FOCUSED IN LATIN AMERICAN SOLUTIONS

DMGA Consulting is a Brazilian registered company owned by lawyers and an engineer.

Our services are based on serious and ethical assessment, management and investigation of the claims as well as arbitration and litigation in case it is not possible to achieve our first goal which is settle the claim amicably but observing all legal local requirements and exposures.

We act as prudent risk managers of the claim and our main purpose is foreseeing the events and acting closely to mitigate them.

With the Latin American local legal expertise we have our correspondents in Peru, Chile, Uruguay and Argentina, all duly registered to assist on the spot under our guidance, management, and control.

Our main goal is certifying that our clients receive the proper factual information covered with the proper legal advise and assessment of their exposures.

We look forward for your visit. It will be a good opportunity to discuss future projects. Please consider us always available for any questions.

We remain at your disposal for matters arising in Latin America.

DMGA’s Co-Founding Members.

• The Insurance Contract - Law 29946 entered into force on 27 May 2013, and it governs all sorts of insurance contracts, except those that have explicit regulations issued by SBS.

• SBS (Superintendence of Banking, Insurance and Private Pension Funds – Superintendencia de Banca, Seguros y AFPs) is the entity responsible for regulating the insurance sector in Peru. SBS is also responsible for controlling all activities in connection with the insurance and reinsurance practice.

Peruvian insurers are able to write reinsurance in Peru and abroad.

In order to be a reinsurer and act in the Peruvian market it is not necessary for the reinsurers to be registered before the SBS. The only necessary request is having a BBB- S&P or similar rating.

Superintendence Resolution No. 3202/2013 provides that notification must be made ‘as soon as reasonably possible’. Nevertheless, for property losses, such notification has to be made in a maximum deadline of three days and seven days for personal insurances, unless the policy provides a longer period.

• Failure to comply with such terms only allows the insurer to reject coverage if said failure is due to willful default of the insured. In case of gross negligence of the insured, the insurer may reject the claim only if the failure to comply with the term affects the assessment of the loss and the insurer did not know about the circumstances of the loss in any other way.

• Exception to force majeure

Article 74 of the Insurance Contract Law provides that a claim should be paid to the insured or its beneficiaries within 30 days following the acceptance of the claim by the insurer. The criteria in order to accept a claim will depend on whether the claim is subject to a loss adjustment process or not.

• Claims

The appointment of the adjuster must be done by the insured from a shortlist , given by the insurer of three adjusters registered before the SBS.

Once the adjuster receives the complete documentation required by the policy, he has 20 days to draft a report recommending approval or rejecting coverage and determining the amount to be paid for the loss.

• If the adjuster requires further and reasonable documentation, he must ask for it within this period. This action suspends the aforementioned period, which will start running again once the required documentation is provided.

In other words, with or without the adjustment report, the period to reject the claim for the insurer is 30 days upon completion of all the information required by the adjuster to the insured party.

Once the adjuster drafts a final adjustment report and it is duly signed by the insured and delivered to the insurer, such insurer has 10 days from receiving it to approve or reject it.

If the insurer does not approve, reject or challenge it within this period, the loss has to be covered.

• However, if the insurer disagrees with the adjustment, he must raise an objection within 10 days from when he received and may require a new adjustment to be completed within a period not exceeding 30 days.

• Following this process the insured or insurer can accept or reject the claim, determine a new amount, propose an arbitration procedure or go before courts.

• It is important to notice that Reinsurance contracts are not subject to Peruvian Law, if such Law is not accepted and can be subject to English or any other Law as long as written out of Peru.

• Reinsurance contracts are also independent and subject to negotiation. However, most Insurance Companies in Peru require that Peruvian Law is observed in order to have back-to-back conditions so it is extremely important that Peruvian Legal requirements are strictly observed when adjusting a claim to avoid surprises.

• Insurance and reinsurance law:

- Commerce Code;- DFL 251/1931 and its amendments;- Law 20667/2013 amends the Commerce Code

• Superintendencia de Valores y Seguros (www.svs.cl) is an autonomy society which supervises insurance and reinsurance business and has a legal relationship with the Ministry of Finance.

• SVS SUPERVISION

a) The Superintendent may require, at any time, the insurer or reinsurer to report on their business, have their offices inspected, examine documents, books, provide rules concerning the preparation and presentation of balance sheets, financial statements and how to keep their accounts; order the appointment of external auditors to report their balance sheets and, appoint external auditors to perform specific activities.

b) If an insurance or reinsurance company violates the law, regulations or statutes, the Superintendent may impose the following sanctions: censure or counterclaim, fine, suspension of administration for up to six months suspension of all or some of the operations up to six months and revocation of authorization of existence.

• Insurance contract

The new law establishes that insurer is not bound to indemnify the loss originated by gross negligence unless parties have agreed on it.

Insurance contracts may now be proven by means such as e-mails and any other documented form of digital or electronic transmission, verbal or written.

Insurance contracts are mandatory and cannot be derogated by the parties; This will not apply to large risk insurance (UF 200), in which case it should be negotiated by the parties and to marine, aviation hull and cargo insurance.

Insured will not have a duty to disclose relevant circumstances to determine risks unless asked by the insurance company. All relevant information shall be asked to insured in the application form.

• Arbitration

(Art. 543) Conflict resolution through Arbitration. Any conflict between insured, contractor and insured in relation to validity, interpretation or aplication of the insurance contract or its general or particular conditions, payment of claim can be solved through arbitration. If the claim is less than 10.000 UF insurer can go to court.

Insurance companies must send copies of final judgments to Superintendencia de Valores y Seguros – SVS which will be available to the public to access precedents.

• Reinsurance:

Reinsurance contract issued in Chile must be placed with both insurance and reinsurance companies duly incorporated and authorized to operate in the country.

• Reinsurance Contract

Concept: On the reinsurance contract the reinsurer is demanded to indemnify reinsured, within limits and terms established in the contract, for the responsibilities that affect their assets as a consequence of the obligation assumed in the insurance or reinsurance contract (Art. 584).

The reinsurance contract does not affect the insurance contract. The insurer cannot condition the payment of the insurance claim to receivables from reinsurer (Art. 585).

Reinsurance does not allow insured to claim reinsurer (Art. 586).

In reinsurance rules from article 585 and 586 are mandatory.

• General regulation for insurance and reinsurance is established by Commercial Code and Law 16.426.

• Law 16.426/93 sets forth the general regime for insurance and reinsurance and has eliminated the state monopoly for insurance except for those provided to public entities, the bond insurance agreement and for labor accident insurance, which should be placed by State Insurance Bank (Law 17.926/2001 art. 614).

Insurance Market is divided into two groups:

1 – General insurance (fire, automobiles, theft, liabilities, bonds, cargo)2 – Life insurance

• Under Uruguayan law it is mandatory for insurance and reinsurance companies to be established in the country and be authorized by Central Bank and SUPERINTENDENCIA DE SEGUROS Y REASEGUROS.

• Insurance agreement that includes any risk that may occur within Uruguayan territory will be subject to local law and regulation and shall be placed by insurance companies established in Uruguay; this rule is not applicable to international cargo and international commerce.

• In Uruguay there is no time limit for providing notice of an insurance claim established in the law; most policies establish a period of five days to notify the insurer.

• Arbitration clauses are enforceable in insurance and reinsurance contracts but it is not common to have arbitration in the insurance contracts due to its high costs but most reinsurance agreements includes arbitration clause.

• In court, there is a conciliation stage before the case is presented to the civil court of first instance. In Uruguay there are no specialized courts for insurance and reinsurance.

• ONE YEAR LIMITATION - Commercial code establishes that actions arising from an insurance policy have a one-year limitation since the day when the obligation is enforceable. There is still a discussion on this time limit because the Consumers Act (Law 17.250/2000) establishes a four-year limitation for actions against producer of fabricant addressed to obtain damage indemnification caused by vices and defects.

• There is no time bar established for a claim under reinsurance contract; two possibilities: one year limitation established for insurance or 20-year-limit established in article 1.018 of the Commercial Code established for commercial obligation. This means it is recommended that on the Reinsurance Contract, Reinsurers state the time limit of one year according to the Commercial Code for their liability in order to avoid future discussions.

• There are no mandatory clauses to be included in insurance or reinsurance contracts, but agreement should comply with the Central Bank regulations and consumers code.

• Insurance Law 17.418 and other resolutions issued by Superintendencia de Seguros de la Nacion – SSN including Resolution 35.615.

• Resolution 35.615 establishes the condition to be fulfilled to operate reinsurance in Argentina.

• Foreign Reinsurers must accomplish with some conditions established by SSN to place reinsurance (art. 20 Resolucion 35.615).

• Aggravation of the risk:

Omission of information can generate cancellation of the contract.

When Aggravation is due to an act of the policyholder, the coverage shall be suspended and insurer must notify suspension (art 39).

If policyholder failed to report aggravation, policy becomes void exclusively in relation to the aggravation.

• Report of the loss :

Insurer is obligated to compensate the property damage caused by the loss, in accordance with the contract without including the loss of profit, unless expressly agreed upon.

The policyholder or beneficiary, if any shall communicate the occurrence of a loss to the insurer within 3 days of knowledge. (art 46).

In property insurance, claims reimbursement must be made within 15 days after the period established in article 56.

In personal insurance, the payment shall be made within fifteen days following the notification of the loss, or receipt of the complimentary information mentioned in article 46 paragraphs 2 and 3, if applicable (art 49).

• Civil Liability InsuranceInsurer is liable for reimbursement for civil liability cases when there is a contract between the assured and a third party (Art. 109).

• Reinsurance• Resolution 35615 de 2011

• Reinsurance operations can be authorized to:

a) Foreign Reinsurers established in Argentinab) Authorization by SSN required.

• All documents issued in a foreign language shall be translated to spanish and by National Public Translators and certified by the “Colegio Publico de Tradutores” (Art. 9).

• SSN may request documents to prove the solvency of the Reinsurers (Art. 10).

• Reinsurance contracts shall include clause establishing that if the insurance company has solvency problem the reinsurer shall pay the obligations even if the insurance company has not fulfilled the obligations with the insured (Art 11).

• All reinsurance contracts issued in accordance with these regulations shall recognize the jurisdiction of Argentina and is forbidden to establish foreign jurisdiction.

• SSN shall authorize to place reinsurance abroad due to value and characteristics of the risk when the reinsurance operation will not be beard by local reinsurance market and must be authorized by SSN prior to the issuance (Art. 19).

• No prior approval is needed to reinsure with admitted reinsurers risk exceeding US$ 50 million, but only for the amount of the risk exceeding that figure.

• Insurance market was established by Decree-Law 73/1966.

• Complimentary Law 126/2007 and Resolutions issued by CNSP 168, 224, 225, 232, 241 regulates reinsurance market.

• Superintendencia de Seguros Privados – SUSEP is responsible for overseeing the segments of insurance, reinsurance, private pension plans, health plans, capitalization and brokerage.

• CNSP and Law 126/2007

• On January 15, 2007, Complementary Law 126 was published in Brazil. It was the end of the state monopoly. Since 1939, reinsurance in Brazil was solely the domain of the government, via the Brazilian Institute of Reinsurance (IRB Brazil Re).

• In September 2013, the Superintendence of Private Insurance (SUSEP) approved the transfer of control of IRB-Brazil Re from the Brazilian government to a controlling block, coordinated under a shareholder agreement, consisting of:

- The Brazilian government (through the Ministry of Finance).- BB Seguros Participações.- Bradesco Auto RE Companhia de Seguros.- Itaú Seguros.- Itaú Vida e Previdência.- Fundo de Investimento em Participações Caixa – Barcelona.

• Reinsurance and retrocession can be placed through the following reinsurers:

- Local reinsurer- Admitted reinsurer- Eventual reinsurer

• Brazil does not accept eventual reinsurers established in countries known as fiscal and taxation paradise.

• Local reinsurers must follow the same regulation applicable to insurance companies.

• Admitted and occasional reinsurers must meet some minimum requirements to be accepted in Brazil.

• Reinsurance must be placed through an authorized intermediary.

• Law establishes the risks that shall be placed in Brazil and those that can be placed abroad.

• The principle restrictions concerning the transfer of risk by insurance and reinsurance companies are set out below. In December 2010, the CNSP published Resolution 224 and Resolution 225, which came into force on 31 January and 31 March 2011 respectively, and which provided as follows.

• Common clauses

Reinsurance contracts (slips) are freely negotiated between the parties without any need for prior approval of SUSEP. However, certain clauses and stipulations are compulsory under Articles 33 to 41 of CNSP Resolution 168/2007:

- Insolvency clause (Article 33).- Intermediation clause if a broker is involved (Article 35 and Article 16 of

Complementary Law 126/2007).- The contractual formalisation must occur within 270 days of the start of

the coverage, and must state the date of the proposal and acceptance, starting date and place for use as a time zone reference of the starting and ending times (Article 37).

- Reinsurance of risks in Brazilian territory are subject to Brazilian legislation and judicial resolution of disputes, unless the parties expressly stipulate another method such as arbitration (Article 38).

- Starting and ending date of the rights and obligations of each party.- Precise stipulation of the risks covered and excluded.- Criteria and procedures for cancellation.- A clause calling for direct payment of the reinsurer to the insured (cut

through clause) (Article 34, main section and sole paragraph).

• Consumer Defence Code (CDC) While the application of the CDC is clear for insurance policies covering individuals, its application to insurance contracted by companies, although sometimes argued in lawsuits based on the idea they are consumers (particularly in the case of small firms), is questionable.

Therefore, the general and specific conditions of insurance contracts should be as clear and transparent as possible, to avoid ambiguities and situations that overly favor insurers in detriment to consumers.