As of December 19, 2023, the recently implemented tax on reinsurance remains at a fixed rate of 25% on premiums ceded to overseas reinsurers. However, it is important to note that this percentage exhibits variability among carriers and risks, particularly when compared to the gross premium stated in the policy. The fluctuation is attributed to factors such as the portion of risk retained by the carrier and the inclusion of local charges in the gross premium. These elements are not ceded overseas, contributing to variations in the tax, ranging from 5% to 25%.
It is noteworthy that two prominent carriers, Zurich Argentina and Chubb Argentina, have opted not to apply this tax in their program policies, at least for the present time.
In a separate development, insurance carrier HDI Argentina has established a unique condition for policy issuance. The carrier stipulates that policies can only be issued in U.S. dollars if premiums are directed to their U.S. dollar account in the United States. This poses a practical challenge unless the client’s parent company overseas handles premium payments, as local organizations are currently restricted from transferring foreign currency abroad. Alternatively, policies can be issued in Argentine pesos, necessitating ongoing monitoring of insured values to prevent the risk of underinsurance.
Moreover, the application of the new reinsurance tax percentage in the case of HDI Argentina is contingent upon the reinsurer involved in the placement. HDI Argentina issues and reinsures placements with both HDI and AXA, each with distinct treaty reinsurance cession arrangements. The applicable tax percentage can vary between 6.25% and 25%, depending on the specific reinsurer associated with the placement.