Banking Board of Ecuador

RESOLUTION No. JB-2015-3363

THE BANKING BOARD

CONSIDERING:

THAT according to the second paragraph of the Third Transitional Provision of the Organic Monetary and Financial Code, published in the Official Register Second Supplement No. 332, of September 12, 2014, the Banking Board will continue to act until it resolves all appeals that were under its consideration as of the date this Code entered into force, for a period of one hundred and eighty days;

THAT Mr. Segundo Olimpo Saltos Ibarra contracted with Seguros del Pichincha S.A., Insurance and Reinsurance Company, the Personal Multirisk Life Insurance Policy Max Plus Prevision No. 0000001454, Certificate No. 9694, valid since June 26, 2012, with automatic renewals for periods equal to the initially established one, which conferred, among others, the following coverage:

• Death by any cause: USD 50,000.00;

THAT the policy contains the health declaration required by the insurer, in which Mr. Segundo Olimpo Saltos Ibarra declared: that his health status is normal, that he has not been diagnosed with cardiovascular diseases, arterial hypertension, renal insufficiency, cancer, AIDS, chronic or serious diseases or others for which he has received or is receiving treatment or medical control. As beneficiary of said policy, the minor Jeancarlos Saltos Pincay, son of the insured, was indicated;

THAT Mrs. Margarita Iluminada Pincay Zamora on December 7, 2012, filed a claim with Seguros del Pichincha S.A. Insurance and Reinsurance Company S.A., for the death of her husband Mr. Segundo Olimpo Saltos Ibarra occurring on December 4, 2012, due to suffering from stomach cancer, cardio-respiratory arrest, seeking to obtain the payment of the life insurance indemnity contracted, in favor of her son Jeancarlos Saltos Pincay;

THAT Seguros del Pichincha S.A. Insurance and Reinsurance Company on January 14, 2013, through letter No. SDP-2013-0056, denied the payment of the claimed indemnity, arguing that there was a concealment of information by the insured at the time of declaring his health status at the signing of the insurance contract on June 26, 2012, by not declaring that since July 2004 he was being treated for suffering from Arterial Hypertension, Cardiac Insufficiency with Coronary Insufficiency and Cardiac Arrhythmia, thus constituting a concealment of informing about the disease already known before the validity of the insurance;

THAT on March 22, 2013, Mrs. Margarita Iluminada Pincay Zamora, filed an administrative complaint against Seguros del Pichincha S.A. Insurance and Reinsurance Company, which was resolved by the National Directorate of User Attention and Education through

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of letter No. DNAE-SAU-2013-04193 of July 25, 2013, in the following terms:

"Based on the documents presented by both Seguros del Pichincha S.A. and the petitioner, as well as the legal basis exposed in the preceding paragraphs, the National Directorate of User Attention under my charge determines that the complaint presented by Mrs. MARGARITA ILUMINADA PINCAY ZAMORA, with citizenship card No. 1203182694, who requests that the content of letter No. SDP-2013-0057, of January 14, 2013, issued by Seguros Pichincha S.A., be dismissed, is not appropriate since the legal requirements of article 14 of the Insurance Contracts Legislation have been configured, ...

In virtue thereof and in accordance with what is prescribed in articles 204 and 213 of the Constitution of the Republic and 171 of the General Law of Institutions of the Financial System, of organic category, it corresponds to the Superintendence of Banks and Insurance to hear and rule on the complaints presented by users of the financial system, a faculty that according to what is established in Resolution No. ADM-2012-10779, published in the Official Register Special Edition No. 282 of April 26, 2012, it exercises through its National Directorate of User Attention and Education, (sic) the office under my charge declares the complaint concluded and the filing of the documentation is ordered.";

THAT through a document entered in this Superintendence on September 5, 2013, Mrs. Margarita Iluminada Pincay Zamora, in her own right and on behalf of her minor son, Jean Carlos Olimpo Saltos Pincay, filed an appeal against the administrative act contained in letter No. DNAE-SAU-2013-04193 of July 25, 2013, through which the National Director of Attention and Education to the User rejected the administrative complaint in the terms provided in the preceding numeral, arguing in principal that: The insurer "...has failed to pay the indemnification to which she is entitled as surviving spouse and by representation of her minor son as her sole beneficiary..., because their arguments do not establish the hidden defect of the thing, since at the time of contracting the present Insurance subject of the complaint, this was done without considering main and essential arguments that determine Art. 1.801 of our Substantive Civil Code..."; and, that the impugned act be reviewed based on the provisions of the Constitution of the Republic, considering also the situation of which her deceased husband was a victim due to the bad sales practice "...simply due to the conditions or 'Suggestions', (...) that third parties not qualified (...) make" (sic);

THAT with resolution No. SBS-INSP-2014-098 of May 7, 2014, the National Intendant of the Private Insurance System, granted the appeal filed and ordered the sending of the file to the Banking Board;

THAT with letters Nos. JB-2014-1243 and JB-2014-1244, both of May 16, 2014, addressed to Mrs. Margarita Iluminada Pincay Zamora and to the economist Alexandra Leiva, General Attorney of Seguros del Pichincha S.A. Insurance and Reinsurance Company, respectively, the Secretary of the Banking

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Board sent certified copies of resolution No. SBS-INSP-2014-098 of May 7, 2014; and, additionally sent to Seguros del Pichincha S.A., a photostatic copy of the document of filing the appeal;

THAT through letter No. SDP-817, received in this control organism on May 17, 2014, the insurer, regarding the appeal filed, requests that the complaint of Mrs. Margarita Iluminada Pincay Zamora be rejected, as clear reticence by the insured at the time of declaring his health status is evidenced, a situation that vitiates the insurance contract as established in article 14 of Supreme Decree 1147;

THAT through a document of June 5, 2014, entered in this Superintendence on the 6th of the same month and year, the appellant Mrs. Margarita Iluminada Pincay Zamora, attached a Sworn Declaration in which she establishes the permanence of 21 years of marital relationship with the deceased insured, in the canton Mocache, Province of Los Ríos, from which relationship they procreated the minor Jean Carlos Olimpo Saltos Pincay, sole beneficiary of the referred policy and the residence certificates issued by the Governorship of Los Ríos, arguing textually that the insurance company "...pretends (sic) to deny payment, alleging futile pretexts, (...) since the Insurance Contract was established without the aforementioned Company establishing, perhaps due to the age of my deceased spouse, a Form where a health declaration is established..., nor that despite his age a Medical-Clinical check-up was established..." (sic);

THAT through communication of June 9, 2014, Mr. Diego Mendizábal, Executive President of Seguros Pichincha S.A. Insurance and Reinsurance Company, presented allegations regarding Resolution No. SBS-INSP-2014-098 with which the National Intendancy of the Private Insurance System accepted the appeal filed by the claimant, arguing: "...that the improperly accepted appeal of Mrs. Margarita Iluminada Pincay Zamora be rejected, since, as demonstrated, it was presented outside the legal term of eight days." (sic); and, that "...in the event that the Banking Board decides to continue with the appeal procedure of the claimant, despite being presented out of time...", requests that the "...members of the Banking Board kindly ratify the content of Letter No. DNAE-SAU-2013-04194, (sic) of July 25, 2013,..." (sic).

Regarding this, it is necessary to point out that in the third consideration of resolution No. SBS-INSP-2014-098 of May 7, 2014, it is stated textually: "...through letter No. JB-2013-1719 of August 23, 2013, notified on August 28, 2013, the (...) Secretary of the Banking Board, Substitute, granted the term of 8 days to Mrs. Margarita Iluminada Pincay Zamora, to file an appeal instead of a review appeal to Letter No. DNAE-SAU-2013-04193 of July 25, 2013, presented through communication entered in the Superintendence of Banks and Insurance on August 15, 2013.";

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

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"Art. 42.- Every insurance company has the obligation to pay the contracted insurance or the corresponding part to the loss duly proven, as the case may be, within forty-five days following the day in which the insured or the beneficiary presents in writing the corresponding complaint accompanied by the documents that, according to the policy, are necessary, unless the insurance company formulates justified objections to such complaint, 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 which the forty-five day term fixed in the first paragraph expires, the insurance company does not make the payment, the insured or the beneficiary will put this fact in the knowledge of the Superintendent of Banks and Insurance, who, upon verifying this situation, will order the payment within a term not greater than fifteen days, together with the interests calculated from the forty-five days previously indicated, at the maximum conventional rate fixed according to the law. If not paid within the granted term, it will order the forced liquidation of the insurance company.

If the insurance company formulates objections to the complaint and no agreement is reached with the insured or beneficiary, the Superintendence of Banks and Insurance will verify the existence of the grounds for said 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 in which the insured or beneficiary presents in writing the corresponding complaint 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 complaint, 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 pertinence or lack of legal pertinence.

In the case at hand, the complaint was formalized on December 7, 2012 and was denied by the insurer with letter No. SDP-2013-0056, on January 14, 2013, that is, within the forty-five days provided for in the norm above transcribed. Such denial was brought to the knowledge of the Superintendence of Banks and Insurance with letter No. SDP-2013-0057 entered on January 16, 2013;

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THAT article 22 of Supreme Decree No. 1147, published in the Official Register No. 123 of December 7, 1963, which contains the Insurance Contract Legislation establishes:

Art. 22.- It is incumbent on the insured to prove the occurrence of the claim, 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 indemnification due from the insurer. It is incumbent on the latter, in both cases, to demonstrate the facts or circumstances excluding his responsibility.";

THAT based on the cited legal provisions, the claimant Mrs. Margarita Iluminada Pincay Zamora proved the occurrence of the claim that occurred on December 4, 2012, with the delivery to the insurer of the death registration issued by the General Directorate of Civil Registry, Identification and Citizenship of the canton Mocache, province of Los Ríos; the insurance company indicated that the claimant formalized the complaint on January 10, 2013 with the last document required in the policy;

THAT the insurance company denies the payment of the claimed indemnification, with the following argument:

MEDICO-LEGAL TECHNICAL RESOLUTION
Based on the documents sent, it is clear that Mr. Segundo Saltos Ibarra was treated for Arterial Hypertension, Cardiac Insufficiency with Coronary Insufficiency and Cardiac Arrhythmia since July 2004 according to a medical certificate issued on January 9, 2013 by Dr. Marco Argudo – Surgeon on July 1, 2009 from the IESS Hospital of Portoviejo, diseases that were not declared at the time of contracting the insurance on June 26, 2012, thus constituting a concealment of informing about the disease already known before the validity of the insurance." (sic);

THAT the insurer through letter No. SDP-817 of May 16, 2013, regarding the appeal filed by Mrs. Margarita Iluminada Pincay Zamora, informed that "The objection is based on the reticence of the insured at the time of declaring his health status at the signing of the policy contract, as demonstrated by the Clinical History of the IESS Hospital of Portoviejo, as well as the medical certificate extended on January 9, 2013 by Dr. Marco Argudo - Surgeon, the insured did not declare that since July 2004 he was being treated for suffering from Arterial Hypertension, Cardiac Insufficiency with Coronary Insufficiency and Cardiac Arrhythmia, his last medical visit for control being June 6, 2012; diseases that were not declared when signing the health declaration at the time of subscribing the insurance contract..." (sic);

THAT the death registration issued by the General Directorate of Civil Registry, Identification and Citizenship of the canton Mocache, Province of Los Ríos, states that the cause of death of Mr. Segundo Olimpo Santos Ibarra occurring on December 4, 2012, was "STOMACH CANCER, CARDIO-RESPIRATORY ARREST", however, Seguros del Pichincha S.A. Insurance and Reinsurance Company denied the payment of the claimed indemnification

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arguing concealment of information by the insured for not declaring that he was treated for Arterial Hypertension, Cardiac Insufficiency with Coronary Insufficiency, Cardiac Arrhythmia, disease diagnosed since 2004, according to the medical certificate extended on January 9, 2013 by Dr. Marco Argudo - Surgeon;

THAT the first paragraph of article 14 of the Insurance Contract Legislation, issued by Supreme Decree No. 1147, published in the Official Register No. 123, of December 7, 1963, provides:

"Art. 14.- The insurance applicant is obliged to objectively declare the state of the risk, according to the questionnaire proposed to him by the insurer. Reticence or falsehood regarding those circumstances that, known by the insured, would have caused him to desist from the celebration of the contract, or induce him to stipulate more burdensome conditions, vitiate the insurance contract with relative nullity, with the exception provided for life insurance in the case of inaccuracy in the declaration of the age of the insured.";

THAT on its part, article one: "Coverages (Benefits and Exclusions) (...) DEATH BY ANY CAUSE", of the General Conditions of the group life insurance policy, multirisk personal for collective life insurance, approved by Resolution No. SBS-INS-2003-158 of June 11, 2003, which is concordant with the coverage table of the Application - Insurance Certificate 9694 signed by the insured on June 26, 2012, says:

"BENEFIT: For the death of the Insured, originating from any cause, the Company will pay to the beneficiaries the sum contracted in the insurance certificate and/or cover of this policy.

B. EXCLUSIONS: Voluntary or involuntary suicide of the Insured, which will be covered after the first (1st) year of validity of the contract, as it appears in exclusion L of the exclusion table.

(...)";

The general conditions of the policies constitute basic principles, stipulations or clauses established by the insurer, in order to regulate the bilateral relationship with the policyholder and/or insured, within the framework of applicable legislation and the principles of insurance technique.

In virtue thereof, the insurance company, according to the general conditions of the policy, which is law for the parties under article 1561 of the Civil Code, obliged itself to pay the insured sum, that is, the "benefit" for the death of the insured "originating from any cause", excluding only suicide occurring within the first year;

THAT on June 26, 2012, the insured when filling out the "Application-Insurance Certificate" No. 9694 of Policy 0000001454 the declaration of health status, responds in the following way:

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"F. I declare in my capacity as Insured, (...) that my health status is normal: that I have not been diagnosed with cardiovascular diseases, arterial hypertension, renal insufficiency, cancer, AIDS, chronic or serious diseases or others for which I have received or am receiving treatment or medical control;..." (sic);

THAT regarding this, although the basis of the insurer to issue its denial is that the insured did not state in said declaration "...that he was treated since July 2004 for Arterial Hypertension, Cardiac Insufficiency with Coronary Insufficiency and Cardiac Arrhythmia,..." as stated in the certificate issued on January 9, 2013 by Dr. Marco Argudo - Surgeon, which is part of the file; it is no less true that in the death act issued on December 4, 2012, it states that Mr. Segundo Olimpo Saltos Ibarra died of "STOMACH CANCER, CARDIO-RESPIRATORY ARREST". Nevertheless, it must be specified that the indemnification claimed by Mrs. Margarita Iluminada Pincay Zamora corresponds to the coverage "Death by any cause" constant in the Coverage Table of the Application - Insurance Certificate 9694 of policy No. 0000001454 that her deceased husband Mr. Segundo Olimpo Saltos Ibarra subscribed with the insurance company on June 26, 2012, subject to what is stipulated in the aforementioned general conditions of the policy, according to which the company for the death of the insured originating from any cause, will pay to the beneficiary the sum contracted in the insurance certificate;

THAT furthermore, from the documentation in the file, there is no evidence that the insured Mr. Segundo Olimpo Saltos Ibarra suffered from cancer at the time of acquiring the Multirisk Personal Max Plus Prevision Life Insurance and subscribing the mentioned Insurance Certificate 9694 on June 26, 2012;

THAT for the above reasons, what is provided in the transcribed article 14 of Supreme Decree No. 1147, a legal provision on which the insurer based itself to deny the complaint of Mrs. Margarita Iluminada Pincay Zamora, has not been configured, and Seguros del Pichincha S.A. Insurance and Reinsurance Company has not demonstrated the facts and circumstances excluding its responsibility;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0080 of January 30, 2015, recommended to the Banking Board to accept the claim contained in the appeal filed;

AND, in exercise of its legal attributions,

RESOLVES:

ARTICLE 1.- ACCEPT the claim contained in the appeal filed by Mrs. Margarita Iluminada Pincay Zamora; DECLARE WITHOUT EFFECT the content of letter No. DNAE-SAU-2013-04193 of July 25, 2013; and, consequently, ORDER Seguros del Pichincha C.A. Insurance and Reinsurance Company to pay the claimant the value of US$ 50,000.00 corresponding to the claimed indemnification under policy No.

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000001454 of Personal Multirisk Life Insurance Max Plus Prevision, Certificate No. 9694, less the deductions agreed in the policy. No payment of interest is due, because the denial has been issued within the forty-five days that article 42 of the General Insurance Law establishes.

ARTICLE 2.- ORDER that the insurance company comply with what is disposed in the previous article within a term of fifteen days, counted from the date in 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.

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

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

I CERTIFY.- Quito, Metropolitan District, on the fifteenth of April of two thousand fifteen.

Lcdq. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD