• GL
Choose your location?
  • Global Global
  • Australia
  • France
  • Germany
  • Ireland
  • Italy
  • Poland
  • Qatar
  • Spain
  • UAE
  • UK

Superintendencia in Peru says that Claims Made Clauses are void

12 February 2019
The Superintendencia in Peru is the financial and insurance regulator of Peru.  It has a significant and imposing role in the Peruvian insurance market particularly with regard to regulating the adjustment of Peruvian claims. 

On occasion, the Superintendencia is asked to comment on the interpretation and /or application of Peruvian law, and while its opinions are not law and thus, not binding, they are highly persuasive given that they represent the views of the regulator in Peru.

The Superintendencia was recently asked to respond to a number of questions on claims made clauses. The most pertinent of these questions was whether the inclusion of claims made clauses in an insurance contract subject to Peruvian law would be valid?

In response to this question, the Superintendencia stated the following:

(1) Peruvian Law No. 29946 does not expressly refer to the validity of claims made clauses;

(2) For property damage insurance and civil liability insurance, Article 87 of Law No. 29946 promotes the idea that the insurance company is liable for covered losses and damages caused, provided the loss occurs during the validity of the insurance policy;

(3) The view in (2) above is consistent with Article 105 of Law No. 29946, which obliges the insurer to hold an insured party harmless for its liability to third parties;

(4) The inclusion of claims made clauses are contrary to the rules because the legislator has expressly opted for the traditional liability system based on the occurrence of the loss and so, claims made clauses are null and void and should be replaced; and

(5) In line with Article 78 of Law no. 29946, there is a term of 10 years from the occurrence of the loss to present actions to the insurance company.

 Implications

The Superintendencia has taken a strict view of the law and the possible implications of these views are potentially significant and, at this stage, give rise to a number of questions:

  • In the context of the above, when would the loss occur under an insurance policy under Peruvian law?
  • If claims made clauses are null and void as the Superintendencia states, then is the effect of that to make the entire contract void?
  • Alternatively, if claims made clauses are to be replaced (as stated by the Superintendencia), are they replaced by the "traditional liability system based on the occurrence of the loss"?

In our view, preliminary indications are that claims made clauses now potentially operate on a losses occurring basis.

This potentially opens current and previous years of account to a liability spanning 10 years.  This may well equate to a significant increase in the period of potential exposure and impact the reserving position.  Insurances likely to be impacted are construction third party and public liability and professional indemnity policies.

If you have queries please contact Iftikhar Ali

 

We use cookies to give you the best user experience on our website. Please let us know if you accept our use of cookies.

Manage cookies

Your Privacy

When you visit any web site, it may store or retrieve information on your browser, mostly in the form of cookies. We mainly use this information to ensure the site works as you expect it to, and to learn how we can improve the experience in the future. The information does not usually directly identify you, but it can give you a more personalised web experience.
Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change permissions. However, blocking some types of cookies may prevent certain site functionality from working as expected

Functional cookies

(Required)

These cookies let you use the website and are required for the website to function as expected.

These cookies are required

Tracking cookies

Anonymous cookies that help us understand the performance of our website and how we can improve the website experience for our users. Some of these may be set by third parties we trust, such as Google Analytics.

They may also be used to personalise your experience on our website by remembering your preferences and settings.

Marketing cookies

These cookies are used to improve and personalise your experience with our brands. We may use these cookies to show adverts for our products, or measure the performance of our adverts.