CHILE Law and Practice Contributed by: Ricardo Rozas, Max Morgan and Stefano Perretta, JJR Abogados
to identify the object of the insurance and assess the nature of the risk. For these purposes, it suffices that the insured report exclusively as per the insurer’s request. 6.2 Failure to Comply With Obligations of an Insurance Contract As regards the insurer’s obligation to sincerely state all circumstances required by the insurer to identify the insured object and risks, if the insured incurs errors, reticence or inaccuracies before a loss in connection with information requested by the insurer and that are determinant for the insured risk, the insurer can rescind the contract. In addition, if the insured provides information that is false, the insurer can avoid the policy and return the premium. The insured must also disclose circum- stances that increase the risk during the policy period. That said, if the insurer fails to request information at the placement stage, the insurer may not then allege any errors, reticence or inaccuracies by the insured, as well as those facts or circumstances that are not included in the request for information. 6.3 Intermediary Involvement in an Insurance Contract Intermediaries and the Role of the Broker Among others, Chilean law regulates the activities of insurance and reinsurance brokers, and loss adjust- ers. Their main licensing requirements can be sum- Insurance brokers are defined as natural persons or legal entities who have been registered as such with the CMF and who act as independent intermediar- ies in the contracting of insurance policies with any insurer. Reinsurance brokers Reinsurance brokers are subject to specific rules con- tained in SVS General Rule No 139/2002. In general, they must be registered in the Registry of Reinsurance Brokers kept by the CMF, and must comply with the following requirements. marised as follows. Insurance brokers
• They cannot be registered as insurance brokers. • They must establish a liability insurance policy for no less than 20,000 Chilean UF or one third of the premium intermediated in the immediately preced- ing year, whichever is higher (the policy must not be subject to any deductibles). • Foreign reinsurance brokers must be legal entities, and must certify that they have been legally incor- porated abroad and are entitled to intermediate risks ceded from abroad. In addition, foreign rein- surance brokers must designate an attorney with a broad range of faculties to act on their behalf in Chile, including the power to serve and be served with court proceedings. Loss adjusters Unlike in many jurisdictions, in Chile the loss adjuster is appointed to act as an impartial claims specialist and must be licensed and supervised by the CMF. The loss adjuster’s role is to investigate and review the circumstances of the loss or damage, and to report on the validity of the policy coverage in respect of the claim. The loss adjuster’s report is released both to the insured and to the insurer. Agencies and contracting As regards agency issues, brokers are also subject to the general agency provisions of both the Civil Code and the Commercial Code. 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract Under Chilean insurance law, an insurance contract is defined as an agreement whereby one or more risks are transferred to an insurer, in exchange for a pre- mium, who becomes obliged to indemnify the damage suffered by the insured or to satisfy capital, income or other agreed provisions. The essential ingredients of an insurance contract are thus: • the insured risk; • the insurance premium; and • the insurer’s conditional obligation to indemnify. The absence of any of these ingredients renders the contract void.
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