P.R. Laws tit. 26, § 8055
(a) The Joint Underwriting Association of the Compulsory Liability Insurance is hereby created as a private association that shall provide and administer the compulsory liability insurance, which shall be acquired through the payment of fees for the [issuance] or renewal of a motor vehicle license. It shall be composed of private insurers that meet the underwriting requirements of this chapter. Each one of the private insurers shall be a member of the Joint Underwriting Association as a condition to continue offering any type of insurance in Puerto Rico.
(b) The main purpose of the Joint Underwriting Association shall be to provide compulsory liability insurance for motor vehicles to persons who do not have traditional liability insurance and that have paid the corresponding coverage fees for the [issuance] and renewal of motor vehicle licenses, or to the applicants for said insurance who have been rejected by private insurers.
(c) The Joint Underwriting Association shall receive from the Secretary of the Treasury the sum proceeding from the compulsory liability insurance that is paid directly by the consumer or insured to the Department of the Treasury pursuant to the following weekly transfer schedule:
(1) On or before noon on Friday of the first week of each month, the Department of the Treasury shall electronically transfer to the financial institution designated by the Joint Underwriting Association the fixed sum of two million dollars ($2,000,000).
(2) On or before noon on Friday of the second week of each month, the Department of the Treasury shall electronically transfer to the financial institution designated by the Joint Underwriting Association the fixed sum of two million dollars ($2,000,000).
(3) On or before noon on Friday of the third week of each month, the Department of the Treasury shall electronically transfer to the financial institution designated by the Joint Underwriting Association the remainder of the premiums collected during the previous month that were not transferred to the Joint Underwriting Association during that past month. The transfer to be made during that third week shall consist of the collections made by the Department of the Treasury on the previous month for compulsory liability insurance premiums minus the total sum of the premiums transferred to the Joint Underwriting Association during that past month.
However, no amount shall be remitted to the Association on that third week when, on making the aforementioned reconciliation, there is a balance in favor of the Department of the Treasury because the amount of the premiums transferred to the Association in the previous month is greater than the premiums actually collected for that month. The amount of said balance in favor of the Department of the Treasury shall be deducted from subsequent transfers, as deemed necessary to settle the balance in favor of the agency.
(4) On or before noon on Friday of the fourth week of each month, the Department of the Treasury shall electronically transfer to the financial institution designated by the Joint Underwriting Association the fixed sum of two million dollars ($2,000,000).
Every six (6) months, the Department of the Treasury and the Joint Underwriting Association shall review the fixed sums paid under the aforesaid schedule to determine if the transfer of the compulsory liability insurance premiums are being adequately transferred and to verify that the monthly amount that is transferred in a fixed manner is not less than seventy-five percent (75%) of the average of the monthly premiums actually collected by the Department of the Treasury during said period. This review shall guarantee that the fixed amounts to be subsequently transferred reflect at least seventy-five percent (75%) of the monthly premiums actually collected by the Department of the Treasury during the preceding period.
If the Secretary of the Treasury fails to comply with the transfer schedule established in this subsection, he/she shall have the obligation to pay to the Association, without the need of previous requirement to such respect, an additional amount equal to the interest generated by the amount not transferred as of the time in which said transfer should have been made, at the interest rate established in the last bond issue of the Government of Puerto Rico. However, under no circumstances shall the Secretary of the Treasury be authorized to retain collected compulsory liability insurance premiums for a term exceeding forty-five (45) days.
The premiums paid through entities authorized to collect compulsory liability insurance, together with the payment of the fees of motor vehicle licenses, shall be duly debited by the Joint Underwriting Association or transferred to it, as established by the Association. The Joint Underwriting Association shall establish, through regulations or corporate policy, the procedure that shall rule the collection and transfer of said premiums. The Joint Underwriting Association may require authorized entities to collect compulsory liability insurance to remit to it the information required in subsection (l) of this section.
The amount of the compulsory liability insurance premiums shall be eventually distributed between private insurers and the Joint Underwriting Association, as it may be appropriate. The administrative and operating expenses of the Joint Underwriting Association shall be charged to the amount of premiums corresponding to it in accordance with this distribution. The operating plan of the Joint Underwriting Association shall establish the form and manner in which the distribution of the amount of premiums received by the Joint Underwriting Association shall be made.
The Joint Underwriting Association shall conduct, at least once a year, a validation or corroboration process of the premiums received from the compulsory liability insurance collected by the Department of the Treasury and other entities authorized to collect the same. The Department of the Treasury, the Department of Transportation and Public Works, and other authorized entities shall be required to furnish the documents and information necessary for the Joint Underwriting Association to conduct said process. If there is a discrepancy between the amounts collected by the Department of the Treasury or by any other authorized entity and the amounts submitted to the Joint Underwriting Association, it shall be submitted to the consideration of an independent arbitrator selected by the concerned parties. The determination of the arbitrator shall be final and cannot be appealed, and all expenses incurred in the proceedings before the arbitrator shall be the responsibility of the losing party.
The Secretary of the Treasury shall deduct from the funds or premiums transferred to the Joint Underwriting Association a service fee for the collection of the premiums collected directly by the Department of the Treasury, which shall be based on a percent of the total of the premiums collected and remitted. The percent to be retained for said fee shall depend on the net income, after the payment of taxes by the Joint Underwriting Association for the previous tax year. This collections service fee does not constitute a tax on the premiums.
If the net income of the Joint Underwriting Association after the payment of taxes for the previous tax year is:
The service fee shall be
Negative (loss) 1%
Not more than $5,000,000 2%
In excess of $5,000,000, but less than $12,000,000 3%
In excess of $12,000,000, but less than $20,000,000 4%
In excess of $20,000,000 5%
(d) The Joint Underwriting Association shall have the general corporate powers of a private corporation and those provided in § 2905 of this title, and the power to negotiate those contracts and to determine the human resources that are appropriate to carry out its purposes. The Joint Underwriting Association shall be considered a stock insurer as such term is defined in § 2903 of this title.
(e) All members of the Joint Underwriting Association shall share in the profits and losses thereof, in the percentage that the direct net premiums underwritten in Puerto Rico during the previous year for each one of the insurers, for insurance against any loss, expense or liability for the loss or the damage caused to persons or property, resulting from the possession, conservation or use of a land vehicle, airship, or draft animal or mount, or incidental thereto, all of which is pursuant to § 407(1) of this title, represented by of the total of the direct net premiums underwritten in Puerto Rico during said year for that type of insurance.
(f) The Joint Underwriting Association shall establish its structure and operations through an operational plan, and its direction through a Board of Directors. This plan shall provide for an economical, fair, and nondiscriminatory administration of the affairs of the Joint Underwriting Association. The operational plan may be amended by the members that constitute the Joint Underwriting Association and its Board of Directors. The operational plan and its amendments shall be notified to the Commissioner.
The Board of Directors of the Joint Underwriting Association shall consist of seven (7) members, three (3) of which shall be appointed by the Governor of the Commonwealth of Puerto Rico, and the remaining four (4) shall be members of the Joint Underwriting Association elected in an annual meeting.
The appointments made by the Governor shall be formally notified by the latter to the Joint Underwriting Association. The members appointed by the Governor shall not be public officials and must have knowledge about the insurance industry. A member appointed by the Governor who, in the course of his/her functions, has a conflict of interest or a potential conflict of interest, as determined by the Joint Underwriting Association, shall be immediately removed from office. To such effect, the Joint Underwriting Association shall notify such fact to the Governor not later than ten (10) days after the removal from office has occurred. The Governor shall proceed to appoint a substitute for the remainder of the term corresponding to the outgoing member. In case of a vacancy in the office of a director elected by the members of the Joint Underwriting Association, the latter shall substitute him/her with one selected by the members of the Association.
The four (4) directors elected by the members of the Joint Underwriting Association shall hold office for a term of three years. The three (3) members appointed by the Governor shall hold office for a term of two (2) years.
The Board of Directors shall appoint the President of the Joint Underwriting Association and shall fix his/her salary.
(g) Neither the Board of Directors of the Joint Underwriting Association, [nor] its directors, personally or individually, shall be held financially liable for any action taken in the performance of their duties and powers under this chapter, which in the case of private insurers shall include both the insurer member as well as his/her representative on the Board of Directors, nor the officials of the Joint Underwriting Association, provided they are not acting intentionally to cause harm or knowing that they may cause harm.
(h) Any member of the Board of Directors who, individually or jointly, among themselves or with other insurer members of the Joint Underwriting Association, and acting in violation of their fiduciary duties, with the Joint Underwriting Association, incur any action which, directly or indirectly, impairs the financial interests of the Joint Underwriting Association, using or disclosing internal information of the Joint Underwriting Association which is not equally accessible to an insurer member, or fail to disclose internal information with the purpose of benefiting or damaging one or several private insurers, shall be liable, individually or jointly, as the case may be to the Joint Underwriting Association or the damaged private insurer, with a sum equal to three (3) times the financial cost which said actions have represented to them.
(i) Any benefit obtained from the operation of the Joint Underwriting Association, as well as any benefit that reverts to its members, shall be subject to the payment of income tax pursuant to the provisions of the Puerto Rico Internal Revenue Code.
(j) The Joint Underwriting Association shall transfer to the Secretary of the Treasury the funds designated in its annual statement as “Funds Retained by the Insurer Belonging to Others”. The Joint Underwriting Association shall transfer those amounts that represent the items that on the close on December 31 have remained in its books for more than two (2) years counting from the date on which the premiums were collected through the [issuance] or renewal of a motor vehicle license. Said transfers shall be made annually by March 30 of the year following the close to which the transfer corresponds. In case that the item “Funds Retained by the Insurer Belonging to Others” was overestimated, the Joint Underwriting Association shall submit evidence that proves the same to the Department of the Treasury. The Department of the Treasury shall proceed to reimburse or credit the total of those overestimated amounts to the Joint Underwriting Association. In case that the amounts were underestimated, the Joint Underwriting Association shall notify the Department of the Treasury and shall remit the corresponding amounts to the latter. In such cases, both parties shall have ninety (90) days as of the notification and presentation of the attesting evidence to make the reimbursement or credit of the corresponding amounts. For the purposes of this section, credit shall be understood to be the monetary amount that the Joint Underwriting Association or the Department of the Treasury can prospectively deduct from the payment of the service fees for the collection of premiums or from the next transfer from the aforementioned Retained Funds item.
The Secretary of the Treasury shall retain the funds transferred by the Joint Underwriting Association in its fiduciary capacity for a five (5)-year term counting from the date in which the retained funds are transferred by the Joint Underwriting Association to the Secretary of the Treasury.
The income generated by these funds shall revert to the General Fund of the Commonwealth Treasury as they are accrued. The Secretary of the Treasury shall establish a procedure for processing the reimbursement request of any person alleging a right to the retained funds. Once five (5) years have elapsed without the consumer claiming the retained funds, these shall become property of the Commonwealth of Puerto Rico and they shall be transferred to the General Fund of the Commonwealth Treasury.
(k) The Joint Underwriting Association may deposit in the Government Development Bank of Puerto Rico or in the Economic Development Bank of Puerto Rico all or part of the funds that it presently invests and that it receives from the Department of the Treasury as premiums paid by the consumer, provided that it complies with the provisions of the Insurance Code of Puerto Rico. The income accrued by the Association from funds deposited in the Government Development Bank or in the Economic Development Bank, which shall offer competitive rates according to the applicable laws, rules and regulations, shall be exempt from the payment of income tax.
(l)
(1) The Secretary of the Treasury shall provide the Joint Underwriting Association a monthly digital list of all license stickers acquired, for purposes of identification, by consumers or insured persons who, upon acquiring their license sticker, purchase the compulsory motor vehicle liability insurance at the Internal Revenue Collections Offices, financial institutions, and official inspection stations, should the latter apply. Said list shall contain the name and address of the insured person, the vehicle identification number (VIN number), the license sticker number, the date of payment, the date of expiration, and the license plate number. The list shall also contain the number of the certificate of compliance that has been used to exempt payment of the compulsory liability insurance in the case of those motor vehicles that have traditional liability insurance. The Department of Transportation and Public Works shall be responsible for providing to the Department of the Treasury and to the Joint Underwriting Association a monthly digital list with the name and address of the insured and the motor vehicle identification number (VIN number), so that the Department of the Treasury may provide all the required information to the Joint Underwriting Association and vice versa.
(2) In the case of all those license stickers acquired by consumers or insured persons through entities authorized to collect the compulsory liability insurance together with the payment of motor vehicle license fees, the Joint Underwriting Association may require them to provide a digital list that shall contain name and address of the insured, and the vehicle identification number (VIN number), the license sticker number, the date of payment, the date of expiration, and the license plate number. The list shall also contain the number of the certificate of compliance that has been used to exempt payment of the compulsory liability insurance in the case of those motor vehicles that have traditional liability insurance.
The Department of Transportation and Public Works shall provide the Department of the Treasury with the information needed to comply with the transmittal of the necessary data. The Department of Transportation and Public Works and the Department of the Treasury shall be responsible for providing the Joint Underwriting Association with the aforementioned information corresponding to the insured person and for overseeing compliance with these requirements by entities authorized to collect the compulsory liability insurance.
History
—Dec. 27, 1995, No. 253, § 6; Aug. 20, 1997, No. 94, § 4; Dec. 26, 1997, No. 201, § 3; Sept. 11, 2002, No. 230, §§ 1–3; Sept. 22, 2004, No. 414, § 1; Aug. 26, 2005, No. 106, § 1; Sept. 14, 2006, No. 200, § 1; Mar. 16, 2007, No. 26, § 1; Dec. 29, 2009, No. 201, § 4.