Banking Board of Ecuador

RESOLUTION No. JB-2015-3416

THE BANKING BOARD

CONSIDERING:

THAT according to the last paragraph of the Second Transitional Provision of the Organic Code of Monetary and Financial Law, published in the Official Register Second Supplement No. 332, on September 12, 2014, the Banking Board will continue to act until it resolves all appeals it was hearing on the date this Code entered into force, for a period of one hundred and eighty days;

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

THAT by vehicle insurance policy No. 0023398, issued by Seguros Sucre S.A., valid from June 6, 2013, to June 6, 2014, the vehicle with license plate MAT0429, make MERCEDES BENZ, class/type OMNIBUS, year 2006, model OF 1721/52, color RED-WHITE, chassis 9BM3840726B462295, use PUBLIC, was insured. From the referenced policy, it is recorded that the insured is Mr. Luis Alfonso Figueroa Pulido;

THAT by means of the "Car Accident Report" form, received in the offices of the insurer on July 3, 2013, Mr. Luis Alfonso Figueroa Pulido informed Seguros Sucre S.A. of the accident that occurred on June 28, 2013, to the insured vehicle, near Puerto Cayo, in the province of Manabí;

THAT on July 29, 2013, Seguros Sucre S.A., through letter No. RC-599-2013, denied the claim filed by the insured based on Clause 4 – Declarations and Validity, of the General Conditions of the vehicle insurance policy;

THAT by a document presented to the Regional Intendancy of Portoviejo, dated September 16, 2013, Mr. Luis Alfonso Figueroa Pulido filed an administrative complaint against Seguros Sucre S.A. for the refusal to pay the indemnity under vehicle insurance policy No. 023398; and requested that the insurance company be ordered to make the payment under the contracted policy;

THAT with letter No. IRP-SSP-2013-131, dated October 22, 2013, the Regional Intendant of Portoviejo requested from Seguros Sucre S.A. the pertinent explanations and supporting documents for the denial of the claim filed by Mr. Luis Alfonso Figueroa Pulido;

THAT by letter No. RC-932-2013, dated October 31, 2013, received by this control body on November 1, 2013, the engineer Luis Fernando González, National Manager of Claims of the insurance company, attended to the requirement of the control body;

THAT with resolution No. SBS-IRP-DASCP-2014-009, dated March 11, 2014,

Resolution No. JB-2015-3416

the Regional Intendant of Portoviejo, ordered:

"(...)"

RESOLVES:

SINGLE ARTICLE.- ORDER, in accordance with what is provided in the third paragraph of Article 42 of the General Insurance Law, that Company SEGUROS SUCRE S.A., under the insurance contract, perfected by Vehicle Policy No. 0023398, valid from June 6, 2013, to June 6, 2014, covering the Vehicle Make Mercedes Benz, plate MAT-0429, Model OF 1722-52, Chassis 9BM3840726B462295, Year 2006, Professional Heavy Activity, Class OMNIBUS, Color White; proceed within a period of 10 days counted from the receipt of this Resolution with the payment to Mr. Luis Alfonso Figueroa Pulido, of the values for the concept of repair of the damaged vehicle, minus the deductible agreed upon in vehicle policy No. 0023398, plus the interest generated from August 18, 2013, on the value to be indemnified, applying the maximum conventional rate fixed by the Central Bank of Ecuador according to the law. Must send a copy of the proceedings to this Control Body.

"(...)"

THAT by memorandum No. JB-2015-012 of January 16, 2015, the lawyer Pablo Cobo, in his capacity as Secretary of the Banking Board, requested this National Intendancy for an amplifying report in which the amount that Seguros Sucre S.A. must pay to Mr. Luis Alfonso Figueroa Pulido is analyzed and determined;

THAT through memorandum No. INJ-DNJ-SAL-2015-0241 of March 23, 2015, this office requested the Regional Intendancy of Portoviejo to gather this information with legal support; and, consequently, deliver a pronouncement regarding the amount of the indemnification to be paid by the insurer, an amount that necessarily should have been recorded in resolution No. SBS-IRP-DASCP-2014-009 of March 11, 2014;

THAT the Regional Intendant of Portoviejo (s), through letter No. IRP-SSP-2015-074 dated April 15, 2015, in response to the above, states that regarding the amount that Seguros Sucre S.A. must pay, it contacted said insurer, which sent to this Office the original invoices totaling the amount of US$ 20,888.49 for the repair of the damaged vehicle, value to be paid minus the deductible agreed upon in vehicle policy No. 0023398 and without interest since the objection to the payment of the indemnification by Seguros Sucre S.A. was made within the legal period;

THAT by a document presented to this control body on March 26, 2014, the doctor Yesenia Riofrío Carpio, Regional Manager of Seguros Sucre

Banking Board of Ecuador

Resolution No. JB-2015-3416

S.A., together with the sponsoring lawyer, filed an appeal against resolution No. SBS-IRP-DASCP-2014-009, of March 11, 2014, before the Banking Board, under the provisions of Article 70 of the General Insurance Law;

THAT by resolution No. SBS-IRP-DASCP-2014-014, of April 9, 2014, the Regional Intendant of Portoviejo, granted the appeal filed by the Regional Manager of Seguros Sucre S.A., and ordered the sending of the respective file;

THAT the appellants, based their appeal on the following:

That on July 3, 2013, the insured and owner of the insured vehicle reported to the insurance company the occurrence of the accident in which the insured vehicle was involved;
That while they were reviewing the accident documentation, they learned that the insured had also contracted an insurance policy covering the same insured vehicle with Seguros Equinoccial S.A., a contract that was never notified to Seguros Sucre S.A.; particularly regarding the percentage in which the vehicle was insured with each company. They also learned that the insured had filed the claim with both insurance companies;
That as a consequence of the above, on July 29, 2013, and within the term granted by law to pronounce on the validity or not of the claim, the denial of payment of the accident was notified; and,
That from the documentation on file, the coexistence of insurance can be evidenced, and however, despite the insured having contracted two insurance policies for the same asset, he did not notify this fact to Seguros Sucre S.A., which undoubtedly constitutes a fault on the part of Mr. Luis Figueroa Pulido for not declaring the true state of the risk. Legally, the insured was obligated to state that the asset had two insurances; and, additionally, he should have indicated in what percentage he was insured with each of the insurers to determine the insured risk;

THAT the first five paragraphs of Article 42 of the General Insurance Law, in force at that time, provide as follows:

"Any insurance company is obligated to pay the contracted insurance or the corresponding part of the loss duly proven, as the case may be, within 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, 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 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 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 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 Superintendency 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 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 Superintendency of Banks to ask it to order the insurance company to pay 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 Superintendency of Banks is competent to hear and resolve the present administrative complaint;

THAT in concordance with the above, Article 22 of Supreme Decree No. 1147, published in the Official Register No. 123, of December 7, 1963, 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 indemnification owed by the insurer. It is incumbent on the latter, in both cases, to demonstrate the facts or circumstances excluding their liability";

THAT in the present case, the accident that occurred on Friday, June 28, 2013,

Banking Board of Ecuador

Resolution No. JB-2015-3416

was brought to the knowledge of the insurer on July 3, 2013, through the presentation of the "Car Accident Reports" form, accompanied by the other documents required for the configuration of the claim. Regarding the amount of the indemnification, the insured has presented several original invoices for the value of US$ 20,888.49;

THAT the insurer through letter No. RC-599-2013, of July 29, 2013, denied the payment of the indemnification claimed for the accident that occurred, based on:

"(...)"

From the analysis of the documentation presented and the investigations carried out by our company, we have determined that there are omitted circumstances and reticence in the information provided to our company, both at the time of the issuance of the policy, as well as at the presentation of the claim for the accident that occurred.

Such is the case that simultaneously with the contracting of policy #23398 with Seguros Sucre to cover the vehicle: MERCEDES BENZ OF 1721/52, Plates: MAT0429 Chassis: 9BM3840726B462295, Motor: 377973U0666326, the issuance of policy #206950 with the Equinoccial Company was proceeded, for the Insured Value of $75,000.00 with the validity date 25-06-2013 to 25-06-2014...

Additionally, we have obtained the documentation related to the presentation of the accident by collision suffered by the vehicle MERCEDES BENZ OF 1721/52, Plates: MAT0429 to the Company Seguros Equinoccial, on the date of June 28, 2012 (the correct year is 2013), that is, the claim for the same damages to our company...

It is important to highlight that there was no formal and written manifestation to our company neither before nor after the accident, regarding the existence of another policy covering the same risk. Additionally and much less a notification that this claim was being presented simultaneously to the other insurer.

The circumstances previously related ground our decision to decline attention to the claim according to Clause 4 of the general conditions of the vehicle insurance policy:

Clause 4 – Declarations and Validity

"This insurance is contracted based on the declarations contained in the application, which forms an integral part of the insurance contract. Consequently, any false or concealed declaration vitiates the relative nullity of the insurance contract according to law".

Additionally, clause 10 numeral 8 of the

Banking Board of Ecuador

Resolution No. JB-2015-3416

general conditions of the vehicle policy apply in this case, which indicate:

Clause 10 – Loss of Rights

"Without prejudice to what the other conditions of this policy establish, the insured will lose the right to any indemnification in the following cases:

If the Insured in bad faith, omits information or makes false declarations, or if he knowingly exaggerates the amount of damages, or if he hides pieces saved from an accident, or if in any other way, he tries to obtain illicit advantages from this insurance";

THAT this communication of denial by the insurer does not involve duly justified objections as determined by the regulations, tending to demonstrate unequivocally the facts or circumstances excluding their liability to indemnify the accident; what is transcribed is a supposed contravention of the insured with what is related to Clauses 4 and 10 of the General Conditions of the Policy, backing up this argumentation in the insured's own subsequent declaration when presenting two claims for the same accident under two insurance contracts on the same insured object;

THAT in concordance, it is also important to cite the provision contained in numeral 14.3 of Article 14 of Resolution JB-2013-2489, which contains the "Manual of Procedures for the Processing of Administrative Complaints Filed Under Article 42 of the General Insurance Law", which establishes as follows:

"Art. 14.- Without prejudice to the legal analysis carried out in each case, within administrative complaints, the payment of the accident will be ordered when:

...14.3 The insurance company formulates objections that are not duly justified or that do not demonstrate unequivocally the existence of the causes excluding their liability, even if these have been notified to the insured or beneficiary within the period of forty-five (45) days; and,...". (Emphasis added);

THAT by a document from the insured Mr. Luis Alfonso Figueroa Pulido, presented to this control body on May 12, 2014, as an extension to his administrative complaint, he says:

"(...)"

In the month of June 2013, Mr. Pablo Paredes, who claimed to be an advisor of SEGUROS EQUINOCCIAL, offered my son to insure my vehicle with said company, communicating to my son that he already had another insurance and that it was active, expressing the said gentleman that it did not

Banking Board of Ecuador

Resolution No. JB-2015-3416

matter, that the main thing was to protect my investment, reinsurance my patrimony, confirming what was said by the chief supervisor of him; Additionally, Mr. Geovanny Cortez, supervisor of Seguros Equinoccial, gave me the monthly payment quote of the insurance, which was reviewed by my daughter who told him that the value was higher than that of Seguros Sucre, expressing that this one was more super secure because it was the largest in Latin America with 40 years of service to the client covering the payments of accidents with security and responsibility and that it had more coverages, asking him again if he could have two insurances because I already had one and he replied that yes, since it was better to have other insurances, for which I agreed to said offer.

On Friday, June 28, 2013, the vehicle described above, owned by me, suffered a traffic accident on the Puerto López-Jipijapa road, reporting the particular to Mr. Paredes, advisor of SEGUROS EQUINOCCIAL, instructing me to go to the Manta office which was the closest to me and to communicate the accident also to the other insurance company; following his instructions to the letter, I filed my claim with the INSURANCE COMPANY S.A. in the Car Accident Reports form.

On July 30, 2013, the Broker of Seguros Sucre calls me to inform me that they cancel my policy because I have another insurance. For which I again contacted the collaborator of Seguros Equinoccial to manifest what happened and he told me that since everything is under the regulation of the Superintendency of Banks and Insurance, it informs the control body for the information cross-check and that I could have two insurances because if not, the policy could not be registered or made, trusting in the word of the representatives of Seguros Equinoccial.

"(...)" (sic);

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

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

Art. 1562.- Contracts must be executed in good faith, and consequently bind, 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 article 36 of Supreme Decree No. 1147, which regulates the legislation on the Insurance Contract, states:

"When there are several insurances on the same risk, with different insurers, the insured must communicate the accident to all

Banking Board of Ecuador

Resolution No. JB-2015-3416

insurers, indicating to each of them the name of the others. The insured may ask each insurer for the indemnification proportional to the respective contract; the sums collected together cannot exceed the amount of the damage" (Emphasis added);

THAT in the case that occupies us, it is the insured who reports the accident to the two insurers, as advised by the representative of Seguros Equinoccial S.A. As a consequence, Seguros Sucre proceeds to cancel the contracted policy denying the accident and in the case of Seguros Equinoccial the Policy was never perfected with the subscription of the contractors, document that when requested by the Regional Intendancy of Portoviejo to said insurer, through letter of March 5, 2014, signed by the lawyer Sergio J. Velasteguí G., Special Representative of Seguros Equinoccial S.A., communicates to this control body as follows:

"...First of all, we must indicate that the lack of presentation of the copy of all risk vehicle VH-206950, was not due to a lack of commitment or diligence in complying with the instructions imparted, or by not providing the facilities to fulfill the functions of the Control Body; this particular was due to the fact that after reviewing the company's files, it was verified that we do not have the mentioned policy signed by the insured...";

THAT in front of these arguments, and since the only policy that is duly perfected, according to article 7 of Supreme Decree No. 1147, is number 0023398 contracted by Mr. Luis Alfonso Figueroa Pulido with Seguros Sucre S.A., therefore, it is under this Policy that the accident must be covered and therefore, proceed to the payment of the corresponding indemnification;

THAT it is important to clarify that the general policy of payment of accidents widespread in the Ecuadorian insurance market is to pay on original invoices, which by law can only be presented to one insurer, no duplicates of original invoices are acceptable. When the figure of several insurances on the same risk exists, the proportional part that was not covered by insurance, is covered by the other company in that same proportion stating that the originals reside in the first claim presented. Therefore, speaking of a possible undue enrichment on the part of the insured, as manifested by Seguros Sucre S.A., must necessarily be proven;

THAT regarding the issue of interest, according to the third paragraph of Article 42 of the General Insurance Law, their payment will be ordered as long as the insurer has not made objections to the claim within the period of forty-five days. In the present case, the payment of interest does not apply, in reason that the denial of payment was made within the aforementioned period;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0373 of May 4, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed;

IN exercise of its legal attributions,

Banking Board of Ecuador

Resolution No. JB-2015-3416

RESOLVES:

ARTICLE 1.- REJECT the claim contained in the appeal filed by the doctor Yesenia Riofrío Carpio, Regional Manager of Seguros Sucre S.A.; and, consequently, CONFIRM PARTIALLY resolution No. SBS-IRP-DASCP-2014-009, of March 11, 2014, by which the Regional Intendancy of Portoviejo ordered that in accordance with what is provided in the third paragraph of Article 42 of the Codification of the General Insurance Law, the insurer proceed within a period of ten (10) days counted from the receipt of this resolution with the payment to Mr. Luis Alfonso Figueroa Pulido, of the values for the concept of repair of the damaged vehicle, according to the original invoices presented by the insured to Seguros Sucre S.A., for the value US$ 20,888.49; minus the deductible agreed upon in Vehicle Policy No. 0023398, with the clarification that the payment is without interest in reason that said payment has been objected within the period of forty-five days provided in Article 42 of the General Insurance Law.

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.

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

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

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

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD