COLOMBIA Law and Practice Contributed by: Rebeca Herrera Diaz, Rebeca Herrera Abogados
is administered by the Colombian Federation of Insur- ance Companies ( Fasecolda ). 6.2 Failure to Comply With Obligations of an Insurance Contract The consequences of withholding (non-disclosure) or misrepresenting information apply if the insured fails to fulfil their disclosure obligations during insurance contract negotiations. If this withholding or misrepre- sentation concerns facts or circumstances that, had the insurer known them, would have prevented the insurer from entering into the contract or would have led the insurer to stipulate more onerous terms, the insurance contract is considered relatively null. Regardless of whether a specific questionnaire was used, withholding or misrepresenting information has the same effect if the policyholder has, through negli- gence, concealed facts or circumstances that objec- tively worsen the risk. However, if the inaccuracy or withholding is due to an innocent error by the policyholder, the contract is not rendered null and void. In the event of a claim, though, the insurer is only obligated to pay a proportion of the insured benefit. This proportion is calculated as the ratio of the premium stipulated in the contract to the premium that would have been appropriate given the true state of the risk. This does not apply if the insurer, before the contract’s conclusion, knew or should have known the facts or circumstances underlying the inaccurate declaration. Nor does it apply if, after the contract is concluded, the insurer agrees to correct, or expressly or tacitly accepts, these inaccuracies. Recent case law has confirmed that the insurers seeking to allege a mis- representation in the execution of the contract have a limitation period of two years from the moment the insurance contract was agreed upon. The SFC can impose sanctions on insurers who fail to disclose all the terms and conditions of an insurance contract. Even if information is missing, the insur- ance contract itself must be interpreted in favour of the insured. The insured can also pursue legal action via a consumer protection claim ( acción de protec -
ción al consumidor financiero ) to compel the insurer to provide the missing information. 6.3 Intermediary Involvement in an Insurance Contract Whether an intermediary is involved in negotiating an insurance contract and who they represent depends on their specific role. If the intermediary is an insur- ance broker, they act on behalf of the insured. How- ever, if the intermediary is an agent or an agency, they are considered to be acting on behalf of the insurer, as specified in Article 2.30.1.1.4 of Decree 2555. 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract The legal requirements of an insurance contract are provided in Article 1045 of the C.Com, which provides that an insurance contract exists when there is a risk, a premium, a conditional obligation of the insurer, and an insurable interest. Its distinguishing features are established in Article 1036 of the C.Com: Insurance is a consensual, bilateral, onerous, aleatory, and succes- sive performance contract. This means that: • The contract does not need to be in writing because the insurance policy is just evidence of the contract. • The contract is based on mutual consent between two parties: the policyholder and the insurer. • Both parties undertake reciprocal obligations. • The occurrence of the insured risk is independent of the will of either party. • The obligations under the contract are performed over a defined period rather than immediately. Section 1 of Article 1045 of the C.Com requires the insured to have an insurable interest in the risk, which may be economic or moral and can be either actual or future. Article 1047 of the C.Com specifies the essential ele- ments that an insurance policy must contain, includ- ing: • the name of the insurer; • the name of the policyholder; • the name of the insured and the beneficiary if they are different from the policyholder;
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