The government regulates the insurance industry through the Insurance Section of the Superintendency of Banks. A social insurance system, the Institute for Social Insurance (Instituto para Seguros Sociales-ISS) established by law in 1946, was organized by the Ministry of Labor to provide life and disability insurance, a pension plan, and a health program for employees in the modern private subsector. In 1999, there were 27 insurance companies in operation, two of which were governmental. In Columbia, third-party automobile liability, workers' compensation, personal accident, professional liability, earthquake, and aviation third-party insurance are compulsory.
During 1995, regulations were issued which require insurance companies to adjust investments to market or equity values and to account for such changes through the income statements. Prior to 1995, any such unrealized adjustments were adjusted directly to policy holders' surplus funds. A relatively modest number of insurers, a competitive environment, and a few dominant companies in terms of market share characterize the Colombian market. A number of foreign insurers operate in Colombia, but foreign insurance companies may not establish local branch offices in lieu of opening major offices. In addition, there are restrictions on foreign ownership of a Colombian insurance company.