COLOMBIA Trends and Developments Contributed by: Rebeca Herrera, Rebeca Herrera Abogados
Insurance brokerage and foreign insurers Regarding intermediation, the CBJ clarifies the clas- sification of natural persons acting as intermediar- ies, such as insurance agents or individuals linked to agencies or other agents, and highlights that these persons may face sanctions through the insurers they are affiliated with. This approach reinforces companies’ responsibility to supervise their commercial networks, in line with conduct-of-business standards and the SFC’s expec- tations regarding the prevention of abusive practices and mis-selling. Regarding the participation of foreign insurers, the RAISAX and RAIMAT chapters have been reorganised to emphasise that their goal is to assist policyhold- ers in assessing the quality and experience of foreign insurers offering coverage related to international maritime transport, commercial aviation, space, and agricultural risks. However, this does not guarantee compliance, supervision, or endorsement by the SFC. Additionally, policyholders who contract with these entities do not have the status of financial consumers under Law 1328 of 2009. Specifically, regarding these registers, the new Circu- lar includes requirements for foreign reinsurers and reinsurance brokers seeking registration in REACOEX, as well as for foreign insurers seeking registration in RAIMAT and RAISAX. This requirement involves dem- onstrating that, in the applicant’s country of origin, there are rules to prevent ML/TF risks and authorities to oversee them. Continuity of collective coverage and bidding for credit-related insurance A practical innovation in the credit and residential leasing insurance industry is how it handles the con- tinuity of collective coverage. The CBJ states that if, at the end of a collective contract, it is not possible to start a new insurance policy, the financial institution may agree with the same insurer on a single extension of up to 90 days under the same agreed conditions. This helps avoid a more complicated situation for the insured debtor.
This clarification, although consistent with general principles of insurance contracts, may impact the discussion on insurer default, punitive interest, and disputes related to claims where the focus is on the sufficiency of evidence rather than the timeliness of the claim. In a market where policy enforcement actions, penal- ties for default, and litigation over “insurer silence” are common, this regulatory nuance could be used by insureds and judges to demand greater diligence in investigating claims and communicating objections or payment decisions. Technical reserves, reinsurance, and portfolio transfer The CBJ also offers more detailed technical informa- tion on the interaction between reserves and reinsur- ance. Specifically, it emphasises instructions on how to account for reserves related to claims deviation and counterparty risk adjustments, consistent with mod- ern actuarial techniques. This relates to the CBCF’s prudential developments concerning IFRS 17 and the evaluation of reserve adequacy, and it anticipates more detailed oversight of the quality of reinsurance as a risk mitigation tool. In portfolio transfer operations, the CBJ requires the receiving entity to have the technical note for the prod- uct being transferred, which reinforces the technical responsibility of the transferee and prevents transfers from being used solely as solvency relief tools, without fully understanding the behaviour of the underlying risk. Regarding claims reserves, the instruction states that the amount requested by the beneficiary, up to the insured sum, should be recorded as the value of the claim in the filing book. It also establishes the obliga- tion to maintain filing books by line of business. This increased detail helps track claims, audit reserves, and ensure consistency between internal data, regula- tory reports, and financial statements.
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