Under Argentine law, employers are required to provide occupational risk insurance to all employees. While Argentina is considered one of the pioneers in this regard since first introducing the requirement in 1915, the framework has over the years gone through a number of reforms, with mitigated results.
In 2017 occupational risk premium reached a total of AR79bn ($4.1bn), up 29% on 2016. It accounted for 35% of premiums in the property damage and mixed segment, making it the second-largest subsegment, behind only automotive, with AR100bn ($5.2bn).
Shortcomings
While compulsory occupational risk insurance can be credited with providing all formal employees a certain degree of security against accidents that occur in the workplace, compensation under the first iteration of the law were seldom sufficient to cover employee losses. Thus, filing a lawsuit against employers and insurance companies was seen as a better alternative to accepting compensation, especially since the process was facilitated by removing any financial cost for the plaintiff.
Despite a number of reforms aimed at filling the gap between compensation and the damages incurred, legal cases continued to soar, from 3012 trials in 2003 to 130,684 in 2017. “Premiums charged by insurers trended upwards, accounting for an average 3.5% of total payroll costs in 2017 against 1% in 2002,” Carlos Porzio, sales director at local insurer Experta ART, told OBG. Simultaneously, legal costs associated with the rise in lawsuits resulted in a number of firms closing. In 2018 there were 13 occupational risk insurers compared to 17 in 2013, of which none were foreign.
Reform
In another attempt to improve the segment, the Superintendency of Occupational Risks enacted a decree in early 2017 to allow for modifications to the Occupational Risk Insurance Law. The new policy strengthened the role of medical commissions in assessing the litigiousness of claims going to trial. Prior to the reform, lawsuits against employers or insurers often bypassed these commissions and went directly through independent medical experts. “Medical experts were remunerated as a percentage of damages paid, which acted as an incentive to overcharge for damages,” Carlos told OBG. “While the introduction of medical commissions is a step forward, the authorities are also assessing how to ensure that medical expert judgments are more objective.” The law also instituted an approval service for medical commissions as well as provincial public self-insurers that cater to claims from public sector employees. The method through which damage payments are calculated has also been overhauled, and is now adjusted according to the average taxable income of stable workers index.
As of end 2017, 15 out of 25 municipalities had implemented the reform, with the City of Buenos Aires being the last in that year to adhere to the new policy, in December 2017. In Capital Federal, the number of trials in 2017 was reduced by 12.9% compared to in 2016, while Córdoba saw a 3.9% drop. Meanwhile, the number of cases taken to court in the City of Buenos Aires experienced a 58.5% increase. “The business community has welcomed the new policy, although they complain that it has not been met with reductions in premiums,” Carlos told OBG. “The number of lawsuits has been falling, and thus impacts on premium payments will be felt as we see a real reduction in claims. However, we expect premiums to be cut by up to 20% in the near future.”
Labour
In early 2018 Argentina sought to pass a reform aimed at lowering employment costs, reducing workplace conflicts and thus the number of litigations, and improving competitiveness. Moreover, it seeks to minimise informal employment levels by instituting an amnesty period during which unregistered workers can be formalised, reduce the cost of contributions to social security schemes and regulate the use of internships for young professionals. However, the proposed labour reform aroused strong opposition from unions, prompting the government to pursue further negotiations.
