COLOMBIA Trends and Developments Contributed by: Rebeca Herrera, Rebeca Herrera Abogados
Meanwhile, the ML/TF and FPADM risk management system is being updated to conform with FATF rec- ommendations, UIAF guidelines, and international cybersecurity standards (ISO/IEC 27001, NIST, among others), as well as the requirement to report cyber inci- dents within a maximum of 72 hours. This reinforcement is crucial for insurers managing large amounts of personal and financial data who are also starting to provide products related to cyber risks. Regarding cross-border service provision, the CBJ adjusts its terminology to align with international trade language and confirms that the unauthorised collec- tion of funds from the public abroad remains prohib- ited, including through digital platforms. It requires foreign providers to have mechanisms to manage technological and consumer protection risks, along with clear warnings about the relevant jurisdiction, coverage limits, and complaint channels. The reorganisation also impacts reinsurance brokers and underwriting agencies overseas: it confirms that brokers – both domestic and international – have the sole purpose of brokering reinsurance contracts and cannot accept risk or sign policies on behalf of rein- surers; abroad-domiciled underwriting agencies can- not operate independently or broker contracts directly in Colombia either. This clarification is essential for structuring interna- tional insurance and reinsurance programmes, espe- cially in specialised markets (energy, infrastructure, maritime, aviation, D&O). Authorisation of lines of business and product design The core insurance provisions are outlined in Title IV of Part II of the CBJ, which is dedicated to the “insur- ance industry”. The SFC maintains a dual scheme for business line authorisations – general and individual regimes – but clarifies the scope of the general regime and, most importantly, introduces a “significance” criterion to determine when coverage related to an unauthorised line of business requires approval from that branch.
In effect, the new CBJ enables insurers to create products with a variety of coverages by using cov- erages already approved in existing lines. According to the technical note, a coverage associated with an unauthorised line is considered significant only when the premium for that coverage exceeds 15% of the policy’s total commercial premium. The entity must obtain authorisation for the respective line to continue issuing it. From a product design perspective, this rule aims to balance commercial flexibility with regulatory compli- ance: it permits multi-risk policies and bundled prod- ucts without requiring constant approvals, but the line of business must be formalised when, in prac- tice, a minor coverage becomes the primary focus of the product. For multinational insurance groups, this entails carefully reviewing the coverage matrices of packaged policies (such as home, SME, cyber add- ons, and extended warranties) and updating technical notes and regulatory reports. Premium financing, credit limits, and compensation payments Another relevant change in the Colombian insurance market concerns the premium financing regime. The CBJ removes the historical reference to the 70% DTF cap and aligns the treatment of premium financing schemes with the individual credit limit regime out- lined in Decree 2555 of 2010. This change has a dual effect. On the one hand, it makes the financial structure of financing agreements more flexible, allowing for rates and schemes that better reflect the reality of the credit market. On the other, it subjects these products to stricter analysis of counterparty risk, concentration, and exposure, which will require insurers (and specialised financiers) to enhance their origination and monitoring models. Equally important is the change to the rule about when the obligation to pay compensation begins. The new CBJ emphasises that the obligation to compensate starts “from the moment the right of the insured or beneficiary is proven”, and not simply from the sub- mission of the claim.
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