Managing Claims and Reinsurance Law in Latin America

Colombia
Salazar,Pardo & Jaramillo

Facts

  • Population
    465.8m (27th)
  • LA Rank (GDP)
    27th
  • Global Rank (GDP)
    30th

GDP 2013
US$381.822 billion

  • Economic Growth 2011
    6.6%
  • Economic Growth 2012
    4.2%
  • Economic Growth 2013
    4.0%
  • Inflation (official) 2011
    3.4%
  • Inflation (official) 2012
    3.2%
  • Inflation (official) 2013
    2.0%

Managing claims

  • Reservation of Rights / Without Prejudice RuleROR is not specifically regulated but may be used to request additional information for coverage analysis. This would not in principle render reinsurers liable. The WP doctrine does not exist although the parties can agree to negotiate on a WP basis although there must be a clear agreement to this effect and on the meaning of WP correspondence.
  • PrivilegeThe doctrine does exist although its application will be weighed against the need not to exclude evidence. The doctrine applies to attorney-client communications/advice.
  • DisclosureParties must produce documents in their power and on which they rely. The parties do not have to produce documents which adversely affect their case, however if a party knows about the existence of a specific document, it can be requested from the other side or from a third party.
  • InterestOnce a valid claim is filed (judicial or non-judicial), it must be paid or declined within 1 month. Once this term expires moratory interest will accrue on the claim at 1.5 times the banking rate if the claim is valid. As at the date of publication the moratory interest rate is 29%.
  • CostsTo be borne by the losing party. Where part of a claim succeeds the judge will assess costs accordingly and assessed costs will not necessarily accord with the amount incurred by the parties. The amount is a matter of discretion for the judge. Consideration will be given to duration, complexity and lawyer's proficiency.
  • Monetary CorrectionNot available as it is understood to be incorporated in the moratory interest rate.
  • Punitive DamagesNot available.
  • Expected length of case1st instance judgment may take 5 years and a judgment at the final appellate level may take a further 3 years (plus one year Cassation). Colombia is gradually incorporating the oral system (which has already been implemented in judicial proceedings related to administrative law) in civil and commercial legal proceedings. Currently, Colombia's civil and commercial proceedings are primarily written (e.g. Court orders are usually served in writing, parties must provide their final submissions in writing, witness statements are typed during the hearing instead of being recorded, etc.). Under the oral system it is expected that legal proceedings will be shorter in length. However, there is as yet no evidence to determine the extent of the time reduction.

Reinsurance law

  • Fronting RequirementsLaw 1328 of 2009 (which came into force in July 2013) allows foreign insurers to offer insurance on a direct basis in limited scenarios, namely: international maritime transport, international commercial aviation and space launch and transportation (known as “MAT” insurance).

    Furthermore, under Law 1328 of 2009 all Colombian residents (natural persons and corporations) are now able to purchase insurance directly from international markets - without any requirement for fronting - save for in the certain limited circumstances. However, the Colombian Financial Regulator (Superintendencia Financiera de Colombia) has stated that the Colombian resident must be physically out of the country in order to buy insurance abroad. Therefore, this rule would prevent taking out insurance from abroad via the internet or any other mechanism if the persons is in Colombia.

    Foreign insurance companies are also allowed to establish branches in order to operate as a local insurer and conduct the business of insurance, subject to various regulatory requirements.
  • LimitationUnder the direct insurance, 2 years from the moment the insured knew or ought to have known of the event that gives rise to the claim. Under the reinsurance, probably two years from the reinsured's ascertainment of its underlying liability by judgment, award or settlement.
  • Conditions, Conditions Precedent and WarrantiesBreach of condition is fact sensitive depending on the wording of the condition. Conditions precedent do not exist. Warranties exist and may or may not be material to the risk. Breach of warranty will lead to avoidance or termination of the contract depending on the timing of the breach (i.e. before or after the inception).
  • Non-Disclosure/MisrepresentationThere is a pre-contractual duty to sincerely declare the facts and circumstances that determine the status of the risk and to notify insurers/reinsurers of a change in circumstances. The obligation is less strictly construed where there is no proposal form. Breach will usually lead to avoidance of the contract. The obligation continues during the operation of the contract.
  • Follow the fortunes/settlementsThe Commercial Code implies a follow the fortunes clause irrespective of whether an express clause is contained in the reinsurance contract. Pursuant to this clause the reinsurer must follow the reinsured's financial fortune. The reinsured must act professionally and in good faith in settling the claim. The obligation is on the reinsurer to prove otherwise.
  • Claims Co-operation/Claims ControlClaims control/cooperation clauses will be deemed valid unless they are designed to interfere of modify the underlying insurance relationship. Absent a claims control clause an insurer should still notify the reinsurer of a loss and provide information the insurer requires.
  • Late Notification / Late PaymentThe insured must provide notice of a loss to the insurer within three days of its occurrence. This time frame may be modified to the insured’s benefit. If the insured does not comply with timely notice of a loss, the insurer may deduct the damages it suffered from late notice (which, in practice, are extremely difficult to determine). The insurer does not have a specific obligation to answer the notice of loss however usually the insurer sends some type of note to the insured acknowledging receipt.

    The insured does not have a specific time frame to file the insurance claim although the insurer must respond to any insurance claim within one month of receiving the claim. When the insured files a claim, he has the burden of proving the loss’s occurrence and its quantum. If there is insufficient information for the insurer to make a determination on the claim the insurer may (depending on the circumstances): i) decline coverage raising serious arguments on the absence of evidence regarding the loss’s occurrence or its quantum; or ii) request the insured to provide additional information that the insurer deems necessary to take a decision. The foregoing should be relevant and related to the claim.

    Failure to reject coverage or to pay the claim will cause default interest to accrue on the claim (currently 30% per annum although this may vary on a three monthly basis) and the insured may file an 'expedited' judicial action against the insurer. Please note that failure to reject the claim does not immediately provide the insured with the right to indemnification (there must still be a valid claim in light of the insurance contract).

    In a reinsurance context, if the parties to the reinsurance contract have not agreed otherwise, the same time frames and consequences should be applied, although this point is controversial.
  • Role of the Reinsurance Broker (Placing and Producing)In the Colombian legal system, reinsurance brokers are independent entities whose main purpose is to offer and promote reinsurance in order to conclude or renew this type of contract; reinsurance brokers act as intermediaries between insurers and reinsurers (according to Art.44.1 of the Organic Statute of the Financial System – Estatuto Orgánico del Sistema Financiero). From a regulatory point of view, the reinsurance broker must be independent from the parties to the reinsurance contractual relationship. Therefore, under Colombian Law reinsurance brokers do not represent the cedant company, nor the reinsurer. The broker will not be deemed to be the agent of the reinsured or of reinsurers.

    Notwithstanding the foregoing, the reinsurance broker is the usual communication channel between the reinsurer and the cedant company.

    In principle, the information known by the reinsurance broker is not binding on the parties. As noted, reinsurance brokers do not possess powers of representation, so in the case of nondisclosure regimes the knowledge of the intermediary should not be understood as knowledge of the original insurer or reinsurer.

    This is a matter that has generated discussion. Though, strictly speaking, there is no representation, the nature of the contractual relationship between the broker and the parties to the reinsurance contract may impose certain duties relating to information and nondisclosure. For example, occasionally one may find that the parties to the reinsurance contract agree that the information provided to the reinsurance broker is understood as being provided to the parties. There is, however, no ruling related to the legality of this type of agreement.
Colombia

Peru
Osterling Abogados

Facts

  • Population
    30.5m (40th)
  • LA Rank (GDP)
    7th
  • Global Rank (GDP)
    49th

GDP 2013
US$206.542 billion

  • Economic Growth 2011
    6.9%
  • Economic Growth 2012
    6.3%
  • Economic Growth 2013
    4.9%
  • Inflation (official) 2011
    3.4%
  • Inflation (official) 2012
    3.7%
  • Inflation (official) 2013
    2.8%

Managing claims

  • Reservation of Rights / Without Prejudice RuleThere are no specific rules governing without prejudice correspondence. The parties can disclose to the Court correspondence notwithstanding the fact it is marked 'without prejudice'. The parties can enter non-disclosure agreements whereby information passed between them cannot be shown to third parties. Reservation of rights is not contemplated under Peruvian Law.
  • PrivilegeIn Peru the term "privilege" is referred to as "professional secrecy" which is the duty a lawyer holds to his or her client not to disclose information received from the client. Lawyers cannot be compelled to hand over information which they received in confidence.
  • DisclosureThere is no disclosure (or discovery) stage in case management in Peru. Disputes will be resolved giving consideration to the information provided by the parties during the hearing or arbitration. If a party knows of information or documents relevant to the dispute and held by the other party, a request can be made by the judge or arbitrator to obtain such information/documents.
  • InterestThe Insurance Contract Law No. 29946 has set a prescriptive timetable under Peruvian law for insurers to pay claims. Default for lending operations in Peru for the currency in the insurance contract, and interest is payable for the whole period of delay. As of November 13 2014, the maximum interest rate fixed is 5.64% for local currency and 2.19% for foreign currency operations.

    The Insurance Contract Law No. 29946 established that in order for the claim to be heard in Arbitration, it is necessary that the insurer and insured convene to do so after the loss occurs and that the amount exceeds US$27,000.
  • CostsThe general rule is that the losing party will bear the costs of the dispute, however parties can agree to apportion costs in an alternative manner and the judge or arbitrator has the power to award costs at his or her discretion. In exercising their discretion, Judges have to support their decision. In arbitration, the arbitrators may distribute and pro-rate the costs between the parties, taking into consideration the circumstances of the case.
  • Monetary CorrectionMonetary correction is available under Peruvian law, however the parties must expressly agree to it in the insurance or reinsurance contract, otherwise the payment will be calculated according to the currency’s worth on the day the payment is due.
  • Punitive DamagesPunitive damages are not available (actually forbidden) under Peruvian law.
  • Expected length of caseThe length of the proceedings will depend 1) on the complexity of each case; and 2) whether the case is heard in arbitration or in Court. An arbitration usually lasts between 8 to 15 months. Court proceedings generally last between three (3) to eight (8) years (if appealed) until a final decision is handed down. Conciliation/mediation is compulsory in judicial proceedings.

Reinsurance law

  • Fronting RequirementsWriting insurance locally requires a fronting company, however, according to Article 10 of the General Law, Peruvian residents are able to contract insurance policies from foreign companies if done so abroad.
  • LimitationArticle 78 of the Insurance Contract Law confirms t general period for bringing a claim from the occurrence of a claim. Under a reinsurance contract t there is no specific time bar, as set forth in the Civil Code.
  • Conditions, Conditions Precedent and Warrantiesonly if such breach is due to wilful default, or gross negligence which affects the assessment of the loss. If the breach is not due to these reasons, the reinsurer is entitled to reduce the loss in proportion to the harm caused to the reinsurer only if the breach does not affect the reinsurer's capability to assess the loss. a (although they are used in the market) and no established interpretation as to the consequences of their breach has been set forth by Peruvian Courts. B a under the Insurance Contract Law No. 29946. To determine compliance with a warranty it is more important to consider whether it has been substantially rather than literally complied with. Reinsurers will be discharged from liability under the contract where the reinsured has breached a warranty provided the breach is connected to the loss.
  • Non-Disclosure/MisrepresentationThe Peruvian Commercial Code requires that facts that are material to the risk, which induce the reinsurer to enter into a contract, and which are within the knowledge of the reinsured and are not within the knowledge of the reinsurer are disclosed and not misrepresented.

    If proper disclosure is not given, or a false statement made, by virtue of wilful default or gross negligence of the insured:

    1. The insurer has 30 days to declare the policy as null and void due to the insurer not being able to assess the risk fully. The burden of proof of improper disclosure and/or false statement relies within the insurer.

    2. If proper disclosure is not given, or a false statement is made, but is not by virtue of wilful default or gloss negligence of the insured, and the insurer notices prior to the occurrence of a loss, the insurer has to propose the insured a new policy with a revised premium or risk coverage. If the insured accepts the new policy, the premium has to be paid accordingly. If the insured does not accept the new policy or fails to do so in 10 days, the insurer has the right to terminate the contract. If the insurer notices after a loss has occurred, the indemnity will be reduced proportionally to the difference between the premium charged and the amount of premium had the real risk been known.

    However, in such cases, the termination, revision and/or nullity and voidance of the policy will not proceed when:

    a) the insurer knows or should have known the real status of the risk when the policy was signed.

    b) the false or undisclosed circumstances ceased before the occurrence of the loss or when the misrepresentation or non-disclosure occurred, that are not wilful defaults, had no influence on the occurrence of the loss or in the measurement of the indemnity.

    c) the omitted circumstances were unanswered in the questionnaire provided by the insurer and he proceeded to sign the policy anyway; or

    d) the omitted or falsely declared circumstances diminish the risk.
  • Follow the fortunes/settlementsThe legal treatment of reinsurance contracts in Peru is undeveloped. Therefore, the concept of follow the fortunes or follow the settlements in a reinsurance contract have no settled meaning in the Peru. It is likely that a Peruvian Court or Arbitral Tribunal would seek uniformity between insurance and reinsurance policies.
  • Claims Co-operation/Claims ControlAs with follow the fortunes/settlements clauses, there is no settled meaning of Claims Co-operation and Claims Control clauses in Peru.
  • Late Notification / Late PaymentU law, requirement, in the absence of an express provision, to notify claims "as soon as reasonably possible", but no later than 3 days after the insured has knowledge of the occurrence of such event for property damage and 7 days for personal insurance. Failure to comply with such terms only allows the insurer to reject coverage if the failure is due to wilful default of the insured. If the insured has been grossly negligent, the insurer may reject the claim, but only if the failure to comply has an effect on the assessment of the loss and the insurer was not made aware of the circumstances from another source.

    Article 74 of the Insurance Contract Law expressly provides that, following ance.

    Once the claims adjuster at the insurer receives the complete documentation required by the policy, they have 20 days to draft a letter approving or rejecting coverage and determining the amount to pay.
  • Role of the Reinsurance Broker (Placing and Producing)According to Peruvian Law, brokers have the general duty to advise insureds on all matters relating to the policy. In particular, brokers must explain the contents of the policy and communicate to the insurer, on behalf of the insured, any loss event or increase of the insurable risk, according to the insured’s declaration.

    Article 24 of the SBS Resolution 1797-2011 establishes that the main purpose of insurance brokers is to reduce a perceived “asymmetry” that exists between the insurer and the insured.

    The Insurance Contract Law provides that insurance brokers act on behalf of policy holders only if the latter had signed a document called “appointment letter”. With said letter, the insurance broker is authorised to act on behalf of the insured for purposes of administrative representation but not for disposition purposes.

    As a broker acts on behalf of the insured, all declarations given to the insurer on behalf of the insured by the broker will be binding on the parties.

    In the case of reinsurance brokers, its duty is to recommend the reinsured which policy to hire and to act as intermediaries and assist and advise their clients. In this sense, in order for the policy to be issued it is usual that the reinsured seeks total consent of placement by the broker via a Cover Note. Nevertheless it is not compulsory to use a reinsurance broker in order to get a reinsurance policy.

    Strictly, once the policy is issued, the insurance/reinsurance broker owes its duties to its principal: the insured/reinsured.
Peru

Ecuador
Moeller, Gómez & Cía

Facts

  • Population
    15.7m (67th)
  • LA Rank (GDP)
    8th
  • Global Rank (GDP)
    63rd

GDP 2013
US$94.144 billion

  • Economic Growth 2011
    7.8%
  • Economic Growth 2012
    5.1%
  • Economic Growth 2013
    4.0%
  • Inflation (official) 2011
    4.5%
  • Inflation (official) 2012
    5.1%
  • Inflation (official) 2013
    2.7%

Managing claims

  • Reservation of Rights / Without Prejudice Rule The doctrines of reservation of rights or without prejudice correspondence do not exist under Ecuadorian law in the form or usage that they are used in England; however certain communications should remain privileged and confidential, but will need the agreement of all parties involved.
  • PrivilegeUnder Ecuadorian law, all communications between a lawyer and his client are private and confidential and need not be disclosed.
  • DisclosureDisclosure, as it is understood in English Civil Procedure, does not exist in Ecuador. In Ecuador, all types of judicial processes have a stage where the parties have a period of time to deal with evidence. The plaintiffs and defendants have to address the Court requesting specific evidence such as inspections, depositions, and also the production of documents and information. Each party can request the other party to exhibit one or more specific documents. The Judge will decide whether the requested documents should be exhibited or not.
  • InterestThe payment of interest will be calculated at the official rate defined by the Central Bank of Ecuador, and interest will accrue from the time the insurance company should have paid the claim i.e. the time of the loss plus the time the assured takes to file all documents plus 45 days. In arbitration the parties are entitled to agree a contractual rate of interest.
  • CostsEcuadorian law allows the Court to decide whether the losing party will bear all litigation costs, however this is unusual and in most circumstances the Court will order the losing party to pay a portion of the real costs.
  • Monetary CorrectionSince 2001 the Ecuadorian national currency has been the US Dollar, therefore, monetary correction does not exist but was available before 2001.
  • Punitive DamagesEcuadorian legislation does not provide for punitive damages as in the US Courts.
  • Expected length of caseAn insurance matter taken to litigation in Court could take from three to four years to be resolved, if the matter is taken up to the Supreme Court. However, it is becoming more popular to litigate commercial matters in Arbitration, where the cases will be resolved in a maximum of one year.

Reinsurance law

  • Fronting RequirementsReinsurance companies have to be registered with the Superintendence of Banks and Insurance in order to be able to sign reinsurance contracts with Ecuadorian insurance companies. It is prohibited to issue a policy on a 100% reinsurance fronting basis, but there is no specified minimum percentage to be retained by a local underwriter. Therefore, in practice, 1% retention would be enough for reinsurance purposes. Under Ecuadorian Law only the insurance contract has to be governed by Ecuadorian law and jurisdiction. Reinsurance contracts can be governed by the law of a foreign country and be subject to a foreign jurisdiction. Also the parties are entitled to choose arbitration if they do not want to submit their differences to a Court of Law, in case of insurance contracts, the arbitration should be held in Ecuador and subject to Ecuadorian law and arbitration proceedings. In case of reinsurance contracts, freedom of contract will apply.
  • LimitationA time bar of two years applies for a claim against a local underwriter, and it will run from the date of the occurrence of the loss. There is no legal provision with regard to time bar in reinsurance contracts and, as such, if the reinsurance contract is subject to Ecuadorian law, the same two year period would probably apply as from the date the reinsurer is aware that its reinsured (underwriter) is obliged to pay, by settlement or award or final judgment.
  • Conditions, Conditions Precedent and WarrantiesThe relevant concept under Ecuadorian law is the 'Condición Suspensiva'. According to this concept, an obligation is not due until a condition is performed, therefore the insurance contract is not a pure and simple obligation to pay a compensation. The compensation is due only if the assured has complied with his duties set forth in the contract and in the law of insurances. Therefore, if there is a breach of 'condición suspensiva', the insurers/reinsurer is discharged from liability. A claims control or claims cooperation clause is often expressed to be a condition precedent to liability in a reinsurance contract. We do not have in our law, differences between obligations and warranties, but not all breaches of an obligation will have the same effect on the contract. Some breaches of obligation cause the nullity of the contract, another could lead to the termination of the contract and another to merely reject a claim.
  • Non-Disclosure/MisrepresentationEcuadorian insurance law places an obligation on the assured to disclose material information to the underwriter. Reinsurance contracts have the same concept. However, Ecuadorian law does not provide conditions regarding non-disclosure and misrepresentation in reinsurance contracts, therefore it will depend on the law that is incorporated into the contract. The general law of insurance provides rules for breach of the assured's duties to disclose all relevant information to the insurance company. These general rules of insurance should also apply to reinsurance contracts.
  • Follow the fortunes/settlementsFollow the fortunes and follow the settlement provisions are not specifically addressed under Ecuadorian law. If the contract of reinsurance contains clear clauses of follow the fortunes and/or follow the settlements, the parties to the contract should comply with those agreements. However, the Superintendence of Banks and Insurance cannot force a Reinsurance company to comply with these agreements because it is not under its control. If the reinsurance contract has incorporated Ecuadorian law, local underwriters will be entitled to claim before a Court of Law any breach of the reinsurance contract provisions.
  • Claims Co-operation/Claims ControlClaims cooperation or control clauses are often considered as conditions precedent to liability in a reinsurance contract. As mentioned above the concept of condition precedent is recognized in Ecuadorian legislation as 'Condición Suspensiva'. Despite the fact that Ecuadorian legislation does not provide special provisions for claims control or cooperation clauses, these clauses are enforceable in a reinsurance contract under the concept of freedom of contract and the obligation of the parties to comply with the contractual obligations.
  • Late Notification / Late PaymentThe assured has 3 days to notify the loss to the insurer after the occurrence of an incident. Failure to notify the insurer within 3 days removes the right to claim unless the insurer and the assured have agreed an extension in the policy. Following reform of the law on 12 September 2014, the period of time within which the the insurer is obliged to provide an answer to a claim has been reduced from 45 to 30 days. The time starts running from the presentation of all the relevant documents supporting the claim and the answer, if negative, must contain explanation of grounds for refusal of the claim. This may pose challenges to insurers facing claims requiring full investigations and expert input.

    Under the abovementioned reform, insurance companies are now subject to the jurisdiction of the Superintendency of Companies. Consequently, where the insurer objects to the claim, notification must be made by the insurer to the Superintendent of Companies. In this scenario, unless an agreement is reached between the parties, the Superintendent will assess the merits of the objections within 30 days and will order either the payment or rejection of the claim. If the Superintendent orders payment of the claim, the insurer will have only 10 days to comply with the order.

    The decision of the Superintendent can be further appealed before the Superintendency of Companies within 10 days. The Superintendency will then have one year to conduct a review of the appeal application and its decision at this stage will be final. Once the decision is issued in first instance, the insurer will have 10 days to make the payment (including any interest ordered). Only if payment has been made, the insurer is able to file the appeal. Failure to comply may result in sanctions including an order to close its operations. Presently, due to the recent reforms, it is unknown how the review process will operate in practice. Although the Superintendent is likely to be a qualified lawyer, he or she will usually be an expert in corporate law and may not have experience in matters of insurance and reinsurance. Importantly, the procedure outlined above is an administrative one. Thus, assured may still opt to enforce its rights in judicial proceedings.

    The 30 day rule does not apply to reinsurance contracts however the rule and the procedure described above can create a number of problems for underwriters with claim control.
  • Role of the Reinsurance Broker (Placing and Producing)There are no local regulations regarding reinsurance brokers.
Ecuador

Brazil
Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados

Facts

  • Population
    196.5m (5th)
  • LA Rank (GDP)
    1st
  • Global Rank (GDP)
    7th

GDP 2013
US$2,242.854 Billion

  • Economic Growth 2011
    2.7%
  • Economic Growth 2012
    0.9%
  • Economic Growth 2013
    2.2%
  • Inflation (official) 2011
    6.6%
  • Inflation (official) 2012
    5.4%
  • Inflation (official) 2013
    6.2%

Managing claims

  • Reservation of Rights / Without Prejudice Rule (11,15% per year, on November 6th, 2014), vary10,000 to R$300,000, according to the Article 29 of the Resolution of the National Council of Private Insurance (Conselho Nacional de Seguros Privados – “CNSP”) No. 243/2011 (in November 2014, USD 3.887,87 to USD 116.636, 22).
  • PrivilegeThe doctrine does exist and applies to communications (and the contents therein) between a lawyer and his client and/or third parties as long as they relate to legal services provided by the lawyer and irrespective of whether adversarial proceedings are in contemplation. There are exceptions to this general rule including where the lawyer himself is being investigated.
  • DisclosureDuring proceedings, a judge can order a party or a third party to disclose a document or other object as a matter of evidence. The disclosure can be requested by the parties themselves, directing their request to the judge, who may accept or reject it. Although the parties are not obliged to disclose documents which are adverse to their case, the disclosing party cannot oppose disclosure (i) if he is obliged in law to disclose it or (ii) if he mentioned the document during the course of the lawsuit as evidence or (iii) if the document is common to both parties to the lawsuit. Disclosure is not required (i) if the document concerns private matters of the family (ii) if, by disclosing it, someone's honour is violated (iii) if disclosure raises a risk of criminal prosecution (iv) if the person is under a confidentiality duty based upon his profession or status e.g. a lawyer (v) if there are other serious grounds not to disclose the document, at the judge’s discretion.
  • InterestLegal interest will normally be applied as of the date on which the debtor was summoned in the lawsuit, unless otherwise established in the contract. According to the Brazilian Civil Code ("BCC"), when the rate of interest on late payment is not established in the contractual provisions, it shall be determined in accordance with the interest rate applicable to the late payment of Federal taxes. Some courts such as the Brazilian Superior Court of Justice consider the Brazilian Central Bank’s official interest rate to be applicable, the so-called SELIC, which is a variable rate (7.89% per year, as of August 3, 2012), as set out by specific legislation on the matter. This is not an undisputed issue, however, as some courts and commentators are of the view that the rate should be a non-variable rate of 1% per month, based on a subsidiary rule set out by the Brazilian Tax Code. None of these rules will prevail over contractual rules regarding interest.
  • CostsThe losing party must pay (i) all judicial costs and (ii) the lawyers' fees incurred by the other party. The legal fees to be paid by the losing party are to be established by the Court and are limited to up to 20% of the total amount awarded in the lawsuit (according to the applicable legislation, these fees will normally range from 10% to 20% of the total amount awarded, depending on how diligent the lawyer was and how important and complex the case was), irrespective of the actual legal fees contractually engaged by the party with his/her lawyer. Thus, the lawyers’ contractual fees are not subject to this rule and must be borne by each party respectively.
  • Monetary CorrectionMonetary correction is available and is applied according to tables defined by each state court based on inflation rates. It begins to run as of the date of the effective damage, thus as a general rule for any kind of damage or obligation, amounts will be corrected as from the date of loss. As the rate varies from state to state, there is no realistic average figure to be applied when calculating monetary correction. Additionally, in the event of breach of contract or the delay in fulfilment of a party's obligations, the Brazilian insurance regulator can apply a regulatory fine ranging from R$10,000 to R$300,000 (as at August 2012, USD5,000 to USD150,000).
  • Punitive DamagesBrazilian law does not expressly provide for punitive damages, although some judges may, in certain circumstances, tend to aggravate moral damages to give it a punitive character, especially in consumer law.
  • Expected length of caseThe length of lawsuits in Brazil varies depending upon the state in which it has been filed. Normally, 1st instance judgments will take around 2 years. In the 2nd instance an appeal can take from 1 to 5 years to be decided, depending upon the complexity of case and the Court. Different states have different estimates on the length of a lawsuit. An appeal in Rio de Janeiro, for instance, may take 1-2 years. In São Paulo, it can take 1-5 years. Arbitration tends to be a much faster process. An arbitral proceeding normally takes around 1.5 years in a complex case. Arbitrations do not allow for appeals and they are considered to be the best option for complex cases.

Reinsurance law

  • Fronting RequirementsTo date, there are no express legal provisions regarding fronting transactions in Brazil. Thus, although this matter is controversial, in theory, as long as the insurer is in compliance with all other applicable cession limitations established in local regulations, there is no provision preventing it from ceding 100% of a given written risk. The three limitations are generally as follows:- (i) Mandatory Cession - Local insurance companies are obliged to cede at least 40% of each reinsurance cession to local reinsurers; (ii) Intragroup Limitation - Local insurance and local reinsurance companies cannot cede more than 20% of the premium related to each contract to companies belonging to their financial group located abroad; (iii) Retention Rule - Subject to certain exceptions, a local insurer or reinsurer cannot cede in reinsurance or retrocession, respectively, either to local or foreign companies, more than 50% of the total amount of premium earned in its operations within a calendar year. Under local regulations, reinsurance agreements in respect of risks (i.e. the insured subject matter) located in Brazil must be submitted to Brazilian law, except for those cases where there is an arbitration provision. If the parties choose arbitration, they can freely choose the applicable law to the contract, except if both parties are Brazilians, in which case any dispute will be arbitrated under Brazilian law. In a situation where the risk is not located in Brazil, it is possible to elect a governing law and jurisdiction to regulate the reinsurance contract other than Brazilian law other than Brazilian jurisdiction. Insurance policies issued in Brazil, on the other hand, must invariably be subject to Brazilian law. Where the insured qualifies as a consumer, their place of residence will be the appropriate forum, although the parties are free to choose the forum where there is no consumer relationship. The insurance company and the insured can also choose arbitration as the method of dispute resolution. However, because insurance agreements are generally considered to be consumer agreements, arbitration clauses will only be considered valid and enforceable if previously agreed by the insured, as evidenced by a specific document which is not the insurer's general policy conditions.
  • LimitationUnder the BCC, the insured has 1 year to file a lawsuit from the date they become aware that the insurer has declined to cover the claim. As far as civil liability insurance policies are concerned, the one-year term starts to run from the date the insured is summoned or on the date they pay a third party with the insurer's consent. Under the reinsurance policy, there are no specific provisions concerning limitation periods, thus, the time bar applicable is the general rule of 10 years which begins to run from the date of the denial of coverage by the reinsurer. This remains a controversial issue.
  • Conditions, Conditions Precedent and WarrantiesA condition is defined in the BCC as a clause whereby the parties subject the effects of a contract to the occurrence of a future and uncertain event. Condition precedents and warranties are not expressly recognised under Brazilian law. Ultimately, it is necessary to rely on the reinsurance contract wording to better understand the obligations of the parties and the consequences of any breach. A breach is analysed on a case-by-case basis and in view of existing Court decisions or related matters. Based on Brazilian case law on insurance, there is a possibility that the breach will only give a reinsurer grounds to repudiate liability if the reinsurance company can prove that such breach caused actual damage.
  • Non-Disclosure/MisrepresentationThe BCC provides express regulation for non-disclosure / misrepresentation in insurance contracts but not in reinsurance contracts. As a result, the principle of good faith, generally applicable to all agreements executed under Brazilian law, will govern the matter jointly with the contractual provisions. Additionally, it is possible to infer that any decision with regard to this issue, if based upon Brazilian law, could be influenced by what the BCC establishes in relation to insurance matters (i.e. based on the principle of utmost good faith, as described above). On these grounds, the non-disclosure or misrepresentation in reinsurance contracts could lead to the avoidance of the contract and the non-payment of the recovery amount. Due to the absence of reinsurance legal provisions specifically regulating this matter, the provisions and remedies established in the reinsurance agreement will prevail. However, as mentioned above, the general insurance rules might also be considered by the judge in case of litigation.
  • Follow the fortunes/settlementsBrazilian law does not regulate or define “follow the fortunes” or "follow the settlement" clauses. Additionally, as there is almost no case law on reinsurance contracts or principles, it is necessary to rely on the reinsurance contract wording to better understand the obligations of the parties and the consequences of any breach thereof. It is therefore very important for the parties to include appropriate wording, especially with regards to remedies. Notwithstanding this, Brazil will probably acknowledge international practices and customs as one of the sources of law applicable to the interpretation of reinsurance contracts.
  • Claims Co-operation/Claims ControlBrazilian law expressly provides that the parties are free to agree on cooperation provisions between themselves. However, the participation of the reinsurer in the claims adjustment process must not affect or modify the obligations of the insurer vis a vis the insured. Also, Brazilian law establishes that the parties to a reinsurance contract (whether treaty or facultative) can insert a claims control provision in favour of the local reinsurer, when the local reinsurer has the greatest percentage of participation in the risk. In the absence of specific written contractual provisions, Brazil will probably acknowledge international practices and customs as one of the sources of law applicable to reinsurance contracts.
  • Late Notification / Late PaymentArticle 771 of Brazilian Civil Code ("BCC") establishes that the insured must inform the insurer about the occurrence of a loss as soon as he/she becomes aware of it, subject to losing his/her right to indemnity. In the event of a late notice of claim by the insured, however, Brazilian courts have ruled that that insurance companies will only have legal grounds to deny the payment of the loss if they can prove that the omission or late notice has caused the insurer damage. In all other situations, the insured will be entitled to receive indemnification.

    In general, insurers must pay the indemnity to the insured within 30 days from delivery by the latter of all required documentation concerning the loss. This deadline may be suspended in case the insurer requests additional documentation to the insured, as long as the request is justified and based on reasonable grounds. There are no specific provisions regarding reinsurance contracts on this matter, thus, the contractual provisions agreed by the parties shall govern it.

    Article 772 of BCC establishes that any delay in the payment of the indemnity by the insurer shall entail (i) monetary adjustment of the due amount and (ii) levying of late payment interests (or "punitive interest"), in addition to possible losses and damages. The parties are free to establish the rate of punitive interest in the contract. When the rate is not expressly established in the contract, however, it shall be determined in accordance with the interest rate applicable to the late payment of Federal taxes. For further details on this matter, please refer to the "interest" heading of the study.

    As Brazilian reinsurance legislation does not regulate this specific issue, i.e. whether reinsurers shall be liable before the insurers for amounts resulting from punitive interests due to delayed payments made by the later, parties to a reinsurance contract have room to negotiate the related provisions as deemed appropriate.
  • Role of the Reinsurance Broker (Placing and Producing) Brokers are classified by their activities of intermediation of insurance or reinsurance agreements, and they must be authorized to perform their activities by the Brazilian insurance regulator. However, the intermediation of the broker in such contractual relationship is not mandatory, since the individual may contract insurance directly with an insurance company.

    Reinsurance brokers must be incorporated as a legal entity. On the other hand, insurance brokers either can be a legal entity or an individual, considering however that both need the regulator’s prior authorization to intermediate insurance transactions. They must have a technical manager (an officer or an owner empowered to represent and/or manage the company) who will be responsible for the company’s activities vis a vis Superintendence of Private Insurance (Superintendência de Seguros Privados – “SUSEP”).

    Both insurance and reinsurance brokers are independent intermediaries, being responsible for approaching the interested parties and helping them to conclude the re/insurance operation. Brazilian law makes no distinction between placing brokers and producing brokers.

    On the other hand, agents represent and act on behalf of insurers and are expressly contemplated in Article 710 of the BCC.

    Insurance agents are regulated by SUSEP and CNSP, which establish that aninsurance representative can promote insurance contracts in the name and on behalf of the insurance company. Besides, according to the above mentioned rules, the agent is forbidden to perform activities as insurance broker or as a sponsor under a group policy.
Brazil

Chile
Sahurie & Asociados

Facts

  • Population
    17.6m (60th)
  • LA Rank (GDP)
    6th
  • Global Rank (GDP)
    39th

GDP 2013
US$276.975 billion

  • Economic Growth 2011
    5.9%
  • Economic Growth 2012
    5.6%
  • Economic Growth 2013
    4.4%
  • Inflation (official) 2011
    3.3%
  • Inflation (official) 2012
    3.0%
  • Inflation (official) 2013
    1.8%

Managing claims

  • Reservation of Rights / Without Prejudice Rule This matter is not regulated under Chilean insurance or reinsurance law, however as a matter of consent between the parties, a 'Reservation of Rights' or 'Without Prejudice' correspondence will have the same force as a written proposal. It is best if the consequence of the 'Reservation' or 'Without Prejudice' correspondence is expressly referred to. Therefore, if a party writes a letter under a 'Reservation of Rights' or on a 'Without Prejudice' basis, the 'Reservation' or 'Without Prejudice' qualification will have full effect unless the other party makes an objection, in which case the entire letter will be treated as having not been made or issued (i.e. including any offer or proposal etc. contained within it). If no objection is made, it would be deemed as accepted as having been written on a 'Without Prejudice' basis or under a 'Reservation of Rights'. The timeframe to object is 24 hours if the addressee lives in the same 'place' (this is understood to be the city or region but is a matter of fact to be decided in each case) and 'by return of mail' if the addressee lives in a different place. The applicability of this rule to emails has not been tested and is not clear under Chilean law; however, the 24 hour rule is most likely to apply.
  • PrivilegeCommunications and correspondence between a lawyer and his client are privileged, the objective being to protect the client’s trust that the lawyer will not reveal the information without his consent. Therefore, the lawyer is exempt from disclosing in proceedings the information received from his client in his capacity as a lawyer. Also, there is a general rule establishing that courts cannot order the production of confidential documents. Under the Chilean Criminal Code, a lawyer who reveals confidential information commits a criminal offence. This privilege can be waived with the consent of the client.
  • DisclosureDisclosure of instruments or documents under the control of a party or third party can be ordered by the Court at the request of the opposing party, as long as the requested instruments or documents directly relate to the dispute and are not confidential. The costs of producing the documents are for the party making the request but in the long term they shall be costs in the case. Unless the Court orders otherwise, there is no obligation on a producing party to "offer" up documents which are adverse to its case.
  • InterestIf the reinsurer delays payment, the reinsured is entitled to the rate of interest agreed in the contract for late payment, and if none, to a rate of interest ordered by the Court or Arbitrator. The Court or Arbitrator has a wide discretion as to the rate. The conduct of the parties is not relevant although the average interest rate will be considered. Currently it is around 6% in Chilean pesos and around 3% in a non-Chilean currency. The Court or Arbitrator will also fix the period for which interest is granted. It may count from the date in which payment should have been effected, the date of the lawsuit or the date of the Court or Arbitrator’s final decision and it will extend until payment is actually effected.
  • CostsThe general rule is that the losing party will be ordered to pay the costs, unless the court considers that it had reasonable grounds to litigate. The consequence of this is that each party will usually bear its own costs and awards for costs, when given, are generally low. The court will declare the motives for litigating in his judgment. Costs are classified as procedural (such as clerks and experts) and personal (which refer mainly to lawyer’s fees). The Courts do not order the actual fees but an amount at their discretion, taking into account the quantum of the litigation, its complexity and duration.
  • Monetary CorrectionMonetary correction is only available under Chilean law if the obligation is in Chilean currency. Often the insured or reinsured value is fixed in “Unidad de Fomento” (UF), which is a unit of indexation whose value varies daily, in accordance with previous inflation rates. On 13 August 2014 1 UF was equivalent to Chilean Pesos 24,075.47 which at the current exchange rate of Chilean Pesos 576.23 per 1 USD, results in a value of US$ 41,78 per 1 UF.
  • Punitive DamagesPunitive damages are not available under Chilean law.
  • Expected length of caseThe length of civil proceedings will vary depending on the specific court, the complexity of the matter, and the incidental or preliminary issues that the parties may raise. On average, the range could be between 1 and 3 years. Arbitration proceedings usually take less time. An appeal can take one more year. Mediation is not compulsory in commercial matters, but the parties may agree to mediate before filing proceedings.

Reinsurance law

  • Fronting RequirementsThere are no specific requirements in respect of fronting and Chilean law does not mandatorily apply to reinsurance contracts. The parties are free to choose the applicable law. In the absence of a choice of law clause, accepted principles on conflicts of laws shall be used to determine the applicable law. Among them, the law of the forum is predominant. Since reinsurance of 'Chilean risks' is subject to Chilean jurisdiction, in the absence of an express choice of law clause or agreement, the 'law of the forum' principle leads to the application of Chilean law. This is consistent with another leading principle, 'territoriality', which the Chilean courts consistently apply. Other criteria that may be used are the place of the contract, the domicile of the parties, the location of matter of the contract, and the place of performance of the obligations established in the contract. Often it is also possible to infer the parties’ choice of law from the reinsurance documents. That is the situation when, for instance, a Chilean legal provision is mentioned in the documents.
  • LimitationThe limitation period commences from the date the reinsured is entitled to require or demand from the reinsurer payment of the reinsurance indemnity. In general, that would correspond to the date of the loss. In liability insurance, it would be relevant whether the reinsurance relates to a claim made or to a per occurrence policy. It will also depend on the date when the original insured’s liability has been declared by a Court or accepted by the parties. In reinsurance matters the lawsuit has to be filed within 4 years from that date. In maritime insurance the time bar is two years. However, since the Chilean Commercial Code does not mention maritime reinsurance, the general 4 year limitation period would probably apply. To interrupt the time bar it is necessary to file the lawsuit and serve it upon the defendant’s representative within the limitation period. Time bar can only be stayed by agreement between the parties in maritime matters.
  • Conditions, Conditions Precedent and WarrantiesIn some cases the Courts have evaluated if the magnitude of the breach of a condition justifies the rescission of the contract, or exoneration of compliance with its contractual obligations. In respect of a condition to promptly notify a loss or claim the Courts generally require that, in order to release the insurer or reinsurer from the duty to indemnify, damage or prejudice exists as a result of the late notification and that the late notice is material. In this situation, the insurer repudiates its liability in respect of the specific claim, although the contract of insurance remains valid.
  • Non-Disclosure/MisrepresentationThe duties of the insured on disclosure or information regarding the risk have been changed substantially under the amendments to the Code of Commerce of Chile.

    Under the new legal norms the duty regarding information relating to a risks will be transferred to the insurer. The duty on the insured is limited to respond specifically and with clarity to any question from the insurer in respect to circumstances known by him and which serve to the insurer to identify the object of the insurance, and to evaluate the extent of the risk.

    Since these are mandatory norms that apply to insureds or beneficiaries who are individual persons, and for companies that pay annually an insurance premium of UF 200 or less (approximately USD 8,600), any stipulation requiring the insured to inform the insurer of any circumstances which may be material to assess the risks would be null and void.

    However, in respect of other (big) risks, there is freedom of contract and so it is possible to establish obligations for the insured with a higher level of disclosure and information.
  • Follow the fortunes/settlementsThe recent amendments to the Code of Commerce clearly establish that the insurer or cedent cannot delay the payment of a loss on the basis of the reinsurance. This is an imperative rule and any stipulation to the contrary is null and void.

    If duly established, custom is also a source of commercial law, including reinsurance. Unless contrary to the rule above, the agreement of the parties in these matters will prevail and freedom of contract is fully applicable. Therefore, follow the settlements/follow the fortunes clauses shall be applicable in the terms agreed by the parties. These type of clauses are frequent, and may constitute a commercial custom which is helpful to ascertain the meaning of technical words included in such clauses.
  • Claims Co-operation/Claims ControlThere are no provisions in Chilean law regarding claims cooperation or control. Therefore, there is absolute freedom of contract. However, parties should be mindful of the new rule referred to above stating that the insurer or cedent cannot delay the payment of a loss on the basis of the reinsurance. The regulations regarding the adjustment of claims may also have potential relevance in connection with claims control/co-operation. In particular, the loss adjuster appointed has to be impartial and independent from the parties to the insurance or reinsurance contract. The adjuster is designated by the insurer, although for big risks it is common to include the name of the adjuster in the policy.
  • Late Notification / Late PaymentUnder Decree 1055 of 2013, the loss adjuster's report (which shall contain conclusions regarding coverage and quantum of the loss) may be objected to by any of the parties to the insurance or reinsurance contract within a 10-day period. The adjuster shall respond to the objection within a 5-day period. This regulation may pose some obstacles to the compliance of claims control or cooperation clauses. If objections are made, then the controversy shall be resolved in accordance with the conflict resolution provision in the policy. Undisputed amounts must be paid by the insurer to the insured. The consequences of not objecting to the adjustment report within the term established in the regulations are not clear. For some it means acceptance of the adjustment report. For others, the parties’ rights can be exercised as long as they are not time-barred in accordance with the law, which should prevail over the rules on loss adjustment. In general, the lack of timely objection to the adjuster's report does not deprive the corresponding party of the right to resort to the Court.
  • Role of the Reinsurance Broker (Placing and Producing)Reinsurance brokers are not regulated under Chilean law. In the absence of any terms agreed between the parties, the reinsurance broker's mandate will be regulated by the general norms of the Civil and Commercial Codes on mandate and by the rules applicable to insurance brokers (whose role is governed by some regulation). In as much as possible the functions and duties of an insurance broker would apply to a reinsurance broker, therefore the reinsurance broker's principal would be the reinsured. Insurance brokers are not independent intermediaries. The placing broker would be deemed to be the agent of the producing broker.
Chile

Paraguay
Berkemeyer

Facts

  • Population
    6.8m (103rd)
  • LA Rank (GDP)
    16th
  • Global Rank (GDP)
    96th

GDP 2013
US$28.333 billion

  • Economic Growth 2011
    4.3%
  • Economic Growth 2012
    -1.2%
  • Economic Growth 2013
    14.1%
  • Inflation (official) 2011
    8.3%
  • Inflation (official) 2012
    3.7%
  • Inflation (official) 2013
    2.7%

Managing claims

  • Effect of a 'Reservation of Rights' and 'Without Prejudice' CorrespondenceThe parties will be held to the terms established by the contract of reinsurance as long as such terms do not conflict with the general rules established in the Civil Code for reinsurance contracts or general rules of Insurance Law. ‘Reservation of Rights’ provisions and ‘Without Prejudice’ correspondence would be construed in light of those principles although these terms do not have a specific meaning under Paraguayan law.
  • PrivilegeThe Penal Code punishes the revelation of private secrets by professionals, including lawyers. A secret is understood as any fact, data or knowledge of restricted access, the disclosure of which could damage the legitimate interests of the party, or in respect of which confidentiality should be kept by law or on the basis of law. A party's lawyer could be liable for malpractice – including negligence or infidelity – if the client suffers damages as a consequence of the malpractice. Malpractice provisions of the Penal Code may also apply.
  • DisclosureParties must submit evidence on which the claim or defence is based i.e. the documents on which the party relies. The court may allow submission of evidence which is not expressly provided for by law as long as such evidence is not expressly prohibited in the case, or is not against morality or the personal liberties of the parties.
  • InterestInterest in litigation must be calculated, along with the Court costs, when the court decision becomes final and binding. Banking authorities set maximum rates chargeable as compensatory, late payment and punitive interest for obligations both in local and foreign currency. The current rates are set on a monthly basis by the Central Bank of Paraguay and they are available at: www.bcp.gov.py
  • CostsAs a general rule the losing party bears its own costs and the costs of the other party. However, the Court may exonerate the losing party or reduce costs totally or partially if it finds a good reason to do so. The reasons must be stated in the decision (e.g. bad faith or an abusive exercise of rights) or, if the subject matter is complex, the losing party must have believed in good faith that it had a right to litigate.
  • Monetary CorrectionThere are no express provisions regarding monetary correction.
  • Punitive DamagesDamages which may be claimed under Paraguayan law are for loss of profits, damages resulting from contractual breach of the debtor, injury caused to one’s honour, reputation, affections, or sentiments by another’s negligence or intentional acts, and damages contemplated in the contract. Punitive damages are therefore not available under Paraguayan law.
  • Expected length of caseIt is hard to estimate as it essentially depends on the filing of defences or incidental motions. An average of one year to judgment at First Instance may be estimated, and approximately 6 months to judgment at Second Instance. A Third Instance trial is possible, depending on the outcome of the previous trials. An action for unconstitutionality may also be filed. Mediation is not compulsory, although parties are advised to pursue this alternative.

Reinsurance law

  • Fronting RequirementsParaguayan Insurance Law sets the requirements for an insurer or reinsurer to operate in the country. There is no prohibition against taking insurance or reinsurance from a foreign company. Article 3 of the Paraguayan Code of Civil Procedure prohibits the parties to an insurance or reinsurance contract from deferring territorial jurisdiction in favour of a foreign court. However, the parties may agree to submit to a foreign law provided that there is a reasonable connection. International arbitration is permitted and therefore a covenant establishing international arbitration will be valid and the parties are free to choose law and jurisdiction. A foreign company may establish Paraguayan legislation and the jurisdiction of the courts of Asunción, Paraguay. Speaking generally, Paraguayan law attempts to protect Paraguayan citizens and prevent litigation abroad.
  • LimitationReinsurance provisions do not set a specific limitation period for reinsurance contracts, therefore, the 10-year limitation period that is set for contracts in the Paraguayan Civil Code would be applicable. Limitation for insurance contracts is 1 year. The period begins to run from the date when the obligation becomes due.
  • Conditions, Conditions Precedent and WarrantiesA reinsurance contract is governed by the covenants established in the contract. The parties will be held to the terms established by the contract of reinsurance as long as such terms do not conflict with the general rules established in the Paraduayan Civil Code for reinsurance contracts or general rules of Paraguayan Insurance Law. The Paraguayan Civil Code and the Insurance Law establish general rules, namely that the reinsured is the sole obligor in respect to the insured; the insured has no claim against the reinsurer; the insured shall have priority on any receivables from reinsurer in case of liquidation of the insurer; in case of liquidation compensation between reinsured and reinsurer shall apply. In this circumstance, compensation shall be based on the termination date of the insurance and reinsurance, the obligation to reimburse premium in proportion to time that has not run, and the obligation to return the guarantee given to reinsured.
  • Non-Disclosure/MisrepresentationAccording to the Paraguayan Civil Code rules the parties must negotiate and enter contracts of insurance and reinsurance in good faith and such contracts must be performed in good faith. Paraguayan Civil Code rules prescribe general rules regarding misrepresentation/non-disclosure in insurance and reinsurance contracts. Misrepresentation, omission or the withholding of information may result in avoidance of the contract, and the insurer must challenge the contract within 3 months following knowledge thereof. If the contract covers more than one party, avoidance applies only to the party that made the misrepresentation or non-disclosure.
  • Follow the fortunes/settlementsThere are no express provisions with regard to Follow the Settlement or Follow the Fortunes conditions. Such conditions would be observed as established in the reinsurance contract, in light of the general rules prescribed in the Paraguayan Civil Code.
  • Claims Co-operation/Claims ControlThere are no express provisions with regard to Claims Cooperation or Claims Control Clauses. Such conditions would be observed as established in the reinsurance contract, in light of the general rules prescribed in the Paraguayan Civil Code.
  • Late Notification / Late PaymentInsurance law does not set a specific term for an insurer or reinsurer to accept or reject a claim. The insured has 3 days to make a claim and the insurer will be deemed to have accepted it if within the three day period it participates in the verification of the claim or in recovery operations. It will be a matter of construction as to whether this period applies in a reinsurance context. The specific reinsurance rules are those described under the Conditions section above.
  • Role of the Reinsurance Broker (Placing and Producing)Insurance Law 827/96 defines a reinsurance broker as a duly authorized natural or legal person that acts in the business of reinsurance contracts as an intermediary between insurers and reinsurers receiving a commission for his services.

    Resolution 143/12 of the Insurance Superintendent notes that the IAIS distinction between Agent and Broker is not applicable since local Insurance Law provides for a distinction between an Agent as a natural person (Art. 71) and Broker as a legal person (Art. 72).

    Under Resolution 143/12 insurance and reinsurance intermediaries have an obligation to disclose to clients, at a minimum, the terms and conditions of the business relationship between them and their clients (i.e. the cedant), and their relationship with the insurers or reinsurers they operate with (i.e. Intermediary, Intermediary with Special or General Powers of Representation, Designated Intermediary).

    The rules governing reinsurers and/or reinsurance brokers’ liabilities when claims are rejected by reinsurers are contained in Resolution 145/12.
Paraguay

Dominican Republic
González & Coiscou

Facts

  • Population
    9.4m (91st)
  • LA Rank (GDP)
    10th
  • Global Rank (GDP)
    70th

GDP 2013
US$60.765 billion

  • Economic Growth 2011
    4.5%
  • Economic Growth 2012
    3.9%
  • Economic Growth 2013
    2.5%
  • Inflation (official) 2011
    8.5%
  • Inflation (official) 2012
    3.7%
  • Inflation (official) 2013
    4.8%

Managing claims

  • Reservation of Rights / Without Prejudice RuleThese principles are not recognised under Dominican law. Parties may agree to negotiate on a without prejudice basis, however the “without prejudice” concept, as applied in common law countries is not applicable in the DR.
  • PrivilegeThere is a general duty of attorney-client confidence.
  • DisclosureThere is no requirement for parties to disclose documents unless the court directs them to produce a particular piece of evidence.
  • InterestIn recent decisions by the Supreme Court of Justice, it has been acknowledged that judges, when granting awards for damages, may also award interest as part of their discretionary powers. A benchmark for what may be the reasonable rate of interest to be awarded has been that of the commercial bank's active rate. It is fair to say that further debate may be expected before the issue of the awarding of interest is a settled legal matter. The same can be said for the criteria to be applied in order to determine the level of interest awarded.
  • CostsThe losing party must bear the costs that arise out of the judicial process. This is not a discretionary decision by the judge, although the party claiming costs must specifically request for such ruling in its favour. Nonetheless, if each party prevails or fails in part of its claim, the judge can and usually does declare that each party is to bear its own costs. The costs include notices between the parties during the process, filings at court, court appearances, expert costs, and other costs directly related to the process. The judge must assess these costs and this is usually on a much lower basis than the actual costs incurred.
  • Monetary CorrectionThere is no explicit regulation covering monetary correction but the court can apply it in certain circumstances. Monetary correction is usually applied in lengthy proceedings, during which devaluation of the Dominican currency takes place, particularly vis-à-vis US dollar, or where significant inflation rates are prevalent. The rates usually used for this correction are the official exchange rate and consumer price index published by the Central Bank of the Dominican Republic. Future argument may arise on whether the granting of interest, already being acknowledged by the Supreme Court of Justice, may exclude or be applied in lieu of monetary correction.
  • Punitive DamagesPunitive damages are not available under Dominican law.
  • Expected length of caseDR insurance law calls for (i) arbitration, for which the parties must agree on the arbitrator(s) and (ii) a conciliation process at the Insurance Superintendency, in case that parties fail to agree on a single arbitrator or an arbitration panel. This has proven ineffective and although both of these processes are prerequisites under insurance law for a claim in court, there are divided opinions at Court level as to whether failure to comply with them can be opposed in Court in order to have the matter dismissed. An approximate time for the resolution of a matter at first instance is one year from the date of the suit. The same term would apply at the appellate level from the date of the appeal.

Reinsurance law

  • Fronting RequirementsLocal risks must be insured with locally approved insurers. Dominican law states that all reinsurers, whether local of foreign, must be authorised in order to enter the Dominican reinsurance market although it is not a requirement that they are domiciled in the Dominican Republic. Local law does not require that reinsurance contracts are subject to Dominican law.
  • LimitationThe limitation period applicable to actions brought by an insured against insurers is two years for the insured or the named beneficiary under a policy, and three years for third parties in the case of liability insurance. The limitation period begins to run from the date of the loss. As between insurer and reinsurer, it is our understanding that limitation period should be subject to the rules of contract. Under contract law, the limitation period is two years. As a matter of Dominican law it is unclear whether limitation starts to run from the original loss or from when the reinsured's underlying liability is established e.g. by judgment, award or settlement.
  • Conditions, Conditions Precedent and WarrantiesA breach of a condition under a reinsurance contract will be assessed in accordance with its importance to the contract. A fundamental breach may render the entire contract invalid. A less substantive breach may only discharge reinsurers from liability for a particular loss. Conditions precedent and warranties should be acknowledged under Dominican law.
  • Non-Disclosure/MisrepresentationDominican contract law provides that good faith shall prevail in insurance and reinsurance contracts. Misrepresentations and non-disclosure of material facts or elements of a risk may give rise to avoidance of the contract ab initio although, to the best of our knowledge, there are no court precedents in this respect.
  • Follow the fortunes/settlementsFollow the fortunes and follow the settlements clauses are valid under Dominican law. Interpretation should depend on the terms of the clauses and the contract, however general industry principles should also be followed by courts.
  • Claims Co-operation/Claims ControlClaims co-operation and claims control clauses may be validly included in contracts for reinsurance. A reinsurer's involvement in the co-operation or control of a claim will depend on the drafting of the clause.
  • Late Notification / Late PaymentAn insured must file its claim within the two year limitation period and failure to do so will give the insurer the right to decline coverage for the specific loss. Under Dominican insurance law, insurers are required to respond to a claim within thirty days from the date it has received all documents required to evaluate the claim. There is no specific sanction against insurers for failing to comply with this provision of law; however, this can be assessed against the insurer in court, as a breach of its contractual obligations under the policy. Although there also appears to be a gap in the law regarding this subject within the insurer-reinsurer context, it would be reasonable to think that reinsurance contractual provisions should prevail between the insurer and reinsurer.
  • Role of the Reinsurance Broker (Placing and Producing)Regarding the principal of the reinsurance broker, the general idea is that the broker acts on behalf of the interests of the reinsured, which is – ultimately – its client. Hence, whether placing or producing broker, its principal would be the reinsured. This scenario results mainly from business practice, as there is no specific statutory provision for reinsurance brokers in this respect; albeit, making use of the principle applicable to insurance brokers, brokers would always be acting on behalf of the one requiring coverage, in this case, the reinsured.

    The broker is deemed to be the agent of the reinsured. Nonetheless, there may be particular cases in which the broker is acting, directly, on behalf of the insured itself, and the insurer is only acting as fronting company. The same explanation given above applies to this answer, as there is no specific statutory provision on this.

    As a matter of doctrine, material facts that may be withheld or omitted by a broker, may be invoked against its principal. Nonetheless, to our knowledge, this issue has not yet been discussed, nor settled, before the courts in the Dominican Republic.
Dominican Republic

Argentina
Marval, O'Farrell & Mairal

Facts

  • Population
    42.7m (32nd)
  • LA Rank (GDP)
    3rd
  • Global Rank (GDP)
    26th

GDP 2013
US$488.213 billion

  • Economic Growth 2011
    8.9%
  • Economic Growth 2012
    1.9%
  • Economic Growth 2013
    5.0%
  • Inflation (official) 2011
    9.8%
    although independent economists put the rate at more than double the official rate.
  • Inflation (official) 2012
    10.0%
    although independent economists put the rate at more than double the official rate.
  • Inflation (official) 2013
    10.6%
    although independent economists put the rate at more than double the official rate.

Managing claims

  • Reservation of Rights / Without Prejudice Rule"RoR" and "WP" are not terms of art as a matter under Argentine law. A "pre-emptive rejection" made by an insurer within the 30 days in which it has to decide if a loss is covered or not should protect the insurer's position. Absence of a formal decision within the 30 day term would lead to an implicit acceptance that the loss is covered. Confidentiality agreements may be signed by parties purporting to protect correspondence that is genuinely aimed at settlement (i.e. WP correspondence). However a party who is a consumer would normally be allowed to disclose to the Court documents exchanged with its counterparty in spite of a confidentiality agreement.
  • PrivilegePrivilege applies to attorney-client communications and advice and gives rise to an obligation and right of professional confidence.
  • DisclosureParties are under no obligation to produce documents other than those on which they rely. Parties may request that opponents or third parties produce documents specifically identified as relevant to the dispute. Expert witnesses may also request access to parties' files and documents via the Courts. Expert witnesses are appointed by the courts and are independent from both parties. In general, they advise the court on the questions that are put to them by each of the parties. To prepare their advice, they are entitled to request documentation from each of the parties including documents which are adverse to the producing party. Judges may draw a negative inference if these requests are rejected. Different rules may apply at provincial level.
  • InterestParties may contractually agree the applicable rate of interest. If no contractual provision exists the parties can still claim interest on sums due. Interest rates vary but the courts in Buenos Aires may award interest on debts in pesos (currently at an annual rate of 18.5% and 6-8% for debts in US$ or other international currencies, although this varies from time to time).
  • CostsThe general principle (at federal level) is that the losing party bears the costs of the litigation. The court has discretion to totally or partially derogate from this general principle if there are sufficient grounds. In general, costs comprise Court tax, lawyers' fees and experts' fees. Court tax usually amounts to 3% of the sum in dispute. The court will calculate legal fees due considering the scale and complexity of the litigation and the proficiency of the lawyers involved. Expert fees are fixed by the Court in accordance with fee regulations applicable to different professions.
  • Monetary CorrectionMonetary correction is not available under Argentine law.
  • Punitive DamagesThe Argentine Consumer Protection Law (2008) made punitive damages available, however they are rarely granted and have not been for significant sums.
  • Expected length of case4 years to first instance judgment and a further 2 years to final appellate level judgment. N.B. In the City and in the Province of Buenos Aires, Mediation is compulsory before a dispute can reach the Courts.

Reinsurance law

  • Fronting RequirementsLocal insurers may only reinsure risks with local reinsurers or approved foreign reinsurers when there is no local capacity to cover the risk ceded. Foreign reinsurance companies must be approved by the Argentine Superintendence of Insurance ('SSN'). Where the risk ceded exceeds $50million, the excess may be reinsured with an admitted reinsurer without the SSN's prior approval. Both insurance and reinsurance contracts must be subject to Argentine law. Reinsurance contracts must contain a clause specifying that they are subject to Argentine law and jurisdiction. Arbitration clauses are also valid, provided the seat of the arbitration is in Argentina and subject to Argentine law (Resolution 38,708, Annex 2.1.1, article 9.5).
  • LimitationThe limitation period for claims brought under an insurance contract is one year from the date the relevant obligation becomes payable (which may extend to three years in consumer insurance). There is no express legal provision governing limitation periods in reinsurance contracts. As a general rule limitation begins to run from the date when the relevant obligation becomes payable. Courts have applied conflicting limitation periods of 1, 5 and 10 years. Parties may suspend a limitation period by agreement or by certain acts (e.g. correspondence) or by interruption (e.g. loss adjustment process, filing of a complaint).
  • Conditions, Conditions Precedent and WarrantiesConditions precedent and warranties are not concepts governed by Argentine reinsurance law. In principle, reinsurance contracts are subject to the terms agreed between the parties, provided they do not conflict with the mandatory provisions of public policy, although these terms will not necessarily operate in the same way as they do under English law.
  • Non-Disclosure/MisrepresentationThere is no express legal provision regarding misrepresentation and/or non-disclosure in reinsurance contracts although it is generally accepted that there is a duty on the reinsured to disclose and not to misrepresent material facts. Courts are likely to apply insurance law principles to contracts of reinsurance and these state that a contract may be void ab initio in the case of a material non-disclosure or misrepresentation which, if known by the insurer would have led them not to underwrite the risk or to do so on different terms. A reinsurer may be deemed to have affirmed the policy if it does not elect to avoid a policy and/or acts in a way consistent with treating the contract as in existence, after becoming aware of facts that give it the right to do so.
  • Follow the fortunes/settlementsParties are free to include “Follow the Fortunes” and “Follow the Settlements” clauses in reinsurance contracts. The scope of these clauses would depend on their text. Even if there is no express provision in the contract, reinsurers may be held to be bound to follow the fortunes of their cedants as a general principle of reinsurance law. There are few court precedents on the actual scope of this principle. It has been recognised that reinsurers may object to the handling of a loss by their cedants when the reinsurer is of the view that the cedant has not acted in good faith.
  • Claims Co-operation/Claims ControlThe reinsured is directly responsible for the handling of claims, although reinsurers and reinsureds can freely agree on the right of reinsurers to monitor or control claims, provided this does not breach any mandatory legal provision or public policy. The scope of these clauses would depend on their text.
  • Late Notice/Payment of ClaimsInsureds should give notice of a loss within three days after the loss has come to the insured’s knowledge. Late reporting entitles an insurer to repudiate liability for the loss. As a general rule, an insurer must take a decision as to the right of the insured to be indemnified within 30 days of the insurer’s receiving notice of the loss. If the insurer does not formally reject the claim within 30 days of the loss being reported, in principle, the law will consider that the loss has been tacitly accepted by the insurer, unless it requests complementary information. This request postpones the inception of the 30 day term to accept or reject a loss. There is no express legal provision to this effect in the reinsurance context, although there is a precedent where the court has applied this 30 day term to a reinsurance contract. Please note that Argentina is a civil law country, where the “stare decisis” doctrine (i.e. where judges are obliged to respect the precedent established by prior decisions) does not apply.
  • Role of the Reinsurance Broker (Placing and Producing)Reinsurance brokers are independent intermediaries.

    Brokers may act on behalf of either the cedant or the reinsurer provided they are appointed as agents through a written agreement. This may occur, for instance, in facultative reinsurance when reinsurers grant authority to brokers to execute cover notes on reinsurers’ behalf.

    Nevertheless, an agency relationship may exist even in the absence of a written agreement. Under general agency principles, brokers may be given authority either expressly or tacitly. An express authorisation can be conferred by a public or private instrument, by letters and also verbally. A tacit authorisation exists when it can be inferred from the cedant's or reinsurer’s acts or inaction.

    Even if a broker has not been granted authority expressly or tacitly, it may have apparent authority to bind either the cedant or the reinsurer if the broker usually acts in the name of them with their tolerance, leading parties to believe, bona fide, that the broker acts with sufficient authority.

    By analogical application of the provisions of the Insurance Act regarding insurance agents, it may be argued that the knowledge of facts which are known to the broker but not known to his principal can be imputed to his principal (section 55 of the Insurance Act). The issue, however, will be decided on a case-by-case basis.
Argentina

Venezuela
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Facts

  • Population
    28.9m (44th)
  • LA Rank (GDP)
    5th
  • Global Rank (GDP)
    31st

GDP 2013
US$373.978 billion

  • Economic Growth 2011
    4.2%
  • Economic Growth 2012
    5.5%
  • Economic Growth 2013
    0.7%
  • Inflation (official) 2011
    26.1%
  • Inflation (official) 2012
    21.1%
  • Inflation (official) 2013
    40.7%

Managing claims

  • Reservation of Rights / Without Prejudice RuleThere are no express provisions regarding ROR. However, a ROR clause is valid. The WP doctrine does not exist although the parties can agree to negotiate on a WP basis. There must be a clear agreement to this effect and on the meaning of WP correspondence.
  • PrivilegeThe doctrine does exist and applies to attorney-client communications/advice.
  • DisclosureMaritime Procedural Law (which applies to marine reinsurance) contains express provisions which allow each party the right to require the other party to disclose documents, records and registries under the custody of the requested party or to allow documents to be recorded or copied or to allow access to a ship, terminal, shipyard, warehouse or port installation in order to inspect ships, goods or any other object or document. This right must be exercised within 5 days of the answer to the lawsuit. The Court must serve an Order of Summons to release the documents within 20 days after service of the same. The requested party can oppose the release of the documents although the judge is entitled to make presumptions if disclosure is held without good reason. In principle these discovery rules should be also apply in non-marine reinsurance cases. Additionally, there is also a general procedural rule giving the parties the right to use all evidential means to prove their allegations and defences, unless expressly prohibited by law.
  • InterestInterest may be agreed by the parties. In the absence of express contractual provision, interest is payable at the current market rate provided it does not exceed 12% per annum from the date that the reinsurer received the reinsured’s demand of payment.
  • CostsTo be borne by the losing party unless the winning party is only partially successful, in which case each party is to bear its own costs, without apportionment of costs between the parties. Costs include the Court's costs (e.g. administrative charges and taxes, experts’ fees, costs of evidence etc.) and legal fees, which cannot be more than 30% of the value in dispute.
  • Monetary CorrectionOwing to the high inflation rates during the last 20 years monetary correction is available and is applied in accordance with the index of costs determined on a monthly basis by the Central Bank of Venezuela.
  • Punitive DamagesNot available, however the parties can agree provisions for punitive damages in the reinsurance contract.
  • Expected length of case1st instance judgment may take 2-3 years and a judgment at the final appellate level may take a further 1-2 years.

Reinsurance law

  • Fronting RequirementsA locally incorporated fronting company is not required and risks can be ceded to local or foreign insurers and reinsurers authorised to operate in Venezuela or to companies within the group operating in their country of origin. Foreign insurers, reinsurers and brokers operating in Venezuela must be authorised, registered and controlled by the Assurance Activity Superintendence (AAS). Copies of insurance and reinsurance contracts must be released to the AAS. Reinsurance contracts are governed by the law agreed by the parties. If the parties have not chosen any law, the contract is governed by the law with which the contract has its closest connection. The Court shall take into account all the elements – objective and subjective – arising from the contract in order to determine the applicable law, including the principles of International Commercial Law accepted by the international community. Normally, as most reinsurance is underwritten in international markets (for instance London, Germany, Switzerland) often the parties agree to apply the law of the domicile of the reinsurer or underwriter. In reinsurance contracts it is also valid (and usual) to submit disputes to foreign jurisdiction and arbitration. In insurance contracts (as opposed to reinsurance contracts) a clause applying foreign law is valid only in exceptional cases and where the choice of foreign law does not contradict the Venezuelan mandatory provisions. In direct insurance contracts Venezuelan jurisdiction cannot be renounced.
  • LimitationUnder the insurance policy the time bar for actions against the insurer in cases of rejection of claim by the insurer is one year from the date of rejection, unless the insured or the beneficiary has lodged a lawsuit, has agreed arbitration or has requested submission of the claim to the AAS. If the insurer has not rejected the claim the time bar is three years from the date of the damage or the loss. Time bar of other actions arising from the contract of insurance (e. g. payment of premium) is 3 years from the date on which the debt is exigible.

    In marine insurance the timebar is three years. In an action for payment of premium, the 3-year period runs from the date when the premium is exigible. In an average action under the hull policy, time bar runs from the date of the accident. Under a cargo policy, time runs from the date of arrival of goods or the date when the goods should have arrived at their final port of destination. In an action for payment of the general average, an action for contribution runs from the date of payment. In relation to an abandonment action, time can run from various points depending on whether the vessel is refloated, or if the vessel is seized by an authority or arrested, or other cases of admissibility of abandonment relating to cargo and hull policies.

    Under a reinsurance policy, the timebar is 10 years which begins to run from the date when the reinsured receives the claim proposed by the insured.

    In principle the time bar cannot be suspended since there is a rule that the time bar cannot be renounced before the time bar itself has expired.
  • Conditions, Conditions Precedent and WarrantiesWhere there is a breach of condition, condition precedent or a warranty by the reinsured, the reinsurer has a right to request cancellation or rescission of the contract and to claim indemnity for his losses and damages. Warranties are not recognized under Venezuelan law in the same way as under English law. If the reinsured claims indemnity, the reinsurer can refuse to pay if the reinsured is in breach of its obligations.
  • Non-Disclosure/MisrepresentationThe obligation of utmost good faith is implied into the reinsurance contract pursuant to the Venezuelan Civil Code. Non-disclosure and/or misrepresentation would amount to breach of contract which would give the reinsurer a right to submit a lawsuit requesting the cancellation of the policy or rescission of the contract. In such a case the reinsurer can also claim for his damages and losses. If the reinsured claims indemnity, the reinsurer can refuse to pay if the reinsured is in breach of its obligations.
  • Follow the fortunes/settlementsVenezuelan law contains no provisions regarding "follow the settlements" or "follow the fortunes" and Venezuelan lawyers are not aware of any case law relating to the interpretation of these clauses. According to the general principle of freedom of contract, follow the settlements/fortunes clauses are valid and can be considered as terms or conditions of the policy, provided they are not contrary to public order or to local law. It is possible that the Court would interpret these clauses by the application of a comparative law (e.g. English law) provided such application is not contrary to public order or local law.
  • Claims Co-operation/Claims ControlClaims control/cooperation clauses are often included in the reinsurance contract to give the reinsurer a right to supervise the investigation and the settlement performed by the reinsured. Breach could be considered as a breach of contract and would give the reinsurer the right to submit a lawsuit seeking to cancel or rescind the contract. The reinsurer could also claim indemnity for his damages. If the reinsured claims indemnity, the reinsurer can refuse to pay if the reinsured is in breach of its obligations.
  • Late Notice/Payment of ClaimsUnder the insurance policy an insured must notify its insurer about the occurrence of damage/loss within the 5 working days from the date the insured acquired knowledge of such occurrence, failing which the insurer is exonerated of all responsibility under the policy, unless insurer proves that the failure was due to a non-imputable act. The insurer must pay or reject the claim within the 30 days from the lodging of the last document/information requested by the insurer. Non-fulfilment of such obligation by the insurer is punished with fines. Under the reinsurance contract there are no legal provisions on time frame.
  • Role of the Reinsurance Broker (Placing and Producing)A broker is an independent intermediary acting either as “producing broker” or as “placing broker”.

    There is no circumstances when the broker may be deemed to be an agent of one of the parties. The Venezuelan insurance law makes a distinction between a broker and an agent. The first acts openly and with independency as intermediary for reinsurers or reinsured, the latter acts directly and exclusively as intermediary for one reinsurer. Both categories are separate and a broker cannot act as agent and vice versa.

    Since the broker has no principal, the question of imputed knowledge of the principal does not arise.
Venezuela

Uruguay
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Facts

  • Population
    3.3m (135th)
  • LA Rank (GDP)
    11th
  • Global Rank (GDP)
    75th

GDP 2013
US$56.345 billion

  • Economic Growth 2011
    6.5%
  • Economic Growth 2012
    3.9%
  • Economic Growth 2013
    3.8%
  • Inflation (official) 2011
    8.1%
  • Inflation (official) 2012
    8.1%
  • Inflation (official) 2013
    8.6%

Managing claims

  • Effect of a 'Reservation of Rights' and 'Without Prejudice' CorrespondenceUruguayan law does not contain special regulations on "Reservations of Rights" and "Without Prejudice" correspondence and the general principles of law would be applicable.
  • PrivilegeCorrespondence (i.e. emails and letters) between a lawyer and his client are protected from disclosure to the Court by virtue of the doctrine of privilege. Those who are covered by professional secrecy rules – as well as those who have a legal obligation to remain silent – have the right to refuse to reply to questions in Court that might breach this obligation.
  • DisclosureAccording to Uruguayan Civil Procedure laws, the burden is on each of the parties that appears before the Court to submit evidence supporting his allegations. Parties in Uruguay do not have an obligation to submit all documents they have (and therefore do not have the general discovery obligations that are applicable in other countries) and they do not have to disclose documents that dont support their case, unless the other party requests the Court to order such disclosure or the Court orders such disclosure of its own initiative.
  • InterestA judge may award interest on a disputed sum which he deems should have been paid at an annual rate of 6% per year if no interest has been agreed in the contract.
  • CostsThe general rule is that each party is responsible for its own litigation costs regardless of the outcome, except for a few exceptions. For example, the court may rule that legal fees be defrayed by one of the parties, where such party has litigated in bad faith.
  • Monetary CorrectionIn the absence of an express contractual provision, in the case of a judicial claim in local currency, Uruguayan law provides that the Court should award monetary correction on the basis of the applicable monetary correction index, at a legal rate set forth by law. The rate is calculated taking into account the “Consumer Products Index” (Índice de Precios al Consumo) which reflects inflation. This index is updated on a monthly basis.
  • Punitive DamagesThere are no provisions in Uruguayan law on punitive damages, unless the contract expressly states otherwise.
  • Expected length of caseMediation is compulsory and must take place before the filing of proceedings. If mediation does not take place, proceedings will be suspended until it does. It is difficult to estimate a time frame from the filing of proceedings to the handing down of a 1st instance judgment. That said, anytime from one to three years is possible depending on the complexity of the case. Appeal proceedings can be estimated to take approximately one year. Cassation proceedings before the Supreme Court can also be estimated to take one year.

Reinsurance law

  • Fronting RequirementsOperating requirements for both insurance and reinsurance companies are similar. Authorization must be obtained to operate before the Executive Branch and consent given by the Central Bank of Uruguay through its Superintendency of Financial Services. Reinsurance companies have a minimum qualification of A- given by an international risk assessment company. Reinsurance contracts must adopt the form and conditions generally accepted by the international use and practices.

    Uruguay does not have a separate insurance/reinsurance law. Although certain specific Acts exist - as well as some clauses in the Commercial Code - regarding certain insurance matters, the general rules of Uruguayan law apply in most cases.

    According to article 2403 of the Uruguayan Civil Code, the parties to an agreement are not free to choose the applicable law or competent jurisdiction. Under the Uruguayan Civil Code, the law to be applied is the law where the agreement is to be performed. Assuming the reinsurance contract was executed in Uruguay, and the place of performance was Uruguay, then such contract would be governed by the law of Uruguay. We are aware only of a limited number of cases where this issue has been tested in Uruguayan courts. In general, the Uruguayan courts tend to maintain the criteria established by Uruguay’s Civil Code rules, i.e., the law of the jurisdiction where the contract is performed.
  • LimitationThe limitation period begins to run against an insurer or a reinsurer from the moment the insurance or reinsurance company’s obligations can be demanded, that is, from the time the insurer or reinsurer accepts or rejects the insured's or reinsureds’ claim. The Law establishes, as a general rule, a one year limitation period from that date (N.B. in the case of car accidents this is two years). That said, Uruguayan Courts accept the validity of clauses which shorten the limitation period.
  • Conditions, Conditions Precedent and WarrantiesAs stated above, Uruguay does not have a separate insurance/reinsurance law. Although certain specific Acts exist - as well as some clauses in the Commercial Code - regarding certain matters, the general rules of Uruguayan law apply in most cases. Breach of conditions or conditions precedent have different effects. In the case of the conditions, their breach gives the non-breaching party the right to claim for damages. On the other hand, the breach of the conditions precedent will mean the reinsured will lose any and all rights the reinsurance contract might have granted. Uruguay lacks a specific Paraguayan legislation on this matter, so the recognition of these concepts derives more from usage and doctrine than from law.
  • Non-Disclosure/MisrepresentationThe good faith obligation is the general standard to be honoured. The insured or reinsured must act with good faith and offer complete and exact information to the insurer or reinsurer. If the insured or reinsured falsifies or conceals relevant information so as to be able to sign a contract he would not have signed otherwise, the contract may be declared null and void. The falsification, concealment or non-disclosure of information (with good or bad faith) by the insured/reinsured must have induced the insurer/reinsurer to execute a contract which – with full knowledge of the facts – would not have been executed, or would have been executed under different conditions (higher insurance premium or lower insured sum).
  • Follow the Settlement/Follow the FortunesAs stated above, reinsurance law is Uruguay is in its infancy. We are not aware of any cases in which these terms have been tested by the Uruguayan Courts. However. “follow the settlement” clauses should bind the reinsurer to the reinsured in case the reinsured settles a claim. This obligation should stand provided such settlement was done by the reinsured in an appropriate, honest and responsible way. The reinsured must prove that claim is covered by the reinsurance policy, but does not need to prove it was declared liable by a Court. If the transaction was done within the logical parameters of responsibility and honesty, the reinsured should be able to call upon the reinsurance policy.
  • Claims Cooperation Clause/Claims Control ClauseGenerally speaking claims cooperation clauses determine the obligation of the reinsured to notify the reinsurer - within a certain time limit - of the occurrence of an incident, and the obligation of the reinsured to collaborate with the reinsurer in the investigation and analysis of the situation. This clause may also state that the reinsured will not be able to make payments without the reinsurers’ previous approval.

    Generally speaking claims control clauses are more severe and oblige the reinsured to immediately notify the reinsurer of any circumstances which might result in loss, and the reinsured forwards all the documents relative to such loss. Also, these clauses allow the reinsurer to designate representatives to follow the reinsureds’ investigation and approval process.

    These clauses would be binding under Uruguayan law. Even though they are not specifically regulated by Uruguayan law, they would not – in principle – violate the general rules of law. Breach of these clauses may mean the reinsured would lose the rights the reinsurance contract might have granted. Even if they were not expressly stated to be a condition precedent, these clauses should state the obligation of the insured/reinsured to cooperate with insurer/reinsurer or otherwise lose the rights the insurance/reinsurance contract might have granted.
  • Late Notification / Late PaymentThe time frame within which an insured or reinsured must make a claim – which begins to run from the moment of the occurrence of the incident – and the time frame within which insurers or reinsurers must respond will depend on the policy terms, as there are no express provisions under Uruguayan law on these issues.
  • Role of the Reinsurance Broker (Placing and Producing)In Uruguay, there is no specific legal body regulating the activity of insurance brokers. For that reason, the insurance brokers are deemed to be independent intermediaries between an insurer and a reinsurer. In that sense, there is no difference between a reinsurance broker and any other independent intermediary in any other activity.

    As a consequence, the knowledge of facts by the insurance broker not revealed to the other parties (e.g. reinsured and/or reinsurer) could potentially result in the broker being liable to the affected parties.
Uruguay

mexico
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Facts

  • Population
    119.7m (11th)
  • LA Rank (GDP)
    2nd
  • Global Rank (GDP)
    14th

GDP 2013
US$1,258.544 billion

  • Economic Growth 2011
    4.0%
  • Economic Growth 2012
    3.8%
  • Economic Growth 2013
    1.4%
  • Inflation (official) 2011
    3.4%
  • Inflation (official) 2012
    4.1%
  • Inflation (official) 2013
    3.8%

Managing claims

  • Effect of a 'Reservation of Rights' and 'Without Prejudice' CorrespondenceAs a matter of Mexican law, reinsurers' rights are always reserved. In order for a right to be waived under Mexican law, the waiver needs to be done in unequivocal terms that leave no room for doubt as to exactly what right has been waived. There is therefore no legal need for reinsurers to reserve rights in complicated claims in Mexico since their rights will be protected as a matter of law. The concept of "without prejudice" is not part of the Mexican legal system.
  • PrivilegeThere is no such thing as privilege under Mexican law.
  • DisclosureThere is no duty of disclosure under Mexican law, as it is understood in English law. A party that initiates proceedings under Mexican law has a duty to present all the documents that support their allegations and/or claim with the initial claim. Whilst there are some procedural exceptions, the general rule is to present all documents with the initial claim or with the response to the complaint.

    Accordingly, there is no obligation for the producing party to disclose documents that are unfavourable to its own case. Specific documents which are known to be in the possession of one of the parties can be ordered to be produced, such as the insurance policy in the case of insurers.
  • InterestPursuant to Mexican law, the default interest rate in commercial matters is 6% but parties can agree upon a different contractual rate. In reinsurance, interest starts running after the cedant has indemnified the original insured and a formal request is made to reinsurers.
  • CostsIn principle, litigation costs are to be borne by each of the parties individually. However, judges have the discretion to impose court and attorney's fees on the losing party if they consider that the latter acted recklessly in the proceedings or if the claim or defence was without merit.
  • Monetary CorrectionMonetary correction does not exist under Mexican law.
  • Punitive DamagesPunitive damages do not exist under Mexican law.
  • Expected length of caseThe expected timeframe from the filing of a claim to judgment at first instance is about one year. However, the losing party has the right to appeal. Appeal proceedings can take between approximately 6 to 9 months for a resolution to be issued. A second and final appeal is always allowed as a matter of law and such a proceeding ("Amparo") takes approximately 6 months.

    Mediation is not compulsory under Mexican law, however the parties can freely agree to mediate their disputes.

Reinsurance law

  • Fronting RequirementsUnder Mexican law, fronting companies need to be authorised Mexican insurance entities in order to be able to issue a local insurance policy. Concerning the applicable law and jurisdiction, in accordance with the Regulations by which foreign reinsurers are authorised to reinsure in Mexico, such reinsurers expressly submit themselves in their reinsurance contracts to the laws and authorities of Mexico. The Mexican Insurance Lawyer's Association has debated whether the authorities have restricted the will of the parties in this respect, however regardless of any discussion on this issue, pursuant to Lloyd's Market Bulletin number Y3099, the reinsurance taken by all of its Syndicates must submit expressly to Mexican law and jurisdiction and this has been followed by the reinsurance company market in London. The specific jurisdiction is the one agreed upon the parties in the reinsurance contract, however, it has to be within the Mexican territory. It can be either Federal or State Jurisdiction on any state within Mexico.
  • LimitationThe reinsurance contract is not specifically regulated under Mexican law. In this respect, the limitation period applicable to the reinsurance contract is the general limitation period for contracts of 10 years. The limitation period starts running from the date when the cedant makes a valid payment under the direct insurance policy.

    In an insurance context, according to the Insurance Contract Act, the limitation period applicable in life insurance is of 5 years, and 2 years for all other cases. Every period starts running from the date the event occurs.
  • Conditions, Conditions Precedent and WarrantiesUnder Mexican contractual law, the terms of a contract are not split in conditions, conditions precedent or warranties. Contracts have to be interpreted in accordance with the construction rules established in the Federal Civil Code. If a reinsurance contract establishes a clause which is identified as a condition or a warranty, the consequences of a breach will not be the same as under English law, but rather they will have to be assessed against the wording of the policy or against the applicable supplementary statutes. Conditions Precedent do not exist as such, however, in certain cases, they can be identified as “condiciones suspensivas” which in practice could have the same consequences.
  • Non-Disclosure/MisrepresentationThere is no specific regulation for non-disclosure/misrepresentation in relation to reinsurance contracts under Mexican law.

    Although there is no positive duty of disclosure and no express rules against misrepresentation (as understood in English law), a non-disclosure/misrepresentation could amount to a "mistake” as per the general rules of civil and commercial contracts. This means that if it can be proven that the will of a reinsurer was mistaken due to erroneous material information from the cedant, then the contract could be declared as null and void but only if the motive of the reinsurance is expressly referred to in the contract or if it can be inferred from the context of the contract and it turns out to be different from the reality. To prove the foregoing is a very difficult task for a reinsurer since, for example, differences in loss history would rarely be a circumstance which would lead to the reinsurance being declared null and void.

    Concerning direct Insurance, the cedant has the right to avoid a policy if in accordance with the proposal form signed by the insured, there has been a non-disclosure or a misrepresentation, without having to prove a mistake.
  • Follow the Settlement/Follow the FortunesThere is no specific regulation for follow the settlements/follow the fortunes clauses in Mexican law. These clauses will be interpreted in accordance with a literal construction of contractual terms and pursuant to the general construction of contracts regulation. Our view is that the nature of reinsurance contracts is to follow the fortunes of the cedant, and by exception and only if it is expressly agreed upon, reinsurers will follow the settlements. This is normally more clearly evidenced in treaty than in facultative reinsurance.
  • Claims Cooperation Clause/Claims Control ClauseThere is no specific regulation for claims cooperation/control clauses under Mexican law. The interpretation of these clauses will be made in accordance with a literal construction of contractual terms pursuant to the general construction of contracts regulation.
  • Late Notification / Late PaymentSince reinsurance is not particularly regulated under Mexican law, the parties to the reinsurance can agree the notification process and time frame that they deem appropriate, including the legal consequences for not complying with them.

    As to Insurance law, the insured must notify the insurer within five days following the time when the loss took place. Failure to do so allows the insurer to reduce the indemnity based on the prejudice caused to them. The policy can be avoided only in circumstances where insurers can prove that the late notice was given in bad faith.

    There are no specific time frames for an insurer to respond to an insured but following some persuasive criteria from the Courts, it is important to respond within thirty days of any correspondence to avoid any possible legal presumption against the insurer that the claim is accepted as presented by the insured.
  • Role of the Reinsurance Broker (Placing and Producing)The reinsured is the principal of the reinsurance broker. Usually the producing broker is the same as the placing broker, and owes direct contractual duties to the reinsured. However, the broker can act as a producing broker and is allowed by law to use the services of other brokers (as placing agents) to negotiate and place the risks. Even in such a case, the producing broker is liable to the reinsured for any default on behalf of the placing brokers. Therefore, the broker is the reinsured’s agent, not the reinsurer’s nor an independent intermediary. Both the producing and the placing brokers would be deemed to act as agents to the original cedant (the reinsured).

    It is important to note that reinsurance brokers have to be authorized by the insurance authority so their services can be utilized by a reinsured.

    Under Mexican Law there is no provision that states that the knowledge of facts, which are known to the broker but not known to his principal, has to be imputed to the latter. Hence, the knowledge of the reinsurance broker cannot be attributed to his principal.
Mexico

Costa Rica
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Facts

  • Population
    4.7m (120th)
  • LA Rank (GDP)
    13th
  • Global Rank (GDP)
    78th

GDP 2013
US$49.621 billion

  • Economic Growth 2011
    4.4%
  • Economic Growth 2012
    5.1%
  • Economic Growth 2013
    3.4%
  • Inflation (official) 2011
    4.9%
  • Inflation (official) 2012
    4.5%
  • Inflation (official) 2013
    5.2%

Managing claims

  • Effect of a 'Reservation of Rights' and 'Without Prejudice' Correspondence‘Reservation of Rights’ and ‘Without Prejudice’ are not regulated under the Costa Rican legislation; however the contract can include this type of clause if agreed by the parties. There is no experience on how the courts will rule on the interpretation of these contractual clauses. According to general commercial law, the Courts will rely on the drafting of the clause and regularly accepted market practices to rule on a case when there is a legal gap or an absence of law.
  • PrivilegeLawyers are allowed to retain evidence based on reasons of professional secrecy with clients.
  • DisclosureThe plaintiff is required to produce the evidence to sustain its claim, but is not expressly required to produce documents which may harm its own case. If a party wishes to produce further evidence after the period for offering evidence has expired, and before the final ruling is issued, the party may apply to the judge to allow it to have the further evidence considered. This may include a request for documents by one party from a producing party which are harmful to the case of the producing party. The judge will rule if the new evidence is required or not for the final ruling. The other party will be notified by the Court that new evidence will have been filed and has the opportunity to oppose or challenge it. The judge will decide whether or not the further evidence should be accepted.
  • InterestInterest is calculated from the date of the final decision of the Court or Arbitrator at a rate based on the basic passive rate of the Central Bank of Costa Rica for operations in national currency (7.20% in November 2014), and equal to the 'prime rate' for operations in U.S. dollars (3.25% in November 2014).
  • CostsEach party pays the legal fees of their own lawyers. The judge awards other expenses such as technical advisors' fees, duties, stamps, services of notices etc. to the prevailing party, unless the judge considers that the losing party litigated in good faith, in which case the judge has discretion as to whether or not to charge court fees and expenses.
  • Monetary CorrectionMonetary correction does not exist in Costa Rican law.
  • Punitive DamagesPunitive damages do not exist in Costa Rican law.
  • Expected length of caseA civil law action may take up to eight years to reach a judgment at first instance. The parties have remedies of appeal before a higher court and in some cases an additional remedy before the Supreme Court of Justice which may take a further four years to reach judgment. Arbitration is allowed only if it is expressly agreed by the parties in the insurance contract. An arbitration award can be obtained within one year. In a reinsurance case, arbitration is allowed even if it is not expressly provided for in the contract.

Reinsurance law

  • Fronting RequirementsUnder Costa Rican legislation, there are no regulatory requirements for local fronting companies, however, the General Superintendence of Insurance may issue regulations if it is considered necessary.

    In order for an insurance company to operate in Costa Rica it must be authorised by the General Superintendence of Insurance and must register its insurance contracts with them. The applicable law and jurisdiction for each agreement may be the one of choice between the parties. Insurance contracts must identify the administrative, judicial or the alternative dispute resolution procedure. The minimum capital required by law to establish an insurance company is valued in development units as follows:

    1. Insurance entities for personal insurance, three million development units (approximately US$ 4,845,000)
    2. Insurance entities for general insurance, three million development units (approximately US$ 4,845,000).
    3. Mixed insurance entities, namely, personal and general insurance, seven million development units (approximately US$ 11,303,000).
    Similarly, a reinsurance company operating in Costa Rica must be authorised by the General Superintendence and must comply with the requirements established in the Regulations for authorizations, registries and requirements. The minimum capital required by law to establish a reinsurance company is approximately ten million development units (approximately US$16,147,000). The parties can chose which law and jurisdiction clause applies to the reinsurance contract.
  • LimitationAccording to Civil Law the statute of limitations is 10 years. In commercial law - including insurance and reinsurance - and in matters of civil liability against the State and its entities the limitation is 4 years. In both insurance and reinsurance, time begins to run from the date of the accident. In a reinsurance context this is the time of the original loss.
  • Conditions, Conditions Precedent and WarrantiesPrior to August 2008 the government had a monopoly over the Costa Rican insurance and reinsurance market through the Instituto Nacional de Seguros (INS). The interpretation of insurance and reinsurance contracts is a relatively new matter. If a contract contains any of the above (i.e. conditions, conditions precedent and warranties) they shall be acknowledged by the legal system, and can be enforced before a court of law. According to general commercial law, the Courts will rely on the drafting of the clause and regularly accepted market practices to rule on a case when there is a legal gap or an absence of law. General law will recognize the right to claim damages and will consider whether there is any liability from the insurer or the reinsurer.
  • Non-Disclosure/MisrepresentationDue to the general contractual principles of good faith, there is a duty on both parties to an insurance contract and to a reinsurance contract to disclose and not to misrepresent material facts. The possible consequence may be that the corresponding clause or section will be declared null and void. If a non-disclosure either has a bearing on a specific clause or leads the underwriter not to consider a specific risk, a relevant clause or section of the policy or the policy itself may be avoided, depending on the extent of the misrepresentation or non-disclosure.
  • Follow the Settlement/Follow the FortunesThe local law does not contain specific regulations on this matter, however the contract can include this type of clause if it is agreed by the parties. There is no experience on how the Courts will rule on their interpretation. According to general commercial law, the Courts will rely on the drafting of the clause and regularly accepted market practices to rule on a case when there is a legal gap or an absence of law.
  • Claims Cooperation Clause/Claims Control ClauseThe local law does not contain specific regulations on this matter, however the contract can include this type of clause if it is agreed by the parties. There is no experience on how the Courts will rule on their interpretation. According to general commercial law, the Courts will rely on the drafting of the clause and regularly accepted market practices to rule on a case when there is a legal gap or an absence of law. There are no rules for the appointment of loss adjusters who can be employees of the insurance or reinsurance companies, or designated by them.
  • Late Notification / Late PaymentThere is no time frame within which an insured must make a claim, provided the claim is made within the limitation period and complies with the notification conditions within the policy. However, an insurer must answer any claim within a maximum period of thirty calendar days from the date of receipt of the claim. Payment must be made within a maximum period of thirty calendar days from the date when acceptance of the claim was notified. If the insurer is late in paying the indemnity, notwithstanding the express terms of the contract, the insurer will be liable for the damages caused and the payment of legal interest in accordance to article 497 of the Commerce Code. Any provision in the contract to the contrary will be regarded as invalid. According to the Regulatory Law for the Insurance Contracts these time frames are applicable in the insurance context only. However, the Regulatory Law for the Insurance Market establishes that the provisions of the law for insurance companies, if appropriate, will apply to reinsurance companies.
  • Role of the Reinsurance Broker (Placing and Producing)Reinsurance brokers are not regulated under the Costa Rican law.
Costa Rica

Panama
Please Supply

Facts

  • Population
    3.4m (134th)
  • LA Rank (GDP)
    14th
  • Global Rank (GDP)
    88th

GDP 2013
US$40.329 billion

  • Economic Growth 2011
    10.8%
  • Economic Growth 2012
    10.5%
  • Economic Growth 2013
    7.9%
  • Inflation (official) 2011
    5.9%
  • Inflation (official) 2012
    5.7%
  • Inflation (official) 2013
    4.0%

Managing claims

  • Reservation of Rights / Without PrejudiceNot applicable in Panamanian civil system , unless expressly established in a contract.
  • PrivilegeNot applicable in the Panamanian civil courts.
  • DisclosureThe Parties must announce and file their evidence and demonstrate the validity of the evidence towards the beginning of the proceedings. A party must disclose documents which damage as well as support its own case. The Court will admit the evidence that is relevant to the case and reject the evidence that they consider to be inadmissible. Following this, no additional evidence may be presented or requested or opposed by any of the parties to the claim, unless the judge orders otherwise. However, an appellant may request new evidence at the appeal stage.
  • InterestIf the parties have not agreed a rate in the policy, the Court may apply the commercial rate which is 10% per annum, in accordance with the Commercial Code.
  • CostsEach party pays for its own costs.
  • Monetary CorrectionNot applicable in Panamanian civil system.
  • Punitive DamagesPunitive damages are not available under Panamanian law.
  • Expected length of caseThe time period from filing a lawsuit to judgment at first instance may take from 3 to 5 years (approximately). Appeals may take from 18 months to 2 years. A further appeal at the Supreme Court level may take from one year to three years. Arbitration might take up to 6 months. If parties agree, the time may be extended.

Reinsurance law

  • Fronting RequirementsSame as UK law.
  • LimitationThere is no express provision in the Panamanian Commercial Code for limitation under a reinsurance contract. Article 1651 of the Panamanian Commercial Code is applicable to direct insurance which provides for a one year time bar for any claim arising out of an insurance contract. Time begins to run from the time when you have a right to file a claim.
  • Conditions, Conditions Precedent and WarrantiesAlthough these terms are not terms of art under Panamanian law, the parties have freedom of contract. The contract should expressly state in as much detail as possible what terms are applicable and what are the consequences of any breach (e.g. repudiation of liability or avoidance of the contract).
  • Non-Disclosure/MisrepresentationSame as UK law.
  • Follow the Settlement/Follow the FortunesThere are no express provisions under Panamanian law relating to follow the fortunes/follow the settlement clauses. However, it is possible to include these clauses in a reinsurance contract. If they are included they will be binding. For this reason they should be properly articulated (including as to consequences of breach).
  • Claims Cooperation Clause/Claims Control ClauseThere are no express provisions under Panama law relating to claims control/co-operation clauses. However, it is possible to include these clauses in a reinsurance contract. If they are included they will be binding. For this reason they should be properly articulated (including as to consequences of breach).
  • Late Notification / Late PaymentThere are no express provisions under Panamanian law relating to notification under an insurance and/or reinsurance policy and, unless the policy itself contains a notification period, the claim must be brought within the limitation period outlined above.

    Insurers must respond to the claim within ten (10) business days from the date of notification by the defendant. Failure to do so will be considered bad faith on the part of the Insurers and will be considered by the judge with the rest of the evidence on the file. This time frame is relevant in an insurance and reinsurance context.
  • Role of the Reinsurance Broker (Producing and Placing)As a matter of Panamanian reinsurance law, the broker is an independent intermediary that requires a license to engage in that activity. It would be exceptional if a reinsurance broker in Panama were deemed to be agent for either the reinsured or reinsurer. However in some instances, it is common for certain specialised brokers to be asked to assist an insurer in placing risks on their behalf. For example, yacht and aviation insurance are placed completely abroad, normally in London, and an insurer may look to a reinsurance broker to act as their agent on those occasions. In practice, the broker may have knowledge of facts which are not known to the insurer or reinsurer although such knowledge is unlikely to be imputed to the broker's principal in the event an agency relationship can be established. Note that there is no case law in Panama on any of these issues.
Panama

England
Please Supply

Facts (UK)

  • Population
    63m (22nd)
  • Global Rank (GDP)
    7th

GDP 2013
$2.4 trillion

  • Economic Growth 2009
    -4.4%
  • Economic Growth 2010
    2.1%
  • Economic Growth 2011
    0.7%
  • Inflation 2009
    2.3%
  • Inflation 2010
    3.3%
  • Inflation 2011
    4.5%

Managing claims

  • The sections below do not take into account the changes in law that will apply from 12 August 2016 according to the Insurance Act 2015.
  • Reservation of Rights / Without Prejudice RuleIt is an essential principle of English law, that if a insurer/reinsurer elects to defend the insured/reinsured without reserving its rights (e.g. in equity and/or in law and/or as to a specific policy defence), it may be precluded from doing so later on. Therefore an insurer/reinsurer must reserve its rights as soon as it has become aware of any breach of the policy or breach of the duty of good faith. The 'Without Prejudice' rule generally prevents statements made (whether in writing or orally) in a genuine attempt to settle an existing dispute from being put before the Court as evidence of admissions against the party who made them. The purpose of the rule is to encourage litigants to resolve matters between themselves.
  • PrivilegePrivilege entitles a party to withhold evidence, either oral or written, from production to the Court. English law recognizes two main types of legal professional privilege: legal advice privilege and litigation privilege. Under legal advice privilege, if no adversarial proceedings are in contemplation, privilege will only attach to documents which constitute confidential communications between a lawyer and his client made for the purpose of giving or obtaining legal advice and documents which evidence such communications. Litigation privilege affords a wider protection since it can protect communications with third parties, as well as those between a lawyer and his client. It applies only where adversarial proceedings are reasonably in prospect, for example where negotiations over a claim for payment are breaking down or where one party sends or receives a formal letter before action. Also, the documents must have been prepared for the dominant purpose of giving or getting legal advice with regard to the litigation or aiding the conduct of the litigation.
  • DisclosureUnder standard disclosure, documents which each party must disclose are "documents" on which a party relies and which adversely affect or support either party's case. Note that documents which harm the case of the producing party must be disclosed. The purpose of disclosure is to make available evidence which either supports or undermines the respective parties' cases and allows the Court to do justice between the parties with "all the cards on the table". The purpose is also to prevent either party being taken by surprise at the trial. Disclosure can also force parties to seriously consider settlement as a way of avoiding disclosure of sensitive and/or prejudicial information to the other side.
  • InterestIn the absence of an express contractual provision, the insured/reinsured is entitled to claim interest if he issues a claim form. The Court has a general discretion but will normally (but not always) award interest on any contractual debt. The practice of the London Commercial Court is to award interest at base rate plus 1%. Under Section 49 of the Arbitration Act 1996, the parties are free to agree on the powers of the Tribunal as regards the award of interest. The Tribunal has a wide discretion to award simple or compound interest from such dates and at such rates as it considers meets the justice of the case.
  • CostsThe general rule is that the unsuccessful party will be ordered to pay the costs of the successful party (this is described as "the loser pays"), but the court may make a different order and has a wide discretion to do so. Such discretion depends on various factors including the conduct of the parties and whether the receiving party has wholly or partially succeeded in its case. Costs can be assessed on either the standard basis or the indemnity basis. On the standard and indemnity bases, a party will not recover costs which have been unreasonably incurred or which are unreasonable in amount. Where a party has succeeded on part of its case only, the Courts are open to arguments for orders for costs to be split. In these circumstances, percentage orders should be made as opposed to issue-based cost orders.
  • Monetary CorrectionMonetary correction is not available as a matter of English law.
  • Punitive DamagesPunitive damages (i.e. bad faith or exemplary damages) are not awarded for late payment of claims under a insurance/reinsurance contract, unless the contract expressly states otherwise.
  • Expected length of caseGenerally speaking, a 1st instance judgment may take 15-24 months and a judgment at appellate level may take a further 6 to 10 months. A judgment at final appellate level (i.e. the Supreme Court) may take a further 6 to 10 months. Mediation is not compulsory but is strongly encouraged.

Reinsurance law

  • The sections below do not take into account the changes in law that will apply from 12 August 2016 according to the Insurance Act 2015.
  • Fronting RequirementsUnder English law, there is no requirement for a local fronting company or that the risk is ceded to a local reinsurance company. An insurance or reinsurance policy is governed by the law and jurisdiction chosen by the parties.
  • LimitationThe conventional analysis is that the limitation period begins to run against the reinsured upon the reinsured's ascertainment of its underlying liability, which is usually established by judgment, award or settlement. The reinsured has 6 years from that date to sue its reinsurer. There is an alternate argument that time runs from the date of the original loss in property insurance.
  • Conditions, Conditions Precedent and WarrantiesThe breach of a simple condition by a reinsured gives the ordinary contractual remedy of a claim for damages. It can be difficult to quantify the measure of damages sustained by a reinsurer. Certain conditions may be described as being (i) conditions precedent to the existence of a binding contract or (ii) conditions precedent to the liability of the reinsurers. A breach of (i) will have the effect of the contract of reinsurance being treated as if it had never been made. A breach of (ii) – e.g. notification of the claim being a condition precedent to liability, will entitle reinsurers to repudiate any claim in respect of which the reinsured has failed to notify in accordance with the condition. The reinsurance contract will generally continue in force; it is simply in respect of the particular claim that reinsurers will be able to repudiate liability. The rationale of warranties is that the reinsurer only accepts the risks provided that the warranty is fulfilled. Reinsurers who successfully rely on a breach of warranty by the reinsured are automatically discharged from any liability under the reinsurance from the date of breach.
  • Non-Disclosure/MisrepresentationThere is a duty to disclose and not to misrepresent facts:
    1. 1. That are material to the risk. A fact is material if it would influence the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk.
    2. 2. Which induce the reinsurer. The reinsurer must have been induced to enter into the contract by the reinsured's non-disclosure or misrepresentation.
    3. 3. Which are within the knowledge of the reinsured. The duty is limited to circumstances which are known or ought to be known to the reinsured.
    4. 4. Which are not within the knowledge of the reinsurer. There is no duty to disclose material facts already known to the reinsurer or which the reinsurer ought to know. The remedy for non-disclosure / misrepresentation is avoidance of the reinsurance contract ab initio.
  • Please note that pursuant to the Consumer Insurance (Disclosure and Representations) Act 2012, the above rules are not applicable in the context of "consumer insurance contracts" entered into on or after 6 April 2013. A "consumer insurance contract" means a contract of insurance between "an individual who enters into the contract wholly or mainly for purposes unrelated to the individual's trade, business or profession" and "a person who carries on the business of insurance and who becomes a party to the contract by way of that business ...".
    For further information, please email geoffrey.conlin@hfw.com
  • Follow the fortunes/settlementsThe effect of a clause binding reinsurers to "follow the settlements" of the reinsured is that reinsurers are obliged to indemnify the reinsured in the event that they settle a claim by their underlying insured provided that: (1) the claim as recognised by them falls within the risks covered by the policy of reinsurance as a matter of law; and (2) in settling the claim, the reinsured has acted honestly and has taken all proper and business like steps in making the settlement. In the absence of a "follow the settlements" clause (or a similar clause), the reinsured is obliged to prove that the loss falls within the underlying and the reinsurance policy. The "follow the settlements" clause is emasculated by the inclusion of a claims cooperation clause, which provides that the reinsured should cooperate with the reinsurer and not make a settlement without the approval of the reinsurer. The combined effect of both clauses, is to require the reinsurer to follow only those settlements which the reinsurer has approved. The term "follow the fortunes" is not yet a term of art as a matter of English reinsurance law and it is therefore difficult to advise on its effect. However, it would appear that the concept of following the underwriting fortunes of the reinsured is different from being bound by his settlements after a loss occurs.
  • Claims Co-operation/Claims ControlA claims co-operation clause gives the reinsurer the right to be involved in the investigation and settlement of the underlying loss. A claims control clause gives a reinsurer even more influence in the handling of the original claim by the underlying insured. There are many forms of these clauses however typical features include:- (i) Notification of Loss provisions; (ii) Control Clauses of all/some aspect of claims handling; (iii) Cooperation in claims handling; (iv) Control of negotiations and settlements. What is the effect of a breach of a claims control or claims co-operation clause? If compliance with the clause is not expressed to be a condition precedent, a failure to comply may prevent reliance on any 'follow the settlements' provision, although it will normally be open to the reinsured to recover by proving its liability for the settled claim. Even if there is no claims cooperation clause, the reinsurer is still entitled to information and documents showing how the claim was made and dealt with. Also, it is always prudent to keep the reinsurer advised during the course of negotiations to settle.
  • Role of the Reinsurance Broker (Producing and Placing)In a normal reinsurance chain, a reinsured will instruct producing brokers who will instruct placing brokers or Lloyd's brokers who in turn have a relationship with reinsurers.

    The producing broker owes direct contractual duties to its principal, the reinsured. The scope of the agency will depend on its express terms or what can be implied by necessity or course of dealing between the parties. The broker has a duty to advise and place the business with reasonable skill and care and will be liable to the reinsured for any default on behalf of its own agent, the placing broker. The placing broker, as well as owing the producing broker direct contractual duties, may also be directly liable to the reinsured, either under the Contracts (Rights of Third Parties) Act 1999 (which can be excluded) and/or breach of the duty of care in tort.

    The broker is therefore the reinsured's agent and, in the absence of an agreement to the contrary (e.g. possibly in a Terms of Business Agreement or TOBA), the broker generally owes no contractual duties to the reinsurer. However caution is needed in the analysis of the agency relationship as the broker may be the agent of the reinsurer for specific purposes, such as proposing retrocession cover to a reinsurer or soliciting business on behalf of a reinsurer. It is also noteworthy that a broker's commission is usually paid for by the reinsurers.

    The knowledge of the reinsurance broker can affect his reinsured principal. For example, pursuant to section 19 of the Marine Insurance Act 1906, where an agent has effected a reinsurance, the reinsurance may be avoided on account of any non-disclosure by the agent of any circumstance that lies within the knowledge of the agent but that is not necessarily within the knowledge of his principle.
England

Guatemala

Facts

  • Population
    15.8m (66th)
  • LA Rank (GDP)
    12th
  • Global Rank (GDP)
    76th

GDP 2013
US$54.383 billion

  • Economic Growth 2011
    4.2%
  • Economic Growth 2012
    3.0%
  • Economic Growth 2013
    3.3%
  • Inflation (official) 2011
    6.2%
  • Inflation (official) 2012
    3.8%
  • Inflation (official) 2013
    4.3%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Guatemala

Honduras

Facts

  • Population
    8.6m (93rd)
  • LA Rank (GDP)
    18th
  • Global Rank (GDP)
    108th

GDP 2013
US$18.813 billion

  • Economic Growth 2011
    3.8%
  • Economic Growth 2012
    3.3%
  • Economic Growth 2013
    2.9%
  • Inflation (official) 2011
    6.8%
  • Inflation (official) 2012
    5.2%
  • Inflation (official) 2013
    5.2%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Honduras

Nicaragua

Facts

  • Population
    6.0m (111th)
  • LA Rank (GDP)
    20th
  • Global Rank (GDP)
    129th

GDP 2013
US$11.272 billion

  • Economic Growth 2011
    5.4%
  • Economic Growth 2012
    5.2%
  • Economic Growth 2013
    3.8%
  • Inflation (official) 2011
    8.1%
  • Inflation (official) 2012
    7.2%
  • Inflation (official) 2013
    7.4%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Nicaragua

Jamaica

Facts

  • Population
    2.7m (141st)
  • LA Rank (GDP)
    19th
  • Global Rank (GDP)
    119th

GDP 2013
US$14.288 billion

  • Economic Growth 2011
    1.7%
  • Economic Growth 2012
    -0.5%
  • Economic Growth 2013
    0.3%
  • Inflation (official) 2011
    7.5%
  • Inflation (official) 2012
    6.9%
  • Inflation (official) 2013
    9.4%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Jamaica

Cuba

Facts

  • Population
    47m (28th)
  • LA Rank (GDP)
    5th
  • Global Rank (GDP)
    29th

GDP 2013
US$321.5 billion

  • Economic Growth 2009
    0.8%
  • Economic Growth 2010
    4.3%
  • Economic Growth 2011
    5.7%
  • Inflation (official) 2009
    4.2%
  • Inflation (official) 2010
    3.1%
  • Inflation (official) 2011
    3.7%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Cuba

Trinidad and Tobago

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Trinidad and Tobago

Haiti

Facts

  • Population
    10.4m (84th)
  • LA Rank (GDP)
    21st
  • Global Rank (GDP)
    137th

GDP 2013
US$8.458 billion

  • Economic Growth 2011
    5.6%
  • Economic Growth 2012
    2.8%
  • Economic Growth 2013
    3.4%
  • Inflation (official) 2011
    7.4%
  • Inflation (official) 2012
    6.8%
  • Inflation (official) 2013
    6.8%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Haiti

Guyana

Facts

  • Population
    0.8m (164th)
  • LA Rank (GDP)
    23rd
  • Global Rank (GDP)
    157th

GDP 2013
US$2.970 billion

  • Economic Growth 2011
    5.4%
  • Economic Growth 2012
    4.8%
  • Economic Growth 2013
    4.4%
  • Inflation (official) 2011
    5.0%
  • Inflation (official) 2012
    2.4%
  • Inflation (official) 2013
    3.5%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Guyana

Suriname

Facts

  • Population
    0.5m (172nd)
  • LA Rank (GDP)
    22nd
  • Global Rank (GDP)
    147th

GDP 2013
US$5.057 billion

  • Economic Growth 2011
    5.3%
  • Economic Growth 2012
    4.5%
  • Economic Growth 2013
    3.9%
  • Inflation (official) 2011
    17.7%
  • Inflation (official) 2012
    5.0%
  • Inflation (official) 2013
    1.9%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Suriname

French Guiana

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

French Guiana

Bolivia

Facts

  • Population
    10.0m (85th)
  • LA Rank (GDP)
    15th
  • Global Rank (GDP)
    95th

GDP 2013
US$29.802 billion

  • Economic Growth 2011
    5.2%
  • Economic Growth 2012
    5.2%
  • Economic Growth 2013
    5.3%
  • Inflation (official) 2011
    9.9%
  • Inflation (official) 2012
    4.5%
  • Inflation (official) 2013
    5.7%

For further information, please contact you usual HFW contact, or Geoffrey Conlin, Partner, at our São Paulo office:

Holman Fenwick Willan

Holman Fenwick Willan Consultores em Direito Estrangeiro
Av. Paulista, 1337 – 21º andar – cj. 211
Bela Vista – São Paulo – SP
CEP 01311-200
Brazil

Tel: +55 (11) 31792900

Fax: +55 (11) 31792914

Bolivia

Holman Fenwick Willan

Welcome
to the Holman Fenwick Willan Interactive Managing Claims and Re/Insurance Law Map for Latin America

HFW is an international law firm with over 450 lawyers specialising in all areas of international commerce, including insurance and reinsurance, mining, energy and exploration, transportation, distribution and the associated logistics of moving goods around the world. The firm has a reputation worldwide for excellence and innovation, and aims to deliver a practical and commercial response to the legal requirements of business around the world.

The firm's insurance and reinsurance practice is recognised internationally as an industry leader. Through our integrated global offices, we offer a comprehensive range of dispute resolution and transactional legal services to the insurance and reinsurance sector, including: policyholders, insurance companies, captives, brokers, managing agents, TPA's and service providers. We have a dedicated team (Chambers & Partners recommended) of experienced Latin American specialists, who speak both Spanish and Portuguese. An outline of our representative work in Latin America can be accessed by clicking on the HFW symbol on this front page.

The purpose of the interactive map is to provide guidance on local insurance and reinsurance law and claims handling considerations to underwriters, claims handlers and their representatives who have business in Latin America. Each of the major jurisdictions in Latin America can be visited by placing your cursor on the relevant country. We have also included at the top right hand corner of this page, for comparison purposes, the position under English insurance and reinsurance law and practice.

We would like to extend our thanks to the law firms across Latin America who have assisted in the compilation of information contained within this guide.

ACKNOWLEDGMENTS

  • Argentina: Marval, O'Farrell & Mairal
  • Brazil: Mattos Filho, Veiga Filho, Marrey Jr. E Quiroga Advogados
  • Chile: Sahurie & Asociados
  • Colombia: Salazar, Pardo & Jaramillo Abogados
  • Costa Rica: Nassar Abogados
  • Dominican Republic: González & Coiscou
  • Ecuador: Moeller, Gomez & Cia
  • Mexico: Garza Tello Abogados
  • Panama: Pardini & Asociados
  • Paraguay: Berkemeyer
  • Peru: Osterling Abogados
  • Uruguay: Estudio Bergstein
  • Venezuela: Matheus & Ulloa, Abogados
Home Home

Holman Fenwick Willan

http://www.hfw.com/Insurance-Reinsurance-Sectors

We have a dedicated team (Chambers & Partners recommended) of experienced Latin American specialists who speak both Spanish and Portuguese and are based in our London office. The team has handled a range of insurance and reinsurance claims arising in Latin America. We have significant experience of dealing with insurance and reinsurance claims arising in Brazil, Colombia, Chile, Argentina, Venezuela, Ecuador, Peru and Mexico. We also have an office in São Paulo which is intended to operate as a base not only for Brazil but as a hub for serving clients throughout the Latin America region, working closely with the London office. In addition to our London and São Paulo offices, we have offices across Europe, the Middle East, Asia and Australia and our lawyers work seamlessly together to provide a 24/7 service.

HFW Representative work

  • HFW representative work in the Insurance/ Reinsurance sector across the Latin American Region
    1. Advising in relation to PD/BI claims of approximately US$150m following strikes and a blast furnace loss at a mine in South America, and advising on issues of causation and coverage under an all risks policy.
    2. Advising on coverage issues arising out of numerous turbine failures around the world, especially in Latin American, Caribbean, Asia and Africa.
    3. Advising in relation to a US$525m PD/BI claim arising from a joint venture. The claim relates to mechanical equipment failures in a copper and zinc mine and production facility in Ancash Province, Peru and subrogation claims in Canada, Peru and Switzerland.
    4. Advising in relation to an explosion whilst a gas carrier was alongside a gas terminal in South America, which resulted in the total destruction of the terminal and vessel, and resulting liability, pollution and loss of life claims.
    5. Advising in connection with the technical investigation, non-back to back coverage, and dispute resolution of substantial PD/BI mining losses in Brazil.
    6. Advising on a US$70m claim under an all risks policy following the collapse of an off-loader in Brazil, including in relation to issues such as force majeure, causation, design defect, utilities, supplier extensions, contingent BI, mitigation and subrogation.
    7. Advising in relation to $2bn of PD/BI claims in South America, South Africa and Australia emanating from a major mining house and involving complex issues of causation, number of events, captive aggregate retention erosion and facultative/excess of loss reinsurance issues.
    8. Advising on a coverage dispute in relation to the application of sub-limits in a Business Interruption claim relating to a power station turbine failure in Chile.
    9. Advising on a property and business interruption claim following a tunnel collapse at a copper mine in Chile.
    10. Advising on various claims following damage to a pipeline caused by an attack by the Revolutionary Armed Forces of Colombia (FARC).
    11. Advising on a loss OR losses arising from contamination following the spillage of petrochemicals at a storage facility in Colombia.
    12. Advising on CEN claims arising in Venezuela and Argentina.
    13. Advising on a property and business interruption claim in Caracas, Venezuela. The value of the claim was US$12m.
    14. Advising in relation to total loss of cargo of heavy crude following sinking of a barge in Peru.
    15. Advising on a Delay in Start Up claim on a CAR policy, following delays in construction of an oil pipeline in Ecuador due to land protests and volcanic eruption/lahars.
    16. Advising insureds on a number of major PD/BI claims in the Powergen sector in the Dominican Republic and in Guatemala.
    17. Advising on a property damage and business interruption claim following an explosion at steel foundry in Mexico.

If you have any queries or comments, please liaise with your usual HFW contact or the following individuals:

São Paulo

Jeremy Shebson
Geoffrey Conlin
Fernando Albino

London

Christopher Cardona
Jonathan Bruce
Paul Wordley

hfw office

Country Name