has made significant progress in reforming its financial sector, and several deficiencies in the legal framework that were identified by the 2000 FSAP have been remedied. As of 2005, the Government was preparing a draft Insurance Law, among other legislative texts. Authorities have agreed with the World Bank that the new Insurance Law should follow supervision standards issued by the International Association of Insurance Supervisors (IAIS). However, no further information regarding Guatemala's compliance with the Insurance Core Principles (ICPs) promulgated by the IAIS in 2003 is publicly available.

General Overview

Based on the recommendations of the Financial System Assessment Program (FSAP) conducted jointly by the World Bank and the International Monetary Fund (IMF) in 2000, the World Bank published a report in 2004 wherein it noted that the Guatemalan authorities embarked on a financial sector reform program aimed at comprehensively addressing the sector's problems. In the 2005 International Bank for Reconstruction and Development's (IBRD) report the assessment team remarked that significant progress had been made in reforming Guatemala's financial sector. Five financial sector laws approved by Congress between October 2001 and April 2002 provide the foundation of the reform program: Monetary Law, Banking and Financial Groups Law, Bank Supervision Law, Central Bank Law, and Money Laundering Law. Another nine laws, including the Insurance Law, as of 2005 are under consideration.

The 2005 IBRD report noted that Guatemalan authorities have agreed that a new Insurance Law should incorporate a number of essential characteristics. The law should reaffirm the supervisory authority of the Superintendence of Banks (SdB) over insurance companies and mandate consolidated supervision. It should also create a system of sanctions to be applied against high-risk activities and comply with the standards established by the International Association of Insurance Supervisors. The law should also open the borders to both foreign and domestic insurers, allowing the former to operate in-country and the latter to operate abroad. In addition, the law should clearly define the insurance market as well as the responsibilities of insurance intermediaries, create a corporate governance regime, and increase the transparency of insurance information. Finally, the law should create effective standards of solvency and create an orderly market-exit mechanism.

The Insurance Supervision Department of the SdB regulates insurance industry in Guatemala. The SdB website discloses that its mission includes conducting integrated and consolidated on-site evaluations of risks undertaken by insurance firms, verifying compliance with relevant laws and regulations, and promoting data quality and effective management standards. The Insurance Supervision Department further defines its roles and functions on its website as: (1) verifying and evaluating technical reserves; (2) ensuring that internal controls are adequate for the scope and nature of firms' practices and policies; (3) ensuring that firms' products are indeed genuine; (4) verifying compliance with laws, regulations and regulatory norms; and (5) investigating the operations of entities which do not fall under its legislative mandate. The International Association of Insurance Supervisors includes the Superintendency of Banks (SIB) as one of its members on its website.

The Principles

ICP 1 Conditions for effective insurance supervision

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 2 Supervisory objectives

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

The Insurance Supervision Department of the SdB regulates insurance industry in Guatemala. On its website, the SdB defines its roles and functions as: (1) verifying and evaluating technical reserves; (2) ensuring that internal controls are adequate for the scope and nature of firms' practices and policies; (3) ensuring that firms' products are indeed genuine; (4) verifying compliance with laws, regulations and regulatory norms; and (5) investigating the operations of entities which do not fall under its legislative mandate.

ICP 3 Supervisory authority

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

The Insurance Supervision Department of the SdB regulates insurance industry in Guatemala. On its website, the SdB defines its roles and functions as: (1) verifying and evaluating technical reserves; (2) ensuring that internal controls are adequate for the scope and nature of firms' practices and policies; (3) ensuring that firms' products are indeed genuine; (4) verifying compliance with laws, regulations and regulatory norms; and (5) investigating the operations of entities which do not fall under its legislative mandate.

ICP 4 Supervisory process

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 5 Supervisory cooperation and information sharing

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 6 Licensing

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 7 Suitability of persons

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 8 Changes in control and portfolio transfers

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 9 Corporate governance

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 10 Internal control

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 11 Market analysis

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 12 Reporting to supervisors and off-site monitoring

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 13 On-site inspection

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 14 Preventive and corrective measures

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 15 Enforcement or sanctions

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 16 Winding-up & exit from the market

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 17 Group-wide supervision

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 18 Risk assessment and management

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 19 Insurance activity

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 20 Liabilities

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 21 Investments

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 22 Derivatives and similar commitments

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 23 Capital adequacy and solvency

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 24 Intermediaries

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 25 Consumer protection

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 26 Information, disclosure & transparency towards the market

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 27 Fraud

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.

ICP 28 Anti-money laundering/ Combating the Financing of Terrorism

II

There is insufficient publicly-available information regarding Guatemala's compliance with the revised Insurance Core Principles promulgated by the International Association of Insurance Supervisors in 2003.