Banking Board of Ecuador

RESOLUTION No. JB-2015-3419

THE BANKING BOARD

CONSIDERING:

THAT this appeal is resolved in accordance with the First Transitional Provision of the Organic Monetary and Financial Code, published in the Official Register Second Supplement No. 332, on September 12, 2014, whose text states that resolutions contained in the Codification of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, and the norms issued by the control bodies, will maintain their validity in all that does not oppose what is provided in the Organic Monetary and Financial Code, until the Monetary and Financial Policy and Regulation Board resolves what corresponds, according to the case; and with the second paragraph of the Third Transitional Provision, which states that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures that it was hearing as of the date of validity of the same, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT by Resolution No. 054-2015-F, of March 5, 2015, published in the Official Register No. 467, on March 27, 2015, the aforementioned period has been extended by one hundred and eighty additional days;

THAT the Company NAVCONSER CIA. LTDA., duly represented by Mr. Kleber Rodrigo Naveda Freire, was the beneficiary of a loan in the amount of USD $83,000.00 granted by Banco Pichincha C.A., through the "Loan or Loan Contract" dated December 30, 2009, with a payment term of 1080 days, the same that by contracting the loan with the financial entity, it had a collective life insurance policy No. MTRZ-0000001680 granted by Seguros del Pichincha S.A. Insurance and Reinsurance Company;

THAT on May 8, 2010, the insured Kleber Rodrigo Naveda Freire, died due to "MULTIPLE TRAUMAS", due to a traffic accident according to the death certificate issued by the General Directorate of Civil Registry, Identification, and Citizenship, of May 10, 2010. Mrs. Jenny Silvana Vera Rodríguez, spouse of the insured, at the date of her husband's death, initiated the procedures for the collection of the credit insurance from Seguros del Pichincha S.A. Compañía de Seguros y Reaseguros;

THAT by letter No. SDP-2010-2288, of December 13, 2010, addressed to Mr. (+) Kleber Naveda Freire, the engineer Paulina Naranjo López, Client Manager of Seguros del Pichincha S.A. Insurance and Reinsurance Company, notified the denial of the claimed indemnity by mentioning that:

"(...)

By means of this letter, I must inform you that once the internal information of the Company and the documents sent have been reviewed, we can observe that Mr. NAVEDA FREIRE KLEBER, does not appear in the list that"

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includes the insured of the Collective Life-Debt Insurance policies of Banco Pichincha and there is no premium payment.

For this reason, as of today, we leave without effect the claim presented." (sic);

THAT by communication received in the Superintendence of Banks on February 28, 2011, Mrs. Jenny Silvana Vera Rodríguez, spouse of Mr. (+) Kleber Rodrigo Naveda Freire, filed an administrative complaint against Seguros del Pichincha S.A. Compañía de Seguros y Reaseguros, for the non-payment of the claim occurred on May 8, 2010;

THAT by letter No. INSP-SSL-2011-0950, of March 30, 2011, the National Intendancy of the Private Insurance System, forwards to Seguros del Pichincha S.A., the complaint raised by Mrs. Jenny Silvana Vera Rodríguez;

THAT by letter No. SDP-2011-0573, of April 6, 2011, entered in the Superintendence of Banks and Insurance on the same day, month, and year, the economist Diego Jorge Mendizábal, Executive President of Seguros del Pichincha S.A., delivered the justifications for which the company denied the reimbursement request;

THAT by resolution No. SBS-INSP-2014-143, of July 1, 2014, the National Intendancy of the Private Insurance System, accepted the complaint presented by Mrs. Jenny Silvana Vera Rodríguez, and resolved:

"(...)

ARTICLE ONE.- ACCEPT, the complaint presented by Mrs. Jenny Silvana Vera Rodríguez.

ARTICLE TWO.- ORDER that SEGUROS DEL PICHINCHA S.A. COMPAÑÍA DE SEGUROS Y REASEGUROS, pay the sum of US$ 75,088.04 (SEVENTY-FIVE THOUSAND EIGHTY-EIGHT DOLLARS AND FOUR CENTS), which corresponds to the outstanding balance of credit No. 663870-00 granted by Banco Pichincha C.A. to Mr. Kleber Rodrigo Naveda Freire; under the coverage of the collective life insurance policy MTRZ-0000001680; without interest by virtue of the fact that the denial of payment was presented within the 45 days that the General Insurance Law provides to proceed to payment or objection of the claim.

ARTICLE 3.- ORDER according to the third paragraph of article 42 of the General Insurance Law, that the insurance company comply with what is established in the previous article of this resolution within a period of fifteen days, under legal warnings.

(...)" (sic);

THAT by letter No. SDP-2014-996, of July 22, 2014, entered in the Superintendence of Banks and Insurance on the 24th of the same month and year, the economist Alexandra Leiva, General Representative of Seguros del Pichincha S.A. Compañía de Seguros y Reaseguros, with the sponsorship of Dr. Alex Paz y

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Miño, filed an appeal against resolution No. SBS-INSP-2014-143, of July 1, 2013, under the provisions of article 70 of the General Insurance Law;

THAT the appellant based his appeal on the following arguments:

• That the object of the policy is to cover the policyholder, in this case Banco Pichincha C.A. and pay him the outstanding balance of the debt in case of death or total or permanent disability of the debtor, so that after the bank authorizes the granting of credits and signs the relevant documents with the client, it informs the insurer, through the insurance advisor, the list of clients that must be incorporated into the policy that the financial institution contracted with the insurer, after the insurer receives the bank's instruction with the list of clients that must be insured, the corresponding debits begin for the premiums that each insured must pay to keep their insurance coverage active;

• That in this type of debt insurance, it is the bank that reports the lists of insured, as well as sends to the insurer the payment of the premium charged or debited to the insured, so that Banco Pichincha C.A. never reported Mr. Kleber Rodrigo Naveda Freire as insured regarding credit No. 663870-00 for the amount of USD $83,000.00, nor did it ever remit payment of any premium, consequently the insured does not appear in the lists sent by the financial institution, therefore there is no place for a claim, nor claim since there is no insurance contract, nor insured, nor premium payment;

• That the insurance company did not assume any risk in exchange for any premium since the bank did not require it, so it is not a problem of communication of the contracting bank with the insurance company, since it is something much more relevant, since the contractor did not ask to insure a certain risk, and therefore there is no insurance contract, regarding the insured.

THAT by resolution No. SBS-INSP-2014-185, of August 25, 2014, the National Intendancy of the Private Insurance System, granted the appeal filed by Seguros del Pichincha S.A. Compañía de Seguros y Reaseguros; and, ordered the sending of the respective file;

THAT the first four paragraphs of article 42 of the General Insurance Law provide as follows:

"Any insurance company is obligated to pay the contracted insurance or the corresponding part of the duly proven loss, as the case may be, within forty-five days following that in which the insured or beneficiary presents in writing the corresponding claim accompanied by the documents that, according to the policy, are necessary, unless the insurance company formulates justified objections to such claim, which must be immediately brought to the knowledge of the Superintendent of Banks and Insurance."

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If the insured or beneficiary agrees to the objections, the insurance entity will immediately pay the agreed indemnity.

If in this case or in which the forty-five day period fixed in the first paragraph expires, the insurance company does not make the payment, the insured or beneficiary will bring this fact to the knowledge of the Superintendent of Banks, who, upon verifying this situation, will order payment within a period not greater than fifteen days, together with interest calculated from the forty-five days previously indicated, at the maximum conventional rate fixed according to law. If payment is not made within the granted period, it will order the forced liquidation of the insurance company.

If the insurance company formulates objections to the claim and no agreement is reached with the insured or beneficiary, the Superintendence of Banks and Insurance will verify the existence of the grounds for such objections and, if there are none, will order payment, otherwise it will reject it.

(...)

THAT the legal provision cited in the previous consideration, provides that once the forty-five days following that in which the insured or beneficiary presents in writing the corresponding claim accompanied by the documents that according to the policy are necessary have passed, without the insurance company having made the payment of the claimed insurance, or in its defect, formulates objections to such claim, the insured can go to the Superintendence of Banks and Insurance to ask it to order the insurance company to pay the claim, and if there are grounds for the denial of said payment, it will analyze them to determine their foundation;

THAT in accordance with the above, article 22 of Supreme Decree No. 1147, published in the Official Register No. 123, of December 7, 1963 says as follows:

Art. 22.- "It is incumbent on the insured to prove the occurrence of the claim, which is presumed to have occurred by fortuitous event, unless proof to the contrary. Likewise, it is incumbent on the insured to prove the amount of the indemnity owed by the insurer. It is incumbent on him, in both cases, to demonstrate the facts or circumstances excluding his responsibility";

THAT Mrs. Jenny Silvana Vera Rodríguez, proved the occurrence of the claim by presenting to the insurer a copy of the "Death Registration" issued by the Civil Registry of the city of Quito, autopsy protocol, Loan or Loan Contract No. 663870-00, signed between the insured and Banco Pichincha C.A., with its respective documentation;

THAT the insurance company by letter No. SDP-2010-2288, of December 13, 2010, denied the payment of the indemnity claimed by Mrs. Jenny Silvana Vera Rodríguez, based on the fact that Mr. Klever Rodrigo Naveda Freire: "...does not appear in the list that covers the insured of the Collective Life-Debt Insurance policies of Banco Pichincha C.A., and no premium was paid.";

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THAT within the "Single Policy Cover" and the particular conditions of the collective life insurance policy No. MTRZ-0000001680, signed between Seguros del Pichincha S.A. Compañía de Seguros y Reaseguros, and Banco Pichincha C.A., which covers the beneficiary clients of credits granted by the financial institution, it is determined:

"(...)

COVERS

DEATH BY ANY CAUSE

BENEFIT: For the death of the insured, originated by any cause, the company will pay to the beneficiaries the sum contracted in the insurance certificate and/or cover of this policy.

EXCLUSIONS: Voluntary or involuntary suicide of the Insured, which will be covered after the first (1st) year of validity of the contract.

TOTAL AND PERMANENT DISABILITY

(...)

B. EXCLUSIONS FOR TOTAL AND PERMANENT DISABILITY - EVENTS NOT COVERED

• Attempted suicide or injury intentionally caused to oneself, whether in a state of sanity or dementia.
• Civil or international war, riot, strike, subversive movement, terrorism or in general civil disturbances of any kind.
• Catastrophic events originated by nuclear reactions.

INSURED

It is the holder of the mortgage guarantee loan granted by BANCO PICHINCHA C.A. and his spouse provided that the corresponding premium is paid and the separate declaration for collective debt insurance is filled out, signed and dated.

BENEFICIARY.- In this insurance the beneficiary on an onerous basis will be BANCO PICHINCHA, in case of death of the insured up to the outstanding balance of the debt.

(...)

ADDITIONAL CLAUSES

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• Banco Pichincha will send to Seguros del Pichincha in the first ten (10) days of the month the information corresponding to billing which must contain the Name of the Debtor, Identification and outstanding balance of the debt.

(...)

THAT articles 1 and 78 of Supreme Decree No. 1147, previously referred to, which contains the legislation of the insurance contract, provide as follows:

"Art. 1.- Insurance is a contract by which one of the parties, the insurer, obligates itself, in exchange for the payment of a premium, to indemnify the other party, within the agreed limits, of a loss or damage produced by an uncertain event; or to pay a capital or a rent, if the eventuality provided for in the contract occurs."

"Art. 78.- In life insurance against the risk of death, only voluntary or involuntary suicide of the insured occurring during the first two years of validity of the contract may be excluded.";

THAT articles 1561 and 1562 of the Civil Code, provide as follows:

"Art. 1561.- Every contract legally celebrated is a law for the contractors, and cannot be invalidated except by their mutual consent or by legal causes."

"Art. 1562.- Contracts must be executed in good faith, and consequently oblige, not only to what is expressed in them, but to all things that emanate precisely from the nature of the obligation, or that, by law or custom, belong to it.";

THAT Mr. Kleber Rodrigo Naveda Freire died on May 8, 2010, as a result of a traffic accident. Regarding this, the particular conditions of the collective life insurance policy MTRZ-0000001680, granted him coverage for death by any cause, the same that according to article 78 of the law ibidem, cannot be subject to any other exclusion other than voluntary or involuntary suicide, provoked within the first two years of validity;

THAT from the review of the file, the "Loan or Loan Contract No. 663870-00", signed between Mr. Kleber Rodrigo Naveda Freire and Banco Pichincha C.A., in which the financial institution granted him a loan for the amount of USD $83,000.00, which was accompanied by an "INFORMATIVE TABLE CONTRACT No. 663870-00" on the breakdown of values to be paid monthly, which corresponded to: CAPITAL, INTEREST, DIVIDEND, AND INSURANCE;

THAT the form "COLLECTIVE LIFE INSURANCE DECLARATION FOR DEBTORS No. 663870-00", dated December 30, 2009, the insured requested and signed the debt insurance, which in the same document details the following:

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"(...)

TYPE OF INSURANCE Debt Insurance X

(...)

b) I declare that on the date of signing this declaration, I have received a statement that contains the coverages, exclusions and general conditions of the debt insurance policy, which I declare to know and accept.

In the event that the Company grants the debt insurance, according to the information supplied in this type of insurance, the coverage will only cover the person who signs this declaration...

(...);"

THAT from the review of the documentation constant in the resource, and according to what is stipulated in the general and particular conditions of the policy contracted by Banco Pichincha C.A., to insure death by any cause and total and permanent disability of the holders of credits granted by the bank, it was the responsibility of the financial institution to send monthly to the insurance company the information on the debtors, insured sums and premium payments made through the cancellation of the installments of the loans granted by the bank, so that the rights and obligations emanating from the insurance contract had to be fulfilled and demanded by the contracting parties, in which in the present case, Mr. Kleber Rodrigo Naveda Freire, was only obligated to the payment of the monthly installment of the loan granted by Banco Pichincha C.A., installment in which the payment of the insurance premium was already included, so it is not the responsibility of the insured that the bank did not include him in the lists sent, so the argument of the insurer in which it mentions that it did not assume any risk is not appropriate, since the payment of the respective premium by the insured has been evidenced;

THAT the National Legal Intendancy, by memorandum INJ-DNJ-SAL-2015-0275 of April 1, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed;

AND IN exercise of its legal attributes,

RESOLVES:

ARTICLE 1.- REJECT the claim contained in the appeal presented by the economist Alexandra Leiva, General Representative of Seguros del Pichincha S.A. Compañía de Seguros y Reaseguros; CONFIRM resolution No. SBS-INSP-2014-143, of July 1, 2014, by which the National Intendancy of the Private Insurance System, accepted the administrative complaint filed by Mrs. Jenny Silvana Vera Rodríguez, ordering Seguros del Pichincha C.A. Compañía de Seguros y Reaseguros, the payment of the outstanding balance of credit No. 663870-00, without interest, since the denial of payment was issued within the 45 days provided in article 42 of the General Insurance Law; and, CLARIFY that the payment must be made to Banco Pichincha C.A.

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ARTICLE 2.- ORDER that the insurance company comply with what is established in the previous article within a period of fifteen days, counted from the date on which it is notified with this resolution, under legal warnings. If it does not do so, it will incur in what is provided in letter a) of article 55 of the General Insurance Law.

COMMUNICATE.- Given in the Superintendence of Banks, in Quito, Metropolitan District, on the thirteenth of May of two thousand fifteen.

Signature

Econ. Rodrigo Landeta Parra GENERAL INTENDANT, S PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on the thirteenth of May of two thousand fifteen.

Signature

Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD