Various theories have been proposed in doctrine:

a) It would be a type of surety: It is said that the reinsurer would be a guarantor for the insurer. This idea is rejected, since the surety gives the creditor an action against the guarantor, which does not exist in the field of reinsurance.

b) It would be an assignment of debt: It is also rejected, since the assignment of debt creates a link between the assigned debtor and the creditor, and we know that the insured has no direct action against the reinsurer.

c) It would be a form of society: It is also rejected because its essential elements are missing.

d) The majority of the doctrine maintains that it is a type of insurance contract: Within them it would be one of the third group, since the insured insures all of his assets, it is a case of liability insurance, but not a typical civil liability insurance, which normally covers the non-contractual liability of the insured, but rather one of contractual liability, since it covers the liability that the insurer will have derived from its insurance contracts. Professor Osvaldo Contreras maintains that it would be a type of damage insurance contract, and that this opinion is shared by most of the current international doctrine and jurisprudence.

It can be noted that the object of this figure is the same as the insurance contract, but the insured interest varies, given that in this case what the contract covers is the potential liability of the direct insurer to pay compensation under the primary insurance contract, if the event that generates such compensation occurs. Thus, in this figure what the direct insurer seeks is to protect its assets.

The insurance and reinsurance contracts are different and independent contracts from the point of view of the legal relationships that exist between the contracting parties.

The incorporation into the Insurance Contract Law of a section dedicated to the general regulation of the reinsurance contract implies, above all, the recognition of the insurance nature of this figure and its classification among damage insurance.[1]​ In this way, reinsurance in Spain is regulated in Law 50/1980, of October 8, on the Insurance Contract (hereinafter, LCS) in its article 77 defines reinsurance as that contract by which one of the parties (reinsurer) is obliged to repair, within the limits established in the Law and in the contract, the property damage suffered by the other party (reinsured or direct insurer) as a result of the payment of compensation derived from an insurance contract.

Regarding the entities that can carry out reinsurance operations, access to the activity and the conditions for the exercise of reinsurance activity, the provisions of Law 20/2015, of July 14, on the organization, supervision and solvency of insurance and reinsurance entities must be complied with.

It is also worth highlighting the draft of the commercial code law, which presents a significant novelty, including the regulation of insurance and reinsurance contracts.

Through the reinsurance contract, the insurer (cedant) and the reinsurers (acceptor/s) agree to assign and accept, respectively, part or all of one or more risks, agreeing on how the premiums accrued from the assumption of the risk will be distributed (insurance policy premiums) and also the distribution of payments for the responsibilities derived from the risk (payments of the claims covered by the policy).

Two large groups of criteria can be differentiated to distribute premiums and responsibilities:.

Proportional reinsurance: The amount of liability that corresponds to the reinsurer in the event of an accident is calculated with the proportion that results between the premium received by it (assigned premium) and the total premium of the policy.

Therefore, the reinsurer participates in the claims and premiums in identical proportions.

Non-proportional reinsurance: The amount of liability that corresponds to the reinsurer in the event of an accident is the excess over a certain limit (called priority or XL), amounts less than this priority are always borne by the insurer.

Therefore, the reinsurer only responds to claims that exceed a certain value (priority).

The usual law dictionary defines reinsurance as contracted insurance insurance, by virtue of which a new insurer takes upon itself, in whole or in part, the risks insured by a first insurer, without altering the conditions of the first contract and transferring it to it or paying it part of the original premium.

Reinsurance, plain and simple, is the means used by the insurance company (the ceding company) that accepts transactions directly from the public, to reduce its liability, distributing it among other insurance companies, who accept responsibility for a corresponding participation in the original premium.

The insured only maintains a contractual relationship with the insurer (cedant), and in no case can this contractual relationship be affected by the relationships between the insurer and the reinsurers that may have agreements with the insurer. In the event of bankruptcy of the insurance company, the insured will not be able to claim their rights from the reinsurer, but rather the competent bodies in this matter will do so, for example in Spain the Insurance Compensation Consortium.

The reinsurance contract can take various modalities. A reinsurance modality is a way of linking the interests of the insurer and the reinsured, seeking to achieve the objectives generally indicated for reinsurance.[2]​.

In this way, we can talk about simple or facultative reinsurance, general, creditable or mandatory reinsurance, facultative-mandatory reinsurance (and open covers) and pool reinsurance.

- Simple or facultative reinsurance: In this type of reinsurance, the reinsured concludes the contract regarding a specific risk or a specific insurance contract. The reinsurer, for its part, is free to accept or reject the business offered. Hence the name optional or optional by which it is normally known.

- General reinsurance, Treaty or mandatory: The Treaty is an agreement signed between a direct insurer and one or more reinsurers, by virtue of which the ceding company - direct insurer - undertakes to assign a part of its business to the reinsurer, and the reinsurer, in turn, undertakes to accept all the risks subscribed by the insurer, within the limits and conditions previously established in the contract.

- Facultative-mandatory and open covers agreements: This type of reinsurance is between Treaty reinsurance and facultative reinsurance. In the same way as in the Treaty, there is an agreement between the direct insured and the reinsurer, through which the latter will accept all the reinsurance offered by the insurer that is in accordance with the conditions pre-established in the contract, without the obligation on the part of the ceding company to offer all its risks to the reinsurer.

In open covers agreements, the Assignor has the power to assign and the Reinsurer has the obligation to accept all the business assigned to the contract up to a certain value - the limit - without this limit being a value that depends on a number of plenary sessions.[3]​.

• Pool reinsurance: This modality is used especially in the transportation industry. It consists of the pooling of the businesses of several insurers or reinsurers, each participating in a specific proposition of the common company.

In the Ecuadorian case, the reinsurance contract as such is regulated by the Ecuadorian Commercial Code, the General Insurance Law, and the Legislation on the Insurance Contract.

Well, we can define that the reinsurance contract is an instrument in which the insurer, that is, the insurance company, transfers to the reinsurer all or part of the risks assumed directly from the insurance contract that the reinsurer has assumed for the beneficiary. The reinsurer is also called the assignee or acceptor.

The author María Concepción Hill Prados, regarding the concept of the reinsurance contract, maintains: “The concept of reinsurance is given by the purpose that the reinsured seeks with this contract, to obtain insurance protection against the possible risk of having to perform the promised benefit to the insured or the beneficiary, in the event of a loss to the insured thing or person” (Hill Prados, María Concepción “El reaseguro” [on line], 2006, ISBN: 8476983441, available at: https://app-vlex-com.sabidi.urv.cat/#ES/vid/289795).

Reinsurance companies are corporations incorporated within Ecuadorian territory, as well as branches of foreign companies that are established in Ecuador in accordance with the law, whose purpose is to grant coverage to one or more insurance companies for the risks that they have assumed, as well as to carry out retrocession operations. Reinsurance companies will be subject to the provisions of this Law, relative to insurance companies, where applicable.

The minimum capital to establish and operate the reinsurance company is thirteen million dollars, which must be contributed in monetary capital.

From the definition, it can be determined that the insurer is involved, which is the company that initially contracted with the beneficiary of the insurance; and the reinsurer, which is the company that contracts with the insurer to assume responsibility for the obligation that the latter has with the beneficiary of the initial insurance.

Jurisprudence of the National Court of Justice (which is a simile to the Supreme Court in Spain), Resolution No. 0222-2016, Judgment No. 0653-2015, of the Civil and Commercial Chamber, regarding the action to claim insurance compensation establishes: "(...) 4.4. The norm under discussion, in its literal text, establishes that it is the event that generates actions; to mean that the occurrence of the risk, generates the right to claim compensation at the expense of of the insurer; since the object of the insurance contract, embodied in the policy, is none other than that the insurer assumes all or some of the risks to which the person's property or the insured thing is exposed. If the rule speaks of an event, it cannot be understood without forcing the meaning of the same that, an event is the refusal to cover compensation for the loss, since the refusal is not an event but a decision based on certain facts; subsection in the text of article 42, which provides that the presentation of the administrative claim that regulates the cited rule, suspends the prescription of the action that the insured or the beneficiary has against the insurer, until the notification of the insurer's resolution; rule not applicable to the case being heard and that does not change the meaning of the rule contained in article 26, but reinforcing its meaning, it provides that the prescription of the action to which it refers is suspended, by the presentation of the claim until the notification with its decision. (…)”

Ecuadorian Regulations

 Ecuadorian Legislation, Commercial Code, Art. 85 (722.85), available at: https://web.archive.org/web/20190125020526/https://www.cepweb.com.ec/AppWeb/RO/1720.pdf.

 Ecuadorian Legislation, Codification of the General Insurance Law, article 4, available at: https://www.cepweb.com.ec/AppWeb/RO/2031.pdf Archived October 10, 2020 at the Wayback Machine.

In Chile, the insurance contract is regulated, fundamentally but not exclusively, in the Ninth Paragraph, of the Second Section, of Title VIII of Book II of the Commercial Code, specifically between articles 512 to 601. Said title was replaced in its entirety in 2013, by Law 20,667, and came into force on December 1, 2013. It should be noted that the second Section mentioned above deals with Insurance. Damage, therefore, the location of reinsurance within the Code is justified given that, according to much of the doctrine, the legal nature of reinsurance is that of damage insurance, and particularly, property damage.

Among the main modifications of this Law, is that the reinsurance contract is currently regulated, and a paragraph especially dedicated to reinsurance has been included, between articles 584 and 587 of the Commercial Code.

Until before Law 20,667, the regulation of reinsurance in Chilean Law was practically null. The old article 523 of the Commercial Code simply established that the insurer could have the same things that he had insured reinsured under more or less favorable conditions than those stipulated. In its second paragraph, the aforementioned article prescribed that reinsurance did not extinguish the obligations of the direct insurer nor did it grant the insurer direct action against the reinsurer, issues that have not been modified by the new regulations.

For its part, DFL 251 of 1931, which organically regulates the bases of the insurance market in Chile, contained certain regulatory and substantive standards in relation to reinsurance. This decree was practically not modified by the new law 20,667.

The new article 584 of the Commercial Code defines reinsurance in the following terms: "By the reinsurance contract the reinsurer is obliged to compensate the reinsured, within the limits and modalities established in the contract, for the responsibilities that affect his assets as a consequence of the obligations that he has contracted in one or more insurance or reinsurance contracts. The reinsurance that protects the reinsurer takes the name of retrocession. In these contracts, the will of the parties will be used to interpret international uses and customs on reinsurance”.

These aspects are dealt with in articles 585 and 587 of the Commercial Code.

According to the first of these provisions, "reinsurance does not alter the insurance contract in any way. The insurer cannot defer the payment of compensation for an incident to the insured, due to reinsurance." This rule agrees with article 28 of DFL 251, according to which “reinsurance does not alter in any way the contract concluded between the direct insurer and the insured, and its payment, in the event of an accident, may not be deferred under the pretext of reinsurance.”

For its part, article 586 refers to the actions of the insured against the reinsurer.

Then, according to article 587 of the Commercial Code, “the provisions of articles 585 and 586 are mandatory.”

Therefore, in light of 587 it can be noted that the rules of the reinsurance contract are not mandatory, except for articles 585 and 586, which always will be. As Professor Osvaldo Contreras points out, the legislator has excluded the reinsurance contract from the imperativeness that as a general rule characterizes the rules that govern the insurance contract, since in this figure the imperativeness is unnecessary and inconvenient, since it would be very difficult for reinsurers to agree to sign reinsurance contracts in which they could not apply traditional principles that govern them.

It is important to highlight that the final paragraph of article 584 of the Commercial Code provides "In these contracts, international uses and customs on reinsurance will serve to interpret the will of the parties."

In Chile, the discussion about the reinsurance contract lacks logic, since according to the new text of the Commercial Code, this contract is qualified and regulated as a property damage insurance contract, and as previously noted, it is treated in the second section of Title VIII of the Second Book, which is called “damage insurance.”

Article 16 of DFL No. 251 of 1931, establishes with whom, and in what way, reinsurance can be contracted in this country, in the following terms: “Reinsurance of contracts concluded in Chile may be carried out by insurance and reinsurance entities, with the entities indicated below”:.

a) National corporations whose exclusive purpose is reinsurance: these entities will be subject to the supervision of the Superintendency, today called the Financial Market Commission, with the powers granted to it by law. They can operate in both insurance groups, as long as they constitute independent capital for each of them and keep absolutely separate accounts for their operations. These entities must maintain a minimum equity indicated in this same article.

b) National insurance companies: these may only reinsure risks of the group in which they are authorized to operate.

c) Foreign reinsurance entities: that are classified by risk rating agencies of recognized international prestige. They must designate a representative in Chile, who will represent them with broad powers. Notwithstanding this, the rule states that the designation of a representative will not be necessary if the reinsurance is carried out through a reinsurance broker registered with the Superintendency, today called the Commission for the Financial Market, in accordance with what is established in the following letter.

d) Contracting of reinsurance with foreign reinsurance brokers who are registered in the Registry of Foreign Reinsurance Brokers maintained by the Superintendency, today called the Commission for the Financial Market. These brokers must meet certain requirements indicated by the same standard analyzed.

As it is a contract, reinsurance binds the parties to it, that is, the direct insurer (reinsured) and the reinsurer. Therefore, it does not imply any connection between the insured or contracting party and the reinsurer.

Article 586 of the Commercial Code provides: “Reinsurance does not confer direct action to the insured against the reinsurer, unless the reinsurance contract provides that payments due to the insured for claims are made directly by the reinsurer to the insured or, in the event that the claim occurs, the direct insurer transfers to the insured the rights that emanate from the reinsurance contract to collect from the reinsurer.

None of these conventions will exonerate the direct insurer from its obligation to pay the claim to the insured.

This rule has been established for the benefit of the insured, since it allows the establishment of a clause that allows the primary insured to take action to claim payment of compensation from the reinsurer. However, this power is subject to the limitation indicated in the second paragraph of the same article 586 of the Chilean Commercial Code.

At this point, the Judgment of the Supreme Court of Santiago de Chile, case No. 17,392-2015, dated March 29, 2016, can be cited, which establishes the following jurisprudence: "The cost of reinstating the reinsurance of damaged goods must be understood to be included in the direct insurance rehabilitation premium paid by the defendant bank."

Therefore, we can see the importance of what is stipulated in the reinsurance policy, in order to know exactly what is included in the reinsurance premium.

CARTER R.L. El Reaseguro, Editorial Mapfre S.A. Spain, 1979.

CONTRERAS STRAUCH, OSVALDO, Institutions of Commercial Law, volume II, Fourth Edition, Thomson Reuters Publishing House, Chile, 2016.

a) Direct Insurer or Ceding Insurer: It is the insurance company that accepts the risk directly with the insured, and that places reinsurance.

b) Reinsurer: It is the company that accepts reinsurance that has been proposed by the direct insurer, whether it is a company specialized in reinsurance or that, its main purpose being to place direct insurance, occasionally accepts reinsurance.

c) Assignment: Term that determines the proportion of liability transferred by the direct insurer to the reinsurer and accepted by the reinsurer, expressed in money or as a percentage of the direct insurance.

d) Retention: It is the part of the risk that the direct insurer retains under its responsibility and for its own account, that is, the part of risks that it does not transfer to the reinsurer.

e) Retrocession: Refers to the possibility that the reinsurer in turn contracts reinsurance with another company.

Various theories have been proposed in doctrine:

a) It would be a type of surety: It is said that the reinsurer would be a guarantor for the insurer. This idea is rejected, since the surety gives the creditor an action against the guarantor, which does not exist in the field of reinsurance.

b) It would be an assignment of debt: It is also rejected, since the assignment of debt creates a link between the assigned debtor and the creditor, and we know that the insured has no direct action against the reinsurer.

c) It would be a form of society: It is also rejected because its essential elements are missing.

d) The majority of the doctrine maintains that it is a type of insurance contract: Within them it would be one of the third group, since the insured insures all of his assets, it is a case of liability insurance, but not a typical civil liability insurance, which normally covers the non-contractual liability of the insured, but rather one of contractual liability, since it covers the liability that the insurer will have derived from its insurance contracts. Professor Osvaldo Contreras maintains that it would be a type of damage insurance contract, and that this opinion is shared by most of the current international doctrine and jurisprudence.

It can be noted that the object of this figure is the same as the insurance contract, but the insured interest varies, given that in this case what the contract covers is the potential liability of the direct insurer to pay compensation under the primary insurance contract, if the event that generates such compensation occurs. Thus, in this figure what the direct insurer seeks is to protect its assets.

The insurance and reinsurance contracts are different and independent contracts from the point of view of the legal relationships that exist between the contracting parties.

The incorporation into the Insurance Contract Law of a section dedicated to the general regulation of the reinsurance contract implies, above all, the recognition of the insurance nature of this figure and its classification among damage insurance.[1]​ In this way, reinsurance in Spain is regulated in Law 50/1980, of October 8, on the Insurance Contract (hereinafter, LCS) in its article 77 defines reinsurance as that contract by which one of the parties (reinsurer) is obliged to repair, within the limits established in the Law and in the contract, the property damage suffered by the other party (reinsured or direct insurer) as a result of the payment of compensation derived from an insurance contract.

Regarding the entities that can carry out reinsurance operations, access to the activity and the conditions for the exercise of reinsurance activity, the provisions of Law 20/2015, of July 14, on the organization, supervision and solvency of insurance and reinsurance entities must be complied with.

It is also worth highlighting the draft of the commercial code law, which presents a significant novelty, including the regulation of insurance and reinsurance contracts.

Through the reinsurance contract, the insurer (cedant) and the reinsurers (acceptor/s) agree to assign and accept, respectively, part or all of one or more risks, agreeing on how the premiums accrued from the assumption of the risk will be distributed (insurance policy premiums) and also the distribution of payments for the responsibilities derived from the risk (payments of the claims covered by the policy).

Two large groups of criteria can be differentiated to distribute premiums and responsibilities:.

Proportional reinsurance: The amount of liability that corresponds to the reinsurer in the event of an accident is calculated with the proportion that results between the premium received by it (assigned premium) and the total premium of the policy.

Therefore, the reinsurer participates in the claims and premiums in identical proportions.

Non-proportional reinsurance: The amount of liability that corresponds to the reinsurer in the event of an accident is the excess over a certain limit (called priority or XL), amounts less than this priority are always borne by the insurer.

Therefore, the reinsurer only responds to claims that exceed a certain value (priority).

The usual law dictionary defines reinsurance as contracted insurance insurance, by virtue of which a new insurer takes upon itself, in whole or in part, the risks insured by a first insurer, without altering the conditions of the first contract and transferring it to it or paying it part of the original premium.

Reinsurance, plain and simple, is the means used by the insurance company (the ceding company) that accepts transactions directly from the public, to reduce its liability, distributing it among other insurance companies, who accept responsibility for a corresponding participation in the original premium.

The insured only maintains a contractual relationship with the insurer (cedant), and in no case can this contractual relationship be affected by the relationships between the insurer and the reinsurers that may have agreements with the insurer. In the event of bankruptcy of the insurance company, the insured will not be able to claim their rights from the reinsurer, but rather the competent bodies in this matter will do so, for example in Spain the Insurance Compensation Consortium.

The reinsurance contract can take various modalities. A reinsurance modality is a way of linking the interests of the insurer and the reinsured, seeking to achieve the objectives generally indicated for reinsurance.[2]​.

In this way, we can talk about simple or facultative reinsurance, general, creditable or mandatory reinsurance, facultative-mandatory reinsurance (and open covers) and pool reinsurance.

- Simple or facultative reinsurance: In this type of reinsurance, the reinsured concludes the contract regarding a specific risk or a specific insurance contract. The reinsurer, for its part, is free to accept or reject the business offered. Hence the name optional or optional by which it is normally known.

- General reinsurance, Treaty or mandatory: The Treaty is an agreement signed between a direct insurer and one or more reinsurers, by virtue of which the ceding company - direct insurer - undertakes to assign a part of its business to the reinsurer, and the reinsurer, in turn, undertakes to accept all the risks subscribed by the insurer, within the limits and conditions previously established in the contract.

- Facultative-mandatory and open covers agreements: This type of reinsurance is between Treaty reinsurance and facultative reinsurance. In the same way as in the Treaty, there is an agreement between the direct insured and the reinsurer, through which the latter will accept all the reinsurance offered by the insurer that is in accordance with the conditions pre-established in the contract, without the obligation on the part of the ceding company to offer all its risks to the reinsurer.

In open covers agreements, the Assignor has the power to assign and the Reinsurer has the obligation to accept all the business assigned to the contract up to a certain value - the limit - without this limit being a value that depends on a number of plenary sessions.[3]​.

• Pool reinsurance: This modality is used especially in the transportation industry. It consists of the pooling of the businesses of several insurers or reinsurers, each participating in a specific proposition of the common company.

In the Ecuadorian case, the reinsurance contract as such is regulated by the Ecuadorian Commercial Code, the General Insurance Law, and the Legislation on the Insurance Contract.

Well, we can define that the reinsurance contract is an instrument in which the insurer, that is, the insurance company, transfers to the reinsurer all or part of the risks assumed directly from the insurance contract that the reinsurer has assumed for the beneficiary. The reinsurer is also called the assignee or acceptor.

The author María Concepción Hill Prados, regarding the concept of the reinsurance contract, maintains: “The concept of reinsurance is given by the purpose that the reinsured seeks with this contract, to obtain insurance protection against the possible risk of having to perform the promised benefit to the insured or the beneficiary, in the event of a loss to the insured thing or person” (Hill Prados, María Concepción “El reaseguro” [on line], 2006, ISBN: 8476983441, available at: https://app-vlex-com.sabidi.urv.cat/#ES/vid/289795).

Reinsurance companies are corporations incorporated within Ecuadorian territory, as well as branches of foreign companies that are established in Ecuador in accordance with the law, whose purpose is to grant coverage to one or more insurance companies for the risks that they have assumed, as well as to carry out retrocession operations. Reinsurance companies will be subject to the provisions of this Law, relative to insurance companies, where applicable.

The minimum capital to establish and operate the reinsurance company is thirteen million dollars, which must be contributed in monetary capital.

From the definition, it can be determined that the insurer is involved, which is the company that initially contracted with the beneficiary of the insurance; and the reinsurer, which is the company that contracts with the insurer to assume responsibility for the obligation that the latter has with the beneficiary of the initial insurance.

Jurisprudence of the National Court of Justice (which is a simile to the Supreme Court in Spain), Resolution No. 0222-2016, Judgment No. 0653-2015, of the Civil and Commercial Chamber, regarding the action to claim insurance compensation establishes: "(...) 4.4. The norm under discussion, in its literal text, establishes that it is the event that generates actions; to mean that the occurrence of the risk, generates the right to claim compensation at the expense of of the insurer; since the object of the insurance contract, embodied in the policy, is none other than that the insurer assumes all or some of the risks to which the person's property or the insured thing is exposed. If the rule speaks of an event, it cannot be understood without forcing the meaning of the same that, an event is the refusal to cover compensation for the loss, since the refusal is not an event but a decision based on certain facts; subsection in the text of article 42, which provides that the presentation of the administrative claim that regulates the cited rule, suspends the prescription of the action that the insured or the beneficiary has against the insurer, until the notification of the insurer's resolution; rule not applicable to the case being heard and that does not change the meaning of the rule contained in article 26, but reinforcing its meaning, it provides that the prescription of the action to which it refers is suspended, by the presentation of the claim until the notification with its decision. (…)”

Ecuadorian Regulations

 Ecuadorian Legislation, Commercial Code, Art. 85 (722.85), available at: https://web.archive.org/web/20190125020526/https://www.cepweb.com.ec/AppWeb/RO/1720.pdf.

 Ecuadorian Legislation, Codification of the General Insurance Law, article 4, available at: https://www.cepweb.com.ec/AppWeb/RO/2031.pdf Archived October 10, 2020 at the Wayback Machine.

In Chile, the insurance contract is regulated, fundamentally but not exclusively, in the Ninth Paragraph, of the Second Section, of Title VIII of Book II of the Commercial Code, specifically between articles 512 to 601. Said title was replaced in its entirety in 2013, by Law 20,667, and came into force on December 1, 2013. It should be noted that the second Section mentioned above deals with Insurance. Damage, therefore, the location of reinsurance within the Code is justified given that, according to much of the doctrine, the legal nature of reinsurance is that of damage insurance, and particularly, property damage.

Among the main modifications of this Law, is that the reinsurance contract is currently regulated, and a paragraph especially dedicated to reinsurance has been included, between articles 584 and 587 of the Commercial Code.

Until before Law 20,667, the regulation of reinsurance in Chilean Law was practically null. The old article 523 of the Commercial Code simply established that the insurer could have the same things that he had insured reinsured under more or less favorable conditions than those stipulated. In its second paragraph, the aforementioned article prescribed that reinsurance did not extinguish the obligations of the direct insurer nor did it grant the insurer direct action against the reinsurer, issues that have not been modified by the new regulations.

For its part, DFL 251 of 1931, which organically regulates the bases of the insurance market in Chile, contained certain regulatory and substantive standards in relation to reinsurance. This decree was practically not modified by the new law 20,667.

The new article 584 of the Commercial Code defines reinsurance in the following terms: "By the reinsurance contract the reinsurer is obliged to compensate the reinsured, within the limits and modalities established in the contract, for the responsibilities that affect his assets as a consequence of the obligations that he has contracted in one or more insurance or reinsurance contracts. The reinsurance that protects the reinsurer takes the name of retrocession. In these contracts, the will of the parties will be used to interpret international uses and customs on reinsurance”.

These aspects are dealt with in articles 585 and 587 of the Commercial Code.

According to the first of these provisions, "reinsurance does not alter the insurance contract in any way. The insurer cannot defer the payment of compensation for an incident to the insured, due to reinsurance." This rule agrees with article 28 of DFL 251, according to which “reinsurance does not alter in any way the contract concluded between the direct insurer and the insured, and its payment, in the event of an accident, may not be deferred under the pretext of reinsurance.”

For its part, article 586 refers to the actions of the insured against the reinsurer.

Then, according to article 587 of the Commercial Code, “the provisions of articles 585 and 586 are mandatory.”

Therefore, in light of 587 it can be noted that the rules of the reinsurance contract are not mandatory, except for articles 585 and 586, which always will be. As Professor Osvaldo Contreras points out, the legislator has excluded the reinsurance contract from the imperativeness that as a general rule characterizes the rules that govern the insurance contract, since in this figure the imperativeness is unnecessary and inconvenient, since it would be very difficult for reinsurers to agree to sign reinsurance contracts in which they could not apply traditional principles that govern them.

It is important to highlight that the final paragraph of article 584 of the Commercial Code provides "In these contracts, international uses and customs on reinsurance will serve to interpret the will of the parties."

In Chile, the discussion about the reinsurance contract lacks logic, since according to the new text of the Commercial Code, this contract is qualified and regulated as a property damage insurance contract, and as previously noted, it is treated in the second section of Title VIII of the Second Book, which is called “damage insurance.”

Article 16 of DFL No. 251 of 1931, establishes with whom, and in what way, reinsurance can be contracted in this country, in the following terms: “Reinsurance of contracts concluded in Chile may be carried out by insurance and reinsurance entities, with the entities indicated below”:.

a) National corporations whose exclusive purpose is reinsurance: these entities will be subject to the supervision of the Superintendency, today called the Financial Market Commission, with the powers granted to it by law. They can operate in both insurance groups, as long as they constitute independent capital for each of them and keep absolutely separate accounts for their operations. These entities must maintain a minimum equity indicated in this same article.

b) National insurance companies: these may only reinsure risks of the group in which they are authorized to operate.

c) Foreign reinsurance entities: that are classified by risk rating agencies of recognized international prestige. They must designate a representative in Chile, who will represent them with broad powers. Notwithstanding this, the rule states that the designation of a representative will not be necessary if the reinsurance is carried out through a reinsurance broker registered with the Superintendency, today called the Commission for the Financial Market, in accordance with what is established in the following letter.

d) Contracting of reinsurance with foreign reinsurance brokers who are registered in the Registry of Foreign Reinsurance Brokers maintained by the Superintendency, today called the Commission for the Financial Market. These brokers must meet certain requirements indicated by the same standard analyzed.

As it is a contract, reinsurance binds the parties to it, that is, the direct insurer (reinsured) and the reinsurer. Therefore, it does not imply any connection between the insured or contracting party and the reinsurer.

Article 586 of the Commercial Code provides: “Reinsurance does not confer direct action to the insured against the reinsurer, unless the reinsurance contract provides that payments due to the insured for claims are made directly by the reinsurer to the insured or, in the event that the claim occurs, the direct insurer transfers to the insured the rights that emanate from the reinsurance contract to collect from the reinsurer.

None of these conventions will exonerate the direct insurer from its obligation to pay the claim to the insured.

This rule has been established for the benefit of the insured, since it allows the establishment of a clause that allows the primary insured to take action to claim payment of compensation from the reinsurer. However, this power is subject to the limitation indicated in the second paragraph of the same article 586 of the Chilean Commercial Code.

At this point, the Judgment of the Supreme Court of Santiago de Chile, case No. 17,392-2015, dated March 29, 2016, can be cited, which establishes the following jurisprudence: "The cost of reinstating the reinsurance of damaged goods must be understood to be included in the direct insurance rehabilitation premium paid by the defendant bank."

Therefore, we can see the importance of what is stipulated in the reinsurance policy, in order to know exactly what is included in the reinsurance premium.

CARTER R.L. El Reaseguro, Editorial Mapfre S.A. Spain, 1979.

CONTRERAS STRAUCH, OSVALDO, Institutions of Commercial Law, volume II, Fourth Edition, Thomson Reuters Publishing House, Chile, 2016.