Agreement 07-2022-BCH
Congreso Nacional
- Decree: 56-2019
- Published: May 3, 2022
- Issuing body: Congreso Nacional
- Gazette: 35,913
- Category: Financial & Tax
Summary
The Central Bank of Honduras opens a special account for insurance companies to deposit the mandatory 5% contribution on fire insurance premiums. This money will be managed exclusively by the Fire Department to purchase equipment, infrastructure, and spare parts, under supervision of the National Banking and Insurance Commission.
Considerations
Whereas the Constitution of the Republic of Honduras establishes that the State, through the Central Bank of Honduras (BCH), shall be responsible for the formulation and development of the country's monetary, credit, and exchange rate policy, duly coordinated with planned economic policy.
Whereas as established in Articles 55 and 56 of the BCH Law, it shall exercise the functions of banker, fiscal agent, and economic-financial advisor to the State, for which reason all funds of the Public Treasury, including those of Special Treasuries, as well as district, municipal, and other State agency funds must be deposited in the BCH.
Whereas the National Congress, by means of Legislative Decree No. 56-2019 of July 10, 2019, published in the Official Gazette "La Gaceta" on February 20, 2020, approved the Law of the Heroic and Meritorious Fire Department of Honduras, which has as its purpose to regulate the organization and functions of said Institution in the national territory, which is of public interest, service to the population, and national security.
Whereas in accordance with Article 75 of said Law, the patrimony of the Heroic and Meritorious Fire Department of Honduras shall be composed, among others, by what is established in numeral 4) of the same, which refers to the income it receives from the five percent (5%) mandatory contribution rate on the value of net premiums charged for fire insurance and allied lines, further providing that it is the duty of insurance companies to collect this rate from the insured, values that must be deposited in the BCH in the special account of the Heroic and Meritorious Fire Department of Honduras, designated for this purpose.
Whereas the aforesaid Law provides that the BCH must account for in separate items the income it receives from the five percent (5%) mandatory contribution rate on the value of net premiums charged for fire insurance and allied lines; additionally, it establishes that this income must be designated solely for the acquisition of equipment, infrastructure, materials, and spare parts.
Whereas in accordance with the provisions of the aforementioned Article 75 of Legislative Decree No. 56-2019, the funds managed by the BCH must be subject to a regulation approved by the same Bank.
Whereas to implement what is established in Article 75, numeral 4, second and third paragraphs of the aforementioned Decree, there was a need for a comprehensive, exhaustive, and complex analysis by the Payment Systems and Accounting departments of this Institution, so that the BCH could establish the most appropriate way to apply said legal provision.
Whereas from the analysis carried out by the aforementioned BCH departments, it was determined that the action of this Institution must be limited to the opening of the account and acting as custodian of the funds, as corresponds to it in its function as banker of the State, and that the administration and rendering of accounts are the exclusive responsibility of the Heroic and Meritorious Fire Department of Honduras.
Whereas the Management, having heard the opinion of the Operations Sub-Management, by means of memorandum SP-516/2022 of March 17, 2022, has recommended to this Board of Directors to approve the Regulation for Collection, Management, and Delivery of Funds of the Heroic and Meritorious Fire Department of Honduras.
Articles
Object. The purpose of this Regulation is to establish the rules and provisions that must be applied in the process of collection of the five percent (5%) mandatory contribution rate on the value of net premiums charged by Insurance Institutions in the line of fire insurance and allied lines (earthquakes, hurricanes, flooding, riot, strike and popular disturbances, etc.), as well as the opening of the special account of the Heroic and Meritorious Fire Department of Honduras in the Central Bank of Honduras (BCH); the foregoing, in compliance with what is established in Articles 75 and 78 of the Law of the Heroic and Meritorious Fire Department of Honduras.
Definitions. For purposes of this Regulation, the following shall be understood as:
- 1)
Central Bank of Honduras (BCH): State Bank, dedicated exclusively to public service and governed by its Constitutive Law, which is responsible for the formulation, development and execution of the country's monetary, credit and exchange rate policy and which exercises the functions of banker, fiscal agent and economic-financial advisor to the State.
- 2)
National Banking and Insurance Commission (CNBS): Entity with functional independence, budgetary autonomy and sufficient administrative powers to ensure the technical and financial capability necessary for the fulfillment of its objectives and governed by its own Organic Law, whose main purpose is to supervise financial, insurance, pension, securities and other activities.
- 3)
Heroic and Meritorious Fire Department of Honduras: Technical institution of public law, apolitical, professional, specialized and permanent, whose institutional mission is to exercise the functions of state firefighters exclusively throughout the national territory and as a participating actor in public safety.
- 4)
Insurance Institutions: Legal entities that are defined and regulated as established in the Law of Insurance and Reinsurance Institutions.
- 5)
Net Commercial Premium: Net premium before tax not including issuance fees and any other surcharges.
- 6)
Returned Collections: Those resulting from decreases in net unearned premiums collected and applied in the month.
Collection of the Mandatory Rate. Insurance institutions duly authorized to operate in the country are obligated to collect from their insureds the mandatory rate of five percent (5%) on the value of net premiums charged to insureds in the concept of fire insurance and allied lines, from the date of entry into force of the Law of the Heroic and Meritorious Fire Department of Honduras, in accordance with what is established in Article 75, numeral 4 of the aforementioned Law.
Calculation Basis. The calculation of the aforementioned contribution shall be applied to new policies that are subscribed, and/or to previously issued policies that are renewed, taking as the basis for calculation the net commercial premium.
Accounting of Funds. The funds received for the five percent (5%) mandatory contribution rate on the value of net premiums collected from fire insurance and allied lines shall be recorded in a special deposit account opened in the name of the Heroic and Meritorious Fire Department of Honduras, designated for this purpose; the foregoing, in accordance with what is stipulated in Article 75, numeral 4) of the Law of the Heroic and Meritorious Fire Department of Honduras.
Transfer of Funds. The amounts collected in the month by insurance institutions shall be deposited in the BCH in the special account in the name of the Heroic and Meritorious Fire Department of Honduras, within the first five (5) calendar days of the month following the month in which they were received.
Method of Collection of the Mandatory Rate from Insureds. Insurance institutions shall collect the mandatory five percent (5%) rate from their insureds in the same manner in which the premiums of the contracted insurance are charged, and it may be established as a single payment or installment payments.
Registration, Liquidation and Payment of Collected Funds. Insurance institutions shall be obligated to maintain monthly auxiliary records of the collected funds so that they serve as the basis for the monthly liquidation for the transfer of collections to the BCH.
Liquidation. The funds to be liquidated shall correspond to the amount resulting from collections charged minus returned collections in the month, according to the format provided by the CNBS.
Notification. Insurance institutions shall be obligated to inform the CNBS of the details of the liquidation and payment of collected funds within the first ten (10) calendar days of the following month.
Responsibilities and Obligations of the Heroic and Meritorious Fire Department. The responsibilities and obligations of the Heroic and Meritorious Fire Department of Honduras shall be the following:
- 1)
Request from the BCH the opening of a special deposit account in national currency for the collection of the five percent (5%) rate on the value of net premiums charged to insureds in the concept of fire insurance and allied lines.
- 2)
Manage the resources derived from the Law of the Heroic and Meritorious Fire Department of Honduras, collected for the mandatory contribution of five percent (5%) on the value of net premiums collected from the fire insurance line and allied lines.
- 3)
Guarantee that the funds received in the special account opened at the BCH are used solely and exclusively for the acquisition of equipment, infrastructure, materials and spare parts; for this purpose, it must publish semiannually on its transparency portal a detailed report of the income and expenses recorded in the period.
- 4)
Inform insurance institutions of the account number assigned at the BCH so that, through current payment systems, they proceed to make transfers of the collected funds.
- 5)
Make proper use of its account and review the movements of the same in the statements of account issued by the BCH, in view of the fact that the use, destination or disposition of resources handled in the current accounts are the exclusive responsibility of the institution that owns the same.
Supervision. The CNBS shall be responsible for supervising that insurance institutions carry out the collection of the mandatory five percent (5%) contribution on the value of net premiums charged from fire insurance and allied lines and that the same be deposited in the special account in the name of the Heroic and Meritorious Fire Department of Honduras, opened for this purpose in the BCH, within the deadline established in Article 6 of this Regulation. The BCH shall remit monthly a bank statement of the movements recorded in the same.
Operations Performed. The operations performed by the Heroic and Meritorious Fire Department of Honduras shall be subject to the oversight of the Superior Court of Accounts, as well as to the internal audit of said institution.
Transitional. The amounts collected by insurance institutions, from the date of entry into force of the Law of the Heroic and Meritorious Fire Department of Honduras, shall be deposited in the special account in the name of the Heroic and Meritorious Fire Department of Honduras in the BCH immediately upon the effective date of this Regulation.
Effective Date. This Regulation shall enter into force as of the date of its publication in the Official Gazette La Gaceta.
Related laws
- Acuerdo No. 07-2022 — Reglamento de Recaudación, Manejo y Entero de los Fondos del Heroico y Benemérito Cuerpo de Bomberos de Honduras (Decree 07-2022, 2022)
- Acuerdo Ejecutivo No. 01-2023 — Derogación del Acuerdo No. 07/2022 sobre Reglamento de Recaudación, Manejo y Entero de Fondos del Cuerpo de Bomberos — This agreement cancels a previous regulation from the Central Bank that controlled how insurance companies collected and deposited the mandatory 5% contribution on fire insurance premiums for the Fire Department. The repeal occurs because Congress modified the law, eliminating the Central Bank's obligation to issue that regulation, allowing funds to continue being collected without that specific rulebook. (Decree 01-2023, 2023)
- Legislative Decree 174-2013 by means of which provisions of the Cooperatives Law of Honduras are reformed — Legislative Decree 174-2013 reformed Honduras' Cooperative Law to allow savings and credit cooperatives to open branches, subsidiaries, and service windows in the country or abroad with authorization from the cooperative supervisor. This expands access to cooperative financial services for the population and improves financial inclusion through new distribution channels. (Decree 174-2013, 2022)
- Regulation of the General Provisions of the General Budget of Income and Expenditures of the Republic for the Year 2022 — This regulation establishes the procedures and mechanisms for executing Honduras' state budget in 2022. It regulates how public institutions must manage income, expenses, contracting, public investment, and human resources, ensuring that money is used in an orderly, transparent manner aligned with government priorities. (Decree 107-2021, 2022)
- Acuerdo Ejecutivo No. 11-2022 — Modificación de comisiones cambiarias y normativa complementaria del Mercado Organizado de Divisas — This law reduces the commissions charged by banks and exchange houses for selling dollars. The Central Bank lowers its commission from 0.7% to 0.5% when selling foreign currency directly, and currency agents also reduce to 0.5% what they charge their customers. The goal is to make dollars cheaper for citizens and businesses that need them. (Decree 11-2022, 2022)