Regulation by country
Argentina
In Argentina, the insurance contract is regulated by Insurance Law No. 17,418, enacted on August 30, 1967, and the resolutions issued by the National Insurance Superintendency.
In addition, by being framed as a consumer relationship, the policy is also covered by the consumer protection and defense regulations (Law 24,240) and by the Civil and Commercial Code of the Nation (CCyC) in relation to adhesion contracts, general contract clauses and consumer relationship.
From the normative plexus it follows that the general clauses must be written in a clear, understandable and complete manner. Likewise, although there is no difference between delimiting clauses, limiting clauses and harmful clauses, art. 988 of the CCyC establishes that in adhesion contracts the clauses considered “abusive” will be considered unwritten, that is, those that distort the obligations of the predisposing party, those that imply waiver or restriction of the rights of the adherent, those that expand the rights of the predisposing party and/or those that, due to their content, wording or presentation, are not reasonably foreseeable. In other words, anything that has the purpose or effect of causing a significant imbalance between the rights and obligations of the parties, to the detriment of the consumer (art. 1119 CCyC).
This control of clauses is not limited only to the contractual content, but also to their incorporation. For this reason, a clause may be declared abusive even if it has been negotiated individually and the policyholder expressly approves it, since, in addition to being an adhesion contract, it is also a consumer contract.
On the other hand, it is important to highlight that the approval and prior administrative control of the general clauses by the National Insurance Superintendency does not prevent the possibility of carrying out a subsequent judicial control and ruling on the nullity of a specific clause (art. 989 CCyC).
Bolivia
In Bolivia, the insurance contract is regulated in the Bolivian Commercial Code (CC). Although it does not include a specific order for limiting or limiting clauses, art. 1013, regarding discrepancies in the policy, states that if the policyholder or insured finds that the policy does not agree with what was agreed or what was proposed, they may request the corresponding rectification in writing, within fifteen days following receipt of the policy. If you do not do so, the stipulations are considered accepted after said period has expired. On the contrary, if the insurer does not proceed with the requested rectification or remains silent, it is understood to have been accepted in the terms of the modification.
The art. 1023 establishes that the insurance contract, with the exception of life insurance, can be terminated by the unilateral will of any of the contracting parties, provided that this is stipulated in the policy. If it is the insurer that exercises said power, it must notify its decision in writing to the insured at his or her address and with no less than fifteen days' notice, while if it is the insured who exercises the power to resolve, it will take effect upon written notification to the insurer.[11].
Colombia
In Colombia, insurance activity is of public interest, therefore, it must be regulated and authorized by the State through the Financial Superintendence, attached to the Ministry of Finance, which exercises inspection, surveillance and control functions.[12].
This activity is enshrined in Title V of the Commercial Code (decree 410 of 1970) as the main regulatory framework. However, since the issuance of the aforementioned decree, laws, decrees and jurisprudence have been promulgated that complement the regulation of the insurance activity. In a special way we find its regulation in health matters in Law 100 of 1993, and Decree 2150 of 1998; We find damage insurance regulated in Law 675 of 2001 and in the Commercial Code and vehicle insurance is regulated in Decree 1507 and 172 of 2001.
Regarding the Insurance Contract, according to article 1045 of the Commercial Code, it must contain, as essential elements: the insurable interest, the insurable risk, value of the premium, conditional obligation of the insurer. If any of the above elements are missing, the insurance contract will not produce any effect.[13].
In addition, it must be written (Insurance Policy) or by confession.[14] This Policy must contain 1) The application, through which the insured indicates to the insurer his interest in contracting the insurance and where he must clearly determine the state of the risk; 2) a cover or cover; 3) the Particular Conditions, which are defined for each specific case; 4) The General Conditions, and 5) The annexes that indicate the policy to which you access.[15].
It is common for dominant parties to add clauses to insurance contracts that harm the adherents. In Colombia, the types of clauses that arise from the abuse of the dominant position have been defined as “Abusive Clauses”. The consumer protection regulations (Law 1480 of 2011) and the Law on the Protection of Consumers of Financial Sector Services (Law 1328 of 2009) expressly prohibit any type of harmful clause, or in its term, abusive clause and have the same effect as harmful clauses, they invalidate the rights of the consumer that is part of the insurance contract and are invalid by operation of law.
To analyze this type of clauses and establish why they are harmful or abusive, the Supreme Court of Justice in Sentence SC129-2018, of February 12, 2018, indicated that the following aspects must be determined: "1. It is imposed in an adhesion contract (which means that the clauses of the contract are not discussed); 2) it generates the imposition of an exaggerated burden for the policyholder and insured; and, iii) it evidences a contractual imbalance, in the extent to which several of the purposes for which the insurance was acquired end up being frustrated, as a result of an exclusion clause that ab initio distorts that purpose.”[16]
Chili
The basic regulation of the Insurance Contract in Chile appears in Title VIII of Book II of the Commercial Code. Among the protection rules for the insured and beneficiary, art. 542 indicates that the provisions governing the insurance contract are mandatory, unless otherwise provided. However, the contractual stipulations that are most beneficial to the insured or the beneficiary will be considered valid.
On the other hand, art. 538 authorizes the contracting party or insured to retract an insurance contract concluded remotely, within a period of ten days, counted from the date of receipt of the policy, without expression of cause or charge, having the right to a refund of the premium that has been paid.[17].
Ecuador
In Ecuador, article 25 of the Codification of the General Insurance Law stipulates that the Superintendency of Companies, Securities and Insurance will determine the clauses that the policies will necessarily contain, as well as the prohibited clauses, which will have no effect and will be considered unwritten if they exist. Insurance policies, among other conditions, must: i) respond to standards of equality and equity between the contracting parties; ii) include a clause stating the parties' option to submit differences arising from the contract or insurance policy to arbitration or mediation; and iii) be written in easily legible typographical characters. Furthermore, when the general conditions of the policies or their special clauses differ from the rules established in the legislation on the insurance contract, the latter will prevail over the former.[18].
Spain
In Spain, the insurance contract is regulated by Law 50/1980, of October 8, on the Insurance Contract (LCS).[19].
The art. 2 of the Insurance Contract Law establishes that the different modalities of the insurance contract will be governed by said LCS, unless another regulation is applicable to them. Its precepts are imperative in nature, so they grant inalienable rights to the insured, unless otherwise provided in them. However, the contractual clauses that are most beneficial for the insured will be considered valid.
As an exception to what is stated in art. 2 of the LCS, its art. 44 stipulates that the insurer does not cover damages due to events arising from armed conflicts or those arising from extraordinary risks to people and property, unless otherwise agreed. Likewise, that same art. 44 stipulates that the mandate contained in article 2 of the same will not apply to insurance contracts for large risks, as defined in this Law.
As DÍEZ-PICAZO, L. and GULLÓN BALLESTEROS, A. (1990) point out, the insurance contract is of the adhesion type, since the insurer carries out a mass contract, establishing a predetermined content for the formalization of all contracts of a certain type. In this way, the insured does not negotiate the clauses, but can only accept or reject them.[20].
Article 3 of the LCS establishes that "the general conditions, which in no case may be harmful to the insured, must be included by the insurer in the insurance proposal if there is one and necessarily in the contract policy or in a complementary document, which will be signed by the insured and to whom a copy of the same will be delivered. The general and particular conditions will be written in a clear and precise manner."[19].
The Spanish Supreme Court has established that a harmful clause or abusive clause is one “that considerably and disproportionately reduces the right of the insured, emptying it of content, so that it is practically impossible to access coverage for the incident.” In short, those clauses that prevent the effectiveness of the policy.[21].
Harmful clauses are prohibited and are always void, so if they appear in the contract they will be considered not included. Unlike the previous ones, the limiting clauses are valid, even though they may not be favorable to the insured, as long as they have given their consent. The jurisprudence of the Supreme Court has established that limiting clauses are those that “condition or modify the insured's right to compensation or the benefit guaranteed in the contract, once the risk covered by the insurance has occurred.” That is, they are frequently included in the contract to condition or modify the rights of the insured regarding their eventual right to receive compensation.
On the other hand, the delimiting clauses (arts. 3 and 8.3 LCS) seek to determine or set the limits of the insured risk (temporally, spatially or quantitatively), describing the guarantees and coverage granted in the contract. Although they do not limit the rights of the insured or injured party, they can be used by the insurance company to deny or reduce compensation. The Spanish Supreme Court has indicated that these delimiting clauses “specify the object of the contract and establish the risks that, if they occur, give rise to the insured's right to the benefit because they constitute the object of the insurance.” That is, a clause of this type is intended to specify the nature of the risk and individualize it, in order to eliminate ambiguities. The qualified delimiting clauses (arts. 8.3 and 22.4 LCS) are those that describe the “exclusions and limitations” of coverage, as well as those that establish “the conditions and deadlines of the opposition to the extension of each party or its unenforceability” and provided that they do not materially limit the rights of the insured, since in this case they become limiting clauses.[22].
Peru
In Peru, art. 39 of the Insurance Contract Law (Law No. 29946) defines that abusive clauses are understood to be “all those non-negotiated stipulations that, even when they have not been observed by the Superintendency, cause, contrary to the requirements of maximum good faith, to the detriment of the insured, a significant imbalance in the rights and obligations of the parties arising from the contract.” A clause is considered not to have been negotiated when it has been previously drafted and the contracting party has not influenced its content.[24].
According to that same article 39, the abusive nature of a clause subsists even when the contracting party and/or insured has specifically approved it in writing. In any case, abusive clauses are null and void and are considered not agreed upon.
In art. 40 there are stipulations prohibited for insurance companies and which are null and void if they appear in a policy. Among these stipulations are the following: i) waiver of the insured and/or beneficiaries to the jurisdiction and/or laws that favor them; ii) the establishment of limitation periods that do not comply with current regulations; and iii) clauses that prohibit or restrict the right of the insured to submit the dispute to judicial proceedings.
In art. 41 indicates abusive practices and the right to repent. For example, they involve prohibited marketing practices i) directly or indirectly imposing the conclusion of an insurance contract, except for mandatory insurance; or ii) predetermine the name of insurance companies through related contracts, in such a way that the freedom of choice of the potential insured is limited.
This article 41 also establishes the right of repentance, which the policyholder has when the insurance offer is made outside the commercial premises of the insurance companies, or of those who are authorized to operate as brokers, or when the offer is made through sales promoters. In these cases, the policyholder may terminate the insurance contract, without giving cause, within fifteen days following the date on which the policyholder receives the policy or a note of provisional coverage.
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