Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 7, 1896, and the Annual Report of the Secretary of State

Mr. Strobel to Mr. Olney.

Legation of the United States,
Santiago , May 7, 1896 . (Received June 12.)

No. 87.]

Sir: Referring to my No. 83 of the 30th ultimo, containing a summary of the legislation to be brought before the Chilean Congress, in view of the importance of the subject to the American insurance companies established in this country, I have the honor to inclose copy and translation of the Government bill which imposes certain burdens on foreign companies of this class.

According to this bill agents of a foreign insurance company will be required to obtain a special permit to carry on business, under penalty of imprisonment; and this permit will not be granted until the company has deposited 100,000 pesos in the mint.

The companies are also required to deduct from their semiannual profits 10 per cent for a reserve fund of 400,000 pesos; and this reserve fund must also be deposited in the mint.

These deposits may be wholly or partially withdrawn, for the purpose of paying losses, when all other resources are exhausted. Should, however, the capital of 100,000 pesos be withdrawn, the whole of the half-yearly profits are to be deposited until this amount is again completed.

Life insurance companies, and companies receiving deposits in the form of savings, are required by the bill to deposit in the mint sums received for premiums, after deduction of an amount necessary for expenses, losses, and dividends. Dividends are not to exceed 6 per cent semiannually.

The above deposits may, wholly or partially, be replaced by real estate. Foreign insurance companies must pay the same taxes as native companies. All legal questions arising out of the business transacted in this country must be decided by the Chilean courts.

The question of accepting or rejecting a proposition for an insurance policy must be passed upon by the agent of the company in Chile, and can not be referred to the head office; and if within fifteen days after the receipt of the proposition by the principal agency the proposition has not been rejected and the premium returned, the policy will be regarded as in force, and on no grounds can it be rejected by the company.

I have, etc.,

Edward H. Strobel.

[Inclosure in No. 87.—From Diario Oficial, April 30, 1896.—Translation.]

Government bill regarding foreign insurance companies.

bill.

• Article 1. Sixty days after the publication of this act in the official journal no agency of a foreign insurance company can do business in Chile unless specially authorized by the President of the Republic, in accordance with the provisions of the present act.
• Article 2. Policies of insurance issued without this authorization shall be null and void, and those persons who, representing themselves as agents of any foreign company, issue them, shall be subject to the penalties established in article 468 of the penal code.
• Article 3. The authorization to establish in Chile agencies of foreign insurance companies can only be obtained by companies which deposit beforehand, in the office of the superintendent of the mint, the sum of 100,000 pesos in Government bonds, or in bonds of the land banks, the price of which shall be fixed by the President of the Republic in accordance with their commercial value.
• Article 4. Agencies of foreign insurance companies are subject to the same taxes as native companies, and are obliged to present their statements to the authorities, and to publish them in the same form and in the same cases as native companies.
• Article 5. Agencies of foreign insurance companies are obliged to establish a reserve fund of ten per cent of the half-yearly profits up to the amount of 400,000 pesos. This reserve fund shall be deposited every six months in the mint, in Government bonds or any bonds of the land banks, in the same form as established in article 3.
• Article 6. The 100,000 pesos required in this article and the reserve fund form the capital of the agencies of foreign insurance companies which are liable for claims; consequently they may withdraw a part of this deposit whenever they have to pay extraordinary losses which may have exhausted their other resources.
• Article 7. Whenever, in order to pay such losses, they shall have withdrawn a part of the capital of 100,000 pesos deposited in the mint, the agency shall devote the total of its profits during the following half years until the said capital is again completed.
• Article 8. Agencies of foreign life insurance companies or agencies receiving deposits in the form of savings shall not be obliged to establish the reserve fund referred to in article 5, but every six months they must deposit in the mint the amount received for insurance premiums, after having deducted from the total amount of premiums the amount corresponding to general expenses, losses, dividends, and expenses necessary for the support of the agency, and their dividends can not exceed six per cent half-yearly.
• This deposit shall be made in the same securities and in the form established by article 3.
• Article 9. Every foreign insurance company, with various agencies in Chile, is obliged to have a principal agency to represent it before the authorities and the public, which shall concentrate its operations, present a statement of all the operations made in Chile, make the deposits established by this act, and, in a word, have the legal representation of the company.
• Article 10. Foreign insurance companies are obliged to leave to the decision of their principal agency in Chile all proposals for insurance which are presented here, whether to refuse or accept them, and to issue the corresponding policy.
• Article 11. If within fifteen days after receipt of the proposal by the principal agency, the said agency should not have refused or returned the first premium delivered by the insurer or depositor, the policy shall be regarded as in force, just as if it had been definitely issued, and under no pretext can the company refuse it.
• Article 12. The calculation and liquidation of the losses and claims of the assured or depositors must likewise be attended to by the principal agencies established in Chile.
• Article 13. This principal agency shall be the legal representative for all questions before the courts relative to operations made in Chile, which, in every case, shall be decided by the Chilean courts, and under no pretext can the company raise the defence that it is sued in a foreign country and not in its domicile.
• Article 14. Agencies of foreign life insurance companies or agencies receiving deposits in the form of savings shall expend in Government bonds or bonds of land banks, the total amount of their receipts for premiums on policies in force in Chile, and shall deposit that amount in the mint, in accordance with the provisions of article 3.
• Article 15. The deposit established by article 14 shall be made in twelve equal monthly dividends to date from the promulgation of this law.
• Article 16. The deposit established by this law may in whole or in part be replaced by its value in real estate purchased by the principal agency, which can not be mortgaged or affected by obligations of any kind, or by sale without judicial authorization, and in order to pay the losses which have occurred in Chile.
• This real estate shall be kept constantly insured in a company distinct from the one to which it belongs.
• Article 17. The agencies of foreign life insurance companies which do not make the deposit established by article 14 are regarded as unauthorized, and if they issue any policies, the same shall be null and void, and the agent who issues them shall be subject to the penalty established in article 2.
• Agencies which are placed in this situation can not do in Chile any other business than that connected with or corresponding to the policies issued before the promulgation of this law.
• Article 18. Within six months from the date of the promulgation of this law, the President of the Republic shall issue for its execution a set of regulations in which fines may be established to the amount of 1,000 pesos, which in every case shall be applied by the regular courts of justice.
• Article 19. The agency which, in any half year, does not deposit the amounts required by this law, either to complete its capital, or corresponding to the reserve fund, or to the premiums on life-insurance policies, is immediately disqualified from continuing to do business in any other form under the penalties established in article 17.
• In order to become rehabilitated, a new authorization of the President of the Republic is required, after the deposit of all the amounts in arrear.
• Article 20. The present law shall be in force in all parts of the Republic, from the date of its publication in the official journal.

Santiago, April 23, 1896.

• Jorge Montt.
• H. Perez de Arce.