The reform which became effective on December 1, 2012 represents the
first major changes to Mexican labor laws in more than 40 years. It
eases legal constraints on a company's ability to hire and dismiss,
lifts the ban on part-time employment, and allows probationary periods
for new hires and caps the amount of money a company must pay to
laid-off workers.
The most important change relating to insurance
is that the Mexican Congress established an increase in the amounts of
indemnities in the event than an individual causes death to a third
party. This change is stated in the Federal Labor Law (article 502) in
which the death benefit increases substantially. Prior to November 30,
2012, the indemnities were based on ââ¬ÅSeven Hundred and Thirty {730} days
of The General Minimum Wage or the highest Professional Minimum Wageââ¬Â,
plus funeral expenses.
The new Labor Law states: ââ¬ÅArticle 502. In
case of death, the compensation due to persons shall be the amount
equal to the amount of ââ¬ÅFive thousand {5000} days of The General Minimum
Wage or the highest Professional
Minimum Wageââ¬Â, plus funeral
expenses. As a result of this change, the liability exposure has been
multiplied by two, three and up to four times, depending on the state
where the accident occurs.
For example, under the old law, after
an accident causing a fatality, the insurer had to pay approximately the
equivalent of US$46,000 per deceased person (this amount varied
depending on the State
of the Mexican Republic where the fatality
happened). Under the new law, the insurer must pay MX$3,779,416 (the
equivalent of US$295,000) per deceased person.
Given the
significance of the Labor Reform, AmigoMex Insurance recommends that all Auto
Liability Limits be increased to at least US$300,000 to meet the minimum
required as per the law states. For further information, please contact
Mario Rivera at mario@abis-group.com or (800) 554-2247