Banking Board of Ecuador

RESOLUTION No. JB-2015-3361

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 the Banking Board, and the norms issued by the control bodies, will remain in force 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 complaints, 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 by letter No. IRP-SSP-2014-145, dated July 4, 2014, addressed to Mr. José Luis Romo-Rosales Castillo, General Manager of Seguros Sucre S.A., the lawyer Teresa Roca Espinel, Regional Intendant of Portoviejo, of the Superintendence of Banks, under the provisions of Article 37, literal b), numeral 2 of the General Insurance Law, imposed on said Manager a fine in the amount of USD $500.00, because the Regional Intendancy of Portoviejo, on several occasions, requested explanations with documents regarding the administrative claim filed by Mrs. Carmen Macías Cedeño, against the insurer, and since the control body verified and evidenced that the requested information was not sent, it fined the aforementioned official, without prejudice to sending the documentation duly certified, under legal warnings;

THAT by letter No. GG-207-2014, dated July 18, 2014, received at the Regional Intendancy of Portoviejo, of this control body on July 21, 2014, Mr. José Luis Romo-Rosales, General Manager of Seguros Sucre S.A., with the professional sponsorship of lawyer Miguel Ángel Carbo Jurado, filed before the Banking Board an appeal against letter No. IRP-SSP-2014-145, dated July 4, 2014, under the provisions of Article 70 of the General Insurance Law;

THAT the arguments of the appellant are limited to stating that:

• That on August 19, 2013, Mrs. Carmen Macías Cedeño, submitted a letter reporting the facts that caused or resulted in an accident, which represented damages to the insured's vehicle, to which, on September 13, 2013, the insurance company proceeded to notify the insured with the respective denial of the accident claim;

---

Banking Board of Ecuador

Resolution No. JB-2015-3361 Page 2

• That on repeated occasions, the Regional Intendancy of Portoviejo, requested information and the respective explanations regarding the status of the vehicle policy signed with number 0022561, despite the fact that at the time the objection to the claim was notified in a motivated manner to the control body;

• That it is widely known that within the procedure of an administrative claim, once the insurer has sent the information it had regarding the claim, the control body will proceed to issue the resolution that corresponds by right, and that in case there is missing documentation, it will not prevent a resolution from being taken regarding it; and,

• That since Seguros Sucre S.A. is a private entity but with public capital, it is a priority for the insurer to avoid that it suffers any economic harm, especially if the imposed fine has no legal basis;

THAT by resolution No. SBS-IRP-DASCP-2014-30, dated July 29, 2014, the Regional Intendant of Portoviejo, granted the appeal filed by the General Manager of Seguros Sucre S.A.;

THAT the first paragraph of Article 213 of the Constitution of the Republic, the second paragraph of Article 1 of the General Law of Institutions of the Financial System, in force at that time, and Article 1 of the General Insurance Law, provide as follows:

Constitution of the Republic of Ecuador:

"Art. 213.- The superintendencies are technical bodies for surveillance, auditing, intervention, and control of economic, social, and environmental activities, and of the services provided by public and private entities, with the purpose that these activities and services are subject to the legal framework and attend to the general interest. (...)

General Law of Institutions of the Financial System:

"ARTICLE 1.- (...) Public financial institutions, insurance and reinsurance companies are governed by their own laws regarding their creation, activities, functioning, and organization. They will be subject to this Law regarding the application of solvency and financial prudential norms and to the control and surveillance carried out by the Superintendence within the legal framework that regulates these institutions in all that is applicable according to their legal nature. The Superintendence will apply the norms that this Law contains on forced liquidation, when there are causes that so warrant."

---

Banking Board of Ecuador

Resolution No. JB-2015-3361 Page 3

(...)

General Insurance Law:

"Art. 1.- This Law regulates the constitution, organization, activities, functioning, and extinction of legal persons and the operations and activities of natural persons that make up the private insurance system; which will be subject to the laws of the Republic and to the surveillance and control of the Superintendence of Banks and Insurance."

THAT Article 65 of the Regulations to the General Insurance Law, in force at the time the appeal was filed, provides:

"Art. 65.- Entities of the private insurance system must observe the norms issued by the Superintendence of Banks in accounting matters, in the opportunities, form, and frequency that it indicates, the financial statements, and, in general, any information that it deems relevant or necessary";

THAT from the literal text of the constitutional and legal provisions transcribed, it is established that the Superintendence of Banks is the technical surveillance body of entities subject to its control, which must respect the legal framework and the general interest, among which are the institutions that make up the private insurance system. In addition, within the attributions of the control body is the power to request information that it deems relevant to the controlled institutions; for this reason, upon express request from the superior body, Seguros Sucre S.A. had the obligation to send the requested documentation;

THAT the Regional Intendancy of Portoviejo, after reviewing the documentation delivered to the control body, through letters Nos. IRP-SSP-2013-114, IRP-SSP-2013-128, IRP-SSP-2013-159, IRP-SSP-2014-029, IRP-SSP-2014-059, IRP-SSP-2014-076, and IRP-SSP-2014-100, dated September 20, 2013, October 16, 2013, December 2, 2013, January 28, 2014, March 27, 2014, April 22, 2014, and May 19, 2014, respectively, requested that Seguros Sucre S.A. send the explanations and documentation that support the status of Vehicle Policy No. 0022561, issued by the insurance company in favor of lawyer Carmen Macías Cedeño, since the insured filed an administrative claim against the insurance company, for the denial of payment for the accident that occurred on July 27, 2013. The insurance company, in order to justify the request sent by the control body, through letter No. GR-2013-162, dated December 17, 2013, requested that "15 additional days" be extended for the term to respond. In addition to what was stated, through letter No. GAF-010-2014, dated April 29, 2014, Seguros Sucre S.A., to protect its interests, and since there is a pending judicial action against the insured, reaffirmed the denial of payment issued on December 4, 2013, so that on July 4, 2014, the Regional Intendancy of Portoviejo, determined the evident non-compliance of the insurer with a provision of the Superintendence of Banks, and proceeded to sanction the General Manager of the insurer, with a fine of USD $500.00;

---

Banking Board of Ecuador

Resolution No. JB-2015-3361 Page 4

THAT it is important to note, what is established in Article 37 of the General Insurance Law, pursuant to which the fine can be applied to the official of a controlled entity when it infringes statutory provisions or norms and instructions issued by the control body, which mentions:

"Art. 37.- (...) When in a controlled entity, its directors, administrators, or officials violate the laws or regulations that govern their functioning, or in cases where they infringe statutory provisions or norms and instructions issued by the Superintendence of Banks and Insurance, and especially when they fail to comply with the provisions of this Law; when they refuse to receive the visit of auditors or officials duly accredited by the Superintendence of Banks and Insurance or refuse to supply the documents or data that are necessary for the practice of the audit; when they do not timely present the balances, accounts, and other documents related to their business, or do not present the special reports requested of them; when they accuse deficiencies in reserves, investments, and the solvency margin; if they do not pay the contribution for the maintenance of the Superintendence of Banks and Insurance within the period that has been set, when they make investments without subjecting themselves to legal norms; the Superintendence of Banks and Insurance, depending on the gravity of the infringement, will impose one of the following sanctions: (...) b) To the directors and administrators of the entity of the private insurance system:

1. Reprimand.
2. Fine.
3. Removal. In any case and without prejudice to what is established in this article, the Superintendence of Banks and Insurance will adopt measures aimed at restoring compliance with the violated norm. The fines imposed on directors and administrators will be paid with their own resources. (...)";

THAT in the present case, the insurance company has incurred in the non-compliance of a clear provision issued by the Superintendence of Banks, for which reason the control body, in the exercise of its constitutional attributions and in application of Article 37 of the aforementioned law, imposed the sanction that has been appealed;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0120 of February 4, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed;

---

Banking Board of Ecuador

Resolution No. JB-2015-3361 Page 5

IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the appeal filed by Mr. José Luis Romo-Rosales, General Manager of Seguros Sucre S.A.; and, consequently, CONFIRM letter No. IRP-SSP-2014-145, dated July 4, 2014, through which the Regional Intendant of Portoviejo, imposed on said General Manager of the insurance company, a fine of USD $500.00 for not having sent the documentation requested by the control body, and in case of recidivism in the reluctance to comply with the instructions of this Superintendence of Banks, progressively a more severe sanction will be imposed.

NOTIFY.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on April 15, two thousand fifteen.

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

I CERTIFY.- Quito, Metropolitan District, on April 15, two thousand fifteen.

Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD