Banking Board of Ecuador

RESOLUTION No. JB-2015-3318

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, of September 12, 2014, whose text states that resolutions contained in the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, and the norms issued by the control bodies, will remain in force insofar as they do 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 entry into force 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 through money insurance policy No. 6011363, issued by Seguros Sucre S.A., valid from August 3, 2011, to August 3, 2012; the money in transit and the money in premises, both in permanence and in ATMs, belonging to the Banco Nacional de Fomento, was insured. From the aforementioned policy, the total insured amount is USD $31,595,000.00;

THAT through letter No. DRC-2011-3549 of December 5, 2011, Seguros Sucre S.A. requested documented information from the financial institution to perform the analysis of the claim presented by the bank; in this regard, the Banco Nacional de Fomento, through letters Nos. DS-1492-2011, and DS-1512-2011, of December 8 and 14, 2011, respectively, provided attention to the request made by the insurance company;

THAT after the analysis performed, through letter No. DRC-2012-2281 of July 11, 2012, Seguros Sucre S.A. denied the claim raised by the insured based on Clauses 10 and 12 of the General Conditions of the Policy – Obligations of the Insured, and Loss of Rights of the Insured;

THAT through a written document, entered into the control body on August 22, 2013, the economist José Andrade López, General Manager of the Banco Nacional de Fomento, filed an administrative complaint against Seguros Sucre S.A. for the refusal to pay the indemnification under money policy No. 6011363; and requested that this Superintendence order the corresponding payment;

THAT with letter No. DNAE-SAU-2013-05119 of September 3, 2013, the Subdirector of Attention and User Education, at that time, accepted the claim for processing, and with letter No. DNAE-SAU-2013-05120, of similar date, requested from Seguros Sucre S.A. the explanations and supporting documents of the refusal of the claim presented by the General Manager of the Banco Nacional de Fomento;

THAT through letter No. GG-290-2013 of September 13, 2013, entered into the Superintendence on the 16th of the same month and year, the engineer Gene Alcivar Guzmán, General Manager of Seguros Sucre S.A., provided attention to the requirement of the control body;

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THAT with resolution No. SBS-DNAE-2013-968 of December 27, 2013, the National Director of Attention and User Education, resolved:

"(...)

ARTICLE 1.- ACCEPT the claim presented by the economist José Andrade López, General Manager and Legal Representative of the Banco Nacional de Fomento.

ARTICLE 2.- ORDER that Seguros Sucre S.A. pay in favor of the BANCO NACIONAL DE FOMENTO US$ 192,500.00, with interest, because it has objected to the payment outside the forty-five-day period provided for in article 42 of the General Insurance Law.

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 two of this resolution within a period of fifteen days, under legal warnings. If it does not do so, it will be subject to what is provided in letter a) of article 55 of the General Insurance Law.

(...)" (sic)

THAT through letter No. GR-2014-017 of January 14, 2014, entered into the Banks Superintendence on the same day, month, and year, the doctor Yesenia María Riofrío Carpio, Manager of the Quito Regional Branch of Seguros Sucre S.A., filed an appeal against the Banking Board resolution No. SBS-DNAE-2013-968 of December 27, 2013, under the protection of what is provided in article 70 of the General Insurance Law;

THAT through resolution No. SBS-INSP-2014-099 of May 7, 2014, the National Superintendent of the Private Insurance System, granted the appeal filed by the Regional Manager of Seguros Sucre S.A., and ordered the sending of the respective file;

THAT the appellant based her appeal on the following:

• That in the Banking Board resolution No. JB-2011-1851, of January 11, 2011, which is included in Book I, Chapter I, Title II, the security measures that financial institutions subject to control must establish are established, so the bank failed to comply with the minimum security norms and measures determined for the opening of a bank agency established by the control body;

• That the insurance contract is composed of the General and Particular Conditions and that this case of refusal is based on what is stipulated in the general conditions which in the pertinent part indicates:

"Clause 10 - Obligations of the Insured:

The Company will be released from the obligation to indemnify if the Insured or any person claiming indemnification does not comply with the following obligations:

10.1 Take all reasonable precautions to protect and safeguard the property insured by this policy."

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Clause 12 – Loss of rights

The Insured, in addition to the cases of nullity established in this contract, will lose their rights to indemnification, in the following cases:

12.5 When they do not comply with any of the obligations established in clause 10."; and

• That the insured completed the documentation requested on May 30, 2012, time from which the period determined by article 42 of the General Insurance Law began to run, so that the insurance company objected and denied the claim within the established period.

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

"Every insurance company has the obligation to pay the contracted insurance or the corresponding part of the duly proven loss, as the case may be, within forty-five days following the day on which the insured or the 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.

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

If in this case or in the case where the forty-five-day period fixed in the first paragraph expires, the insurance company does not make the payment, the insured or the beneficiary will bring this fact to the knowledge of the Superintendent of Banks and Insurance, who, upon verifying this situation, will order the payment within a period not exceeding fifteen days, together with the 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 the payment, otherwise it will reject it.

The insured or beneficiary may resort to summary verbal trial before competent judges or submit to commercial arbitration or mediation, as the case may be.

(...)."

THAT according to the cited norm, once the forty-five days following the day on 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, formulated 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 refusal

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of the mentioned payment, it will analyze them to determine their grounding. Therefore, in light of this legal provision, it is established that the Superintendence of Banks is competent to hear and resolve this administrative claim;

THAT the insurer through letter No. DRC-2012-2281 of July 11, 2012, denied the payment of the indemnification claimed by the presented claim, stating, principally, that:

"(...) we regret to inform you that this event is not covered within the Money policy contracted, according to the General and Particular Conditions of the Money policy that covers the following:

Clause 10 - Obligations of the Insured

The Company will be released from the obligation to indemnify if the Insured or any person claiming indemnification does not comply with the following obligations:

10.1 Take all reasonable precautions to protect and safeguard the property insured by this policy (...)

If the insured does not comply with what is established in this clause, they will be deprived of all rights to indemnification under this policy. (...)

Clause 12 – Loss of rights

The Insured, in addition to the cases of nullity established in this contract, will lose their rights to indemnification, in the following cases:

12.5 When they do not comply with any of the obligations established in clause 10 (...)

In this case, it is important to indicate that according to the information collected in the claim inspection, the vault opening was manual (DUAL) and two (2) keys were required,

Therefore, if the aforementioned procedure was followed, the vault at the time of the robbery could not be opened by one of the employees present at the time of the robbery, as it would have been necessary to enter the other key, but since it was enabled, it opened easily.

Finally, according to the review of the events by the National Police, this unit issues a report dated December 06, 2011, by Mr. Palma Pesantes José (Police Chief) Investigator Agent of the PJM-4 who in a paragraph of his report indicates:

"That in the investigations carried out by the undersigned, it was verified that the Banco de Fomento does not have the necessary security, therefore there was negligence on the part of the administrator of the Banking entity"

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In view of the above, we are proceeding to close the case in our files without any indemnification

(...)" (sic)

THAT from the review of the Particular Conditions of the contracted policy, which are duly signed by the contracting parties, no type of guarantee for the granting of coverage is indicated; equally within it there is a clarifying note which mentions:

"in case a claim and/or theft and/or armed robbery event occurs, it will be understood that all money that has been stolen as a result of the event is covered regardless of the physical space where it was (affected branch, office and/or agency of the BNF)"

THAT from the review of the file, it is determined that it is not stipulated within the insurance contract what the "reasonable precautions to protect and safeguard the insured property" are, as determined by Clause 10 of the General Conditions of the contracted Policy;

THAT regarding the argument of the appellant, in which he refers to resolution No. JB-2011-1851 of January 11, 2011, in which several articles regarding the installation of minimum security measures that every financial institution must adopt in each of its establishments are included, it is clarified that although every financial institution must comply with the regulations established by the control body for the development of its functions, and not doing so entails the pertinent sanctions, in this case, said regulation is not a prior requirement for the contracting of the different general insurance programs of the controlled institutions, so it is not appropriate to allege the non-compliance with said regulation in the contracting of the general insurances of the Banco Nacional de Fomento, as Seguros Sucre S.A. maintains;

THAT within the General Conditions of the money insurance policy No. 6011363, clause eleven (11) mentions:

"Clause 11 – Basic documents necessary for the claim of a claim:

11.1 Written communication addressed to the company notifying the claim within three days following the date on which knowledge of it was had.

11.2 Written communication addressed to the Company indicating the causes and circumstances that originated the claim accompanied by a detailed valuation of the loss or damages.

11.3 In case of theft, certified copy of the complaint to the authorities detailing the stolen objects and the amount of damage. Invoices demonstrating the preexistence of the stolen objects.

11.4 Detailed list of all insurances that exist on the goods affected by the claim.

11.5 Budget for repair or replacement of damaged goods"

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11.6 Documents that prove the occurrence of the claim and the amount of indemnification to be paid by the Company.

(...);

THAT 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 upon the insured to prove the occurrence of the claim, which is presumed to have been produced by fortuitous case, unless proof to the contrary. Likewise, it is incumbent upon the insured to prove the amount of the indemnification to be paid by the insured. In both cases, it is incumbent upon him to demonstrate the facts or circumstances excluding his responsibility";

THAT in this case, the insured has proven the occurrence of the claim with the presentation of the following documents: 1. Report or novelty report made by the insured at the time of the claim; 2. Accounting entry where the value of the loss is registered; 3. Report of the Prosecutor and police investigations; and 4. The claimant, likewise, has proven the amount of the indemnification by presenting the internal audit report to the insurance company, through which he quantified the claimed claim in the amount of USD $192,500.00, a value that also appears in the Preliminary Report of INSPESSEG Cia. Ltda., adjuster of the claim in this case, in which the insured formalized the claim on December 14, 2011, by presenting the documentation requested according to the general conditions of the subscribed insurance policy;

THAT it is important to indicate that the documentation requested by the insurer through letter No. DRC-2014-1834 of May 28, 2012, is not contemplated within clause No. 11, of the general conditions of the contracted policy, in which case, the Banco Nacional de Fomento delivered the documentation requested by the insurer, and from there began to run the period of 45 days that establishes article 42 of the General Insurance Law, period that ended on January 28, 2012, in which case the insurer presented the objections late, since the refusal issued by it was notified to the insured on July 13, 2012, so it proceeds that Seguros Sucre S.A. cancel the insured sum, together with the interest calculated at the maximum conventional rate from the day following that in which the 45 days established in article 42 of the aforementioned law expired;

THAT the National Legal Superintendence, through memorandum INJ-DNJ-SAL-2015-0046 of January 22, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the Manager of the Quito Regional Branch of Seguros Sucre S.A.; and,

IN exercise of its legal attributes,

RESOLVES:

ARTICLE 1.- REJECT the claim contained in the appeal filed by the doctor Yesenia María Riofrío Carpio, Manager of the Quito Regional Branch of Seguros Sucre S.A.; and, consequently, CONFIRM resolution No. SBS-DNAE-2013-968 of December 27, 2013, through which the National Director of Attention and User Education ordered that in accordance with what

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is established in the third paragraph of article 42 of the General Insurance Law, the insurer pay in favor of the Banco Nacional de Fomento, the sum of USD$ 192,500.00, less the deductions stipulated in the policy, together with the interest calculated at the maximum conventional rate fixed according to law, from January 29, 2012, the day following that in which the forty-five days that the insurer had to pay the claim expired.

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 what is provided in letter a) of article 55 of the General Insurance Law.

NOTIFY.- Given in the Superintendence of Banks and Insurance, in Quito, Metropolitan District, on the twenty-fifth of March of two thousand fifteen.

Econ. Rodrigo Landeta Parra GENERAL SUPERINTENDENT (S) PRESIDENT OF THE BANKING BOARD SESSION (E)

I CERTIFY.- Quito, Metropolitan District, on the twenty-fifth of March of two thousand fifteen.

Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD