Banking Board of Ecuador

RESOLUTION No. JB-2015-3405

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitional Provision of the Organic Monetary and Financial Code determines that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures it was hearing as of the date of entry into force of that Code, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT with insurance policy against all risks for vehicles No. 2369-1, issued by Coopseguros del Ecuador S.A., in liquidation, valid from January 7, 2012, to January 7, 2013, the vehicle with license plate AAA1197, brand INTERNATIONAL, class/type TRAILER CAB, year 2010, model CHASIS CABINADO 9200I 6, color RED, engine 79402479, use PUBLIC, insured value: US$ 105,000.00, was insured. From the aforementioned policy, it appears that the insured is Mr. Víctor Oswaldo Harris Vásquez;

THAT through a communication entered into the control body on November 5, 2012, the insured filed an administrative claim, requesting that Coopseguros del Ecuador S.A., currently in liquidation, be ordered to make the final payment (second part of the claim) for damage to a light pole in the city of Cuenca as a result of an accident involving the insured vehicle on February 13, 2012; an accident in which two other vehicles were involved, whose payment had already been made by the insurer under the extra-contractual civil liability coverage contracted in the corresponding Policy;

THAT on August 9, 2012, Coopseguros del Ecuador S.A., in liquidation, through letter No. REG-094-2012, denied the aforementioned claim filed by the insured based on Condition Nineteen of the General Conditions of Vehicle Policy No. 2369-1: Obligations of the insured in case of accident: "Refrain from taking any measures, agreeing to settlements, or adjusting indemnity payments, without written authorization from the Company";

THAT through letter No. IDC-2012-5122 of November 20, 2012, the Intendant of Cuenca requested explanations and supporting documents from Coopseguros del Ecuador S.A., in liquidation, regarding the denial of the claim filed by Mr. Víctor Oswaldo Harris Vásquez. In the absence of a response from the insurer, through letter No. IDC-2013-447 of January 29, 2013, the Intendant of Cuenca ordered, under legal warnings, that Coopseguros present the explanations and documentation related to this case, within the non-extendable term of 48 hours;

THAT regarding this matter, the insurer through letter No. REC-002-201 of January 29, 2013, entered into this Superintendence of Banks on the same day, Coopseguros del Ecuador S.A., in liquidation, responded without providing any explanation of the accident and without attaching all the documents it stated were attached. Therefore, without justifying its objection to the denial of payment;

THAT with resolution No. SBS-IRC-2014-728 of March 28, 2014, the Regional Intendant of Cuenca ordered:

(...)

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Banking Board of Ecuador

Resolution No. JB-2015-3405

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RESOLVES:

ARTICLE ONE.- ACCEPT the claim filed by Mr. VÍCTOR OSWALDO HARRIS VASQUEZ, regarding the accident related to material damage to a light pole owned by Empresa Eléctrica Regional Centro Sur, related to policy No. 2369-1.

ARTICLE TWO.- ORDER that the company Coopseguros S.A. pay in favor of Mr. VÍCTOR OSWALDO HARRIS VASQUEZ the amount of US$ 3,113.79, without interest, on the grounds that it objected to the payment within the forty-five-day period provided for in Article 42 of the General Insurance Law.

(...) (sic);

THAT through a document presented at the Intendencia of Cuenca on April 14, 2014, the engineer Francisco Prieto Sánchez, General Manager of Coopseguros del Ecuador S.A. Compañía de Seguros y Reaseguros, currently in liquidation, filed an appeal against resolution No. SBS-IRC-2014-728 of March 28, 2014, before the Banking Board, under the provisions of Article 70 of the General Insurance Law;

THAT with resolution No. SB-IRC-2014-813 of December 5, 2014, the Regional Intendant of Cuenca, granted the appeal filed by the General Manager of Coopseguros del Ecuador S.A., in liquidation, and ordered the sending of the respective file;

THAT the appellant based his appeal on the following:

• That the insured vehicle, on February 13, 2013 (sic) (the correct date is 2012), suffered a collision accident in which two vehicles belonging to third parties were affected; and that the insured vehicle suffered no damage. Under the third-party damage coverage contracted in the present policy, the insurer proceeded to recognize the payment for the repairs of said vehicles;

• That subsequently, on June 26, 2012, a claim for US$ 3,113.79 was filed with the insurance company for the damages suffered by a public lighting pole as a consequence of said accident;

• That the insurer justified, within the 45 days established in Article 42 of the General Insurance Law, its objection to the payment based on condition nineteen of the general conditions of the contracted policy, which refers to the obligations of the insured in case of accident; and,

• That in the present case, the insured proceeded to pay for the damage to the light pole, without the express authorization of the insurance company;

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

"Every 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 the day on which the insured or beneficiary presents the corresponding claim in writing

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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 beneficiary accepts the objections, the insurance entity will immediately pay the agreed indemnity.

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 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 exceeding fifteen days, along with interest calculated from the aforementioned forty-five days, at the maximum conventional rate fixed by 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 will verify the existence of the grounds for such objections and, if none are found, will order 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 the corresponding claim in writing 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, having formulated objections to such claim, the insured may go to the Superintendence of Banks to ask it to order the insurance company to pay for the accident, and if there are grounds for the denial of said payment, it will analyze them to determine their justification. Therefore, according to this legal provision, it is established that the Superintendence of Banks is competent to hear and resolve the present administrative claim; additionally, from the documentation reviewed in the file, it is determined that the insurer presented its objection to the payment of the claimed accident within the legal period;

THAT the insurer through letter No. REG-094-2012 of August 9, 2012, denied the payment of the indemnity (pending) claimed for the accident that occurred, in the following terms:

"(...)

With this, we regret to communicate to you the objection to the payment of the claim presented for the event that occurred to the vehicle detailed in reference, since this particular was not notified in the presentation of the claim, also in accordance with what is stipulated in the general conditions of the policy.

CONDITION NINETEEN: OBLIGATIONS OF THE INSURED IN

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CASE OF ACCIDENT:

• Refrain from taking any measures, agreeing to settlements, or adjusting indemnity payments, without written authorization from the Company.

In the event of non-compliance with any of these obligations, the insured will not have the right to indemnity.

(...) (sic);

THAT this communication of denial by the insurer does not involve duly justified objections as determined by the regulations, aimed at reliably demonstrating the facts or circumstances excluding its responsibility to indemnify the accident;

THAT reviewing the file, on folio 3 there is an email through which Mrs. Lorena Cordero, an employee of the insurer, tells the insurance advisor textually: "The company must pay but the invoice must be issued in the name of the insured, that is, in the name of Mr. Harris". This demonstrates the knowledge the insurer had regarding the damage caused by the insured vehicle to public property (third parties); it is difficult to state in its letter of denial of payment that this particular was not notified to said insurer, especially when the indemnities for two third-party vehicles involved in the same accident had already been paid;

THAT it is also important to mention Article 22 of Supreme Decree No. 1147, published in the Official Register No. 123 of December 7, 1963, which states as follows:

"Art. 22.- It is incumbent on the insured to prove the occurrence of the accident, which is presumed to have been produced 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 the latter, in both cases, to demonstrate the facts or circumstances excluding its responsibility";

THAT in the present case, the insured proved the occurrence of the accident and regarding the amount, the file contains the invoice issued by Empresa Eléctrica Regional Centro Sur C.A., in the name of Mr. Víctor Oswaldo Harris Vásquez, for the value of US$ 3,113.79, an invoice that was paid exactly as the insurer's employee stated should be done;

THAT the National Legal Intendencia, through memorandum INJ-DNJ-SAL-2015-0271 of March 31, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the General Manager of Coopseguros del Ecuador S.A. Compañía de Seguros y Reaseguros; and,

IN exercise of its legal powers,

RESOLVES:

ARTICLE 1.- REJECT the claim contained in the appeal filed by engineer Francisco Prieto Sánchez, General Manager of

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Coopseguros del Ecuador S.A. Compañía de Seguros y Reaseguros, currently in liquidation; and, consequently, CONFIRM resolution No. SBS-IRC-2014-728 of March 28, 2014, with which the Regional Intendencia of Cuenca ordered that Coopseguros del Ecuador S.A. Compañía de Seguros y Reaseguros, currently in liquidation, pay in favor of Mr. Víctor Oswaldo Harris Vásquez, the sum of US$ 3,113.79, for the accident related to the material damage of a light pole owned by Empresa Eléctrica Regional Centro Sur.

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 of notification of this resolution, under legal warnings. Failure to do so will incur the provisions of letter a) of Article 55 of the General Insurance Law.

NOTIFY.- Given at the Superintendence of Banks and Insurance, in Quito, Metropolitan District, on the eighth of May of two thousand fifteen.

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

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

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD

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Banking Board of Ecuador