Summer 2006-10 Insurance countersignature requirement declared unconstitutional

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Number 64
Summer 2006

Insurance countersignature requirement declared unconstitutional

The United States Court of Appeals has recently announced its decision declaring unconstitutional the countersignature requirements of the Puerto Rico Insurance Code, as they violate the Privileges and Immunities Clause of the United States Constitution.


Sections 329 and 927 l of the Puerto Rico Insurance Code disallow the sole signature of a non-resident insurance agent or broker, even if locally licensed. This requirement forces counter-signature by a resident counterpart.


In the case of Council of Insurance Agents and Brokers v. Juarbe, 443 F.3d 103 (2006), the U.S. Court of Appeals for the First Circuit affirmed the judgment of the U.S. District Court for the District of Puerto Rico, 363 F. Supp. 2d 47 (2005), which decided that these requirements are contrary to the U.S. Constitution. On appeal, the Council claimed that non-resident agents and brokers, some of which are licensed to sell insurance in Puerto Rico, were denied to solicit insurance unless the insurance was obtained outside of Puerto Rico or if the non-resident agent or broker placed the insurance through a resident agent or broker. Citing with approval from the U.S. District Court's opinion, the First Circuit ruled that:

"The countersignature requirements of Sections 329 and 927 [of the Code] are unconstitutional to the extent that they deny Puerto Rico-licensed non-resident insurance agents the same rights and privileges that they afford Puerto Rico-licensed resident agents. The Commissioner . . . is enjoined from denying to Puerto Rico-licensed nonresident agents the same rights and privileges possessed by Puerto Rico-licensed resident agents under the governing statutes."


At oral argument, the Court of Appeals raised the issue of a technical reconsideration that had been raised at the trial level on the question of whether the judgment covered brokers as well.

The parties submitted an agreement that brokers that are situated in the same position as are the agents should also be protected by the judgment.

© 2006 Goldman Antonetti & Cordova, LLC