COLOMBIA Law and Practice Contributed by: Rebeca Herrera Diaz, Rebeca Herrera Abogados
6.6 Consumer Contracts or Reinsurance Contracts Regarding consumer contracts and reinsurance con- tracts, it is worth mentioning that according to Law 1480 of 2011, the insurance contract is, in general terms, a consumer contract. Recent case law has pro- vided some cases in which the insurance contract can be construed as a commercial contract in exceptional conditions. On the contrary, the reinsurance contract is not con- sidered a consumer contract in Law 1480 of 2011, nor in the C.Com. In this regard, Article 1134 of the C.Com establishes that the insurer and the reinsurer agree to the reinsurance contract. Case law has determined that because these parties are professionals in their businesses, none are financial consumers. Hence, this contract is a commercial contract in which parties act freely and with the utmost good faith. 7. Alternative Risk Transfer (ART) 7.1 ART Transactions Colombian regulation has no provisions regarding alternative risk transfer (ART) transactions such as industry loss warranty contracts and insurance-linked securities. Accordingly, regulators do not recognise such transactions as insurance or reinsurance agree- ments. However, self-insurance schemes have been recog- nised as ART specifically for public entities. Article 107 of Law 42 of 1993 requires public officers to either insure official goods and assets or use a self- insurance fund to cover their property risk. It is also common practice for large corporations to establish captive reinsurers in jurisdictions such as Bermuda, Barbados, and the Cayman Islands, among others. These captives then manage the reinsurance place- ment of their insurance programme or the retroces- sion of their insured portfolio’s reinsurance scheme. Colombian law places no restrictions on the formation of such captives. In October 2024, decrees 1271 and 1272 were enact- ed, modifying D.2555 to incorporate some Solvency II guidelines into the insurance companies’ techni-
• the capacity in which the policyholder is acting; • the precise identification of the insured object or person; • the term of the contract, with an indication of the dates and times of commencement and expiry, or the manner of determining both; • the sum insured or the manner of detailing it; • the premium or the manner of calculating it and the form of its payment; • the covered risks; • the date on which it is drawn up and the signature of the insurer; and • the other particular conditions agreed upon by the contracting parties. If the contract conditions are not expressly agreed upon, they will default to those set out in the policy or annex deposited by the insurer with the SFC for the same business line, coverage, contract type, and risk category. 6.5 Multiple Insured or Potential Beneficiaries In the case of life insurance policies and first-party property and casualty insurance policies, the benefi- ciary must be included in the policy for this beneficiary to have the right to the insurance. Accordingly, ten- ants, subcontractors or mortgagors can be insureds and beneficiaries when they have an insurable interest and are included in the policy as such. Third-party liability insurance policies do not require the benefi- ciary to be revealed because this beneficiary is only determined when the loss arises, being the victim of the event caused by the insured. In the case of life insurance, when the beneficiary is not included or, for some reason, cannot receive the compensation, the beneficiary is determined accord- ing to successor law. According to Law 1328 of 2009, the beneficiary is considered a financial consumer and thus has the same information rights as the policyholder and the insured. Regarding life insurance policies and third- party liability insurance coverage inserted in motor insurance policies, Law 1328 of 2009 established the insurance registry ( Registro Único de Seguros , RUS), which allows potential beneficiaries to check for the existence of a relevant policy.
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