The law’s preventive approach is especially manifested in the regulation system created to confront financial difficulties that may affect these entities. The Extraordinary Program of Risk Prevention for Financial Interme- diary Institutions is a fund that can channel public and private resources to protect deposits and avoid a sys- temic risk that may affect the financial system as a whole. In addition, Dominican law creates a system of administrative sanctions that are applicable in cases of vi- olations of the law. It contains rules for weighting violations and imposing sanctions, explains the types of violations and applicable penalties, and sets forth the special provisions for the sanctioning process. An in- stitution, its directors, and related companies may be held liable and subject to administrative sanctions un- der the law. Also, the law defines criminal infractions and provides their corresponding sanctions.
INSURANCE
Dominican law regulates all insurance operations, reinsurance, and bails made within the Dominican Repub- lic. The Insurance Superintendent is in charge of the supervision of insurance companies, reinsurance compa- nies, intermediaries, and adjustors. As a matter of public order, insurance that covers assets located in the Dominican Republic must be issued in the country, except when it is related to insurance surplus lines. The insurance branches in which insurance and reinsurance companies may operate are personal insurance, general insurance, and bonds. The law establishes the necessary requirements to operate as an insurance and reinsurance company in the coun- try, as an intermediary, or as an adjuster, as well as the process for requests to initiate operations and to act as a local or international insurance or reinsurance company. Also, the law governs matters relating to insurance and bond agreements, such as their execution, contents, payment of premiums and claims, among other things, and establishes the creation of a guarantee fund to guarantee the obligations derived from these contracts.
FREE ZONES
Free zones are geographical areas within the Dominican Republic that are subject to special fiscal and customs regime, within which companies dedicated to the production of goods or provision of services for the internation- al market are located. The Free Zone system in the Dominican Republic is one of the most advanced in the world. The main activities of the Free Zones are the manufacture of textiles, services, and the commercialization and production of tobacco and other products.