PORTUGAL Law and Practice Contributed by: Leonor Futscher de Deus, Broseta Abogados, SLP
give rise to the insurer’s liability under general terms); or • delivery of the policy, the policyholder will be enti- tled to terminate the policy and receive premium reimbursement. 6.3 Intermediary Involvement in an Insurance Contract Ancillary insurance intermediaries and agents act on behalf of and for the account of insurers (or other insurance intermediaries), whereas brokers act inde- pendently of the insurers and in representation of their clients. Nevertheless, although the provision of advice (per- sonalised recommendation) is not mandatory under the Portuguese Insurance Distribution Law, all inter- mediaries must act in accordance with the customers’ best interests, providing information about the insur- ance contract that best suits each customer’s needs and also about their rights and obligations arising from the conclusion of insurance policies. Intermediaries must also explain to customers the reasons why they are providing information or advising on a given prod- uct (except when it comes to large-risk insurance). Besides the foregoing, brokers are additionally subject to portfolio diversification rules and impartiality when suggesting a given product to the customer, basing their activity on the analysis of a sufficiently large num- ber of diversified contracts available on the market. 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract The Insurance Contract Law does not provide for a definition of “insurance contract” but establishes its main features. By means of an insurance contract: • the policyholder (natural or legal person, in due capacity) transfers to the insurer a given risk, which must be an existing future (or unknown) risk – the contract will be null and void as regards risks that have ceased before the conclusion of the contract or that do not come to take place; and • in turn, the insurer undertakes to provide the insured with an agreed compensation in case the
aleatory event provided for in the contract occurs (claim). Except in those cases legally provided for, the cover- age of risks depends on prior payment of the insur- ance premium (no premium, no risk). The insured must have an insurable interest worthy of legal protection related to the risk that is being cov- ered throughout the life of the contract, under penalty of the contract being null and void or terminated ex lege. The contents of the insurable interest will depend on the type of insurance. The following general rules apply. • Property and casualty – the insurable interest must concern the preservation and integrity of the object, right or assets. • Life insurance – the insured who is not the ben- eficiary must consent to their life being covered, except where the policy is intended to comply with any legal provision or collective labour regulations. • Personal accident – when the policyholder is the beneficiary but not the insured, the latter must consent to their physical integrity being covered, provided they are individually identified in the con- tract. In terms of format, the Insurance Contract Law states that the validity of a contract is not subject to any special format. However, regarding mass-risk insur- ance, the insurer must write down the policy, date it and sign it. As a rule, the policyholder’s signature is not legally required. 6.5 Multiple Insured or Potential Beneficiaries Depending on the type of insurance and cover, Por- tuguese law allows some flexibility when it comes to beneficiaries. • The beneficiary can be the policyholder or anyone named by the policyholder (or by the insured, in collective insurance). • The beneficiary does not need to be an insured. • It is possible to designate irrevocable beneficiaries (eg, a bank in credit protection insurance). • The designation of the beneficiary can be made within the insurance policy, by means of a writ-
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