Banking Board of Ecuador

RESOLUTION No. JB-2015-3424

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitional Provision of the Organic Code of Monetary and Financial Affairs determines that the Banking Board will continue to act until it resolves all claims, appeals, and other administrative procedures it was handling 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 Lenco S.A. entered into a comprehensive all-risk transport insurance policy No. GYE-0000005865 with Interoceánica C.A. de Seguros y Reaseguros, whose validity began on August 18, 2013, and ended on August 18, 2014, to cover the container, generator, and merchandise: Dry and refrigerated goods owned by shipping companies that are transported by the insured for the movement of third-party cargo;

THAT the parties agreed to set the following maximum insured limits:

• Container US $ 20,000.00
• Merchandise US $ 15,000.00
• Chassis US $ 5,000.00
• Single Limit per Shipment US $ 40,000.00
• Aggregate Annual Limit US $ 63,500.00

The parties agreed on the following estimated annual movement volume:

US $ 180,000,000.00:

THAT on October 22, 2013, an accident occurred involving the vehicle driven by Mr. Jacinto Peña Cerezo, driver for Lenco S.A., which was transporting the insured container No. MORU0601396, containing 1,540 boxes of bananas belonging to TUCHOK S.A. As a result of the accident, the container was severely damaged and the merchandise spoiled due to being export bananas, except for that merchandise which was sold immediately as salvage;

THAT said accident was reported to the insurer on October 25, 2013, through Cafma Cia. Ltda. Insurance Producer Advisory Agency, who submitted the documentation to support the claim;

THAT through a communication entered into the Superintendency of Banks on April 24, 2014, Mrs. Elisa María Falconí Dueñas, General Manager of Lenco S.A., with the professional sponsorship of lawyer Francisco Nieto Vergara, filed an administrative claim against Interoceánica C.A. de Seguros y Reaseguros, aimed at having this regulatory body order said insurance company to pay the indemnity covered under the comprehensive all-risk transport policy No. GYE-0000005865;

THAT through Official Letter No. DAyEU-SSP-REQ-2014-221 of May 5, 2014, the Regional Intendancy of Guayaquil requested explanations from the insurance company and the submission of corresponding documentation;

THAT with Official Letter No. QGG-0376-2014, entered into this regulatory body on June 6, 2014, Interoceánica C.A. provided a response to what was required by the Superintendency of Banks

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and principally stated that this administrative claim filed against it should be rejected because it is not properly documented or valued by the insured, and is therefore an inappropriate claim lacking any factual and legal basis;

THAT in attending the proposed administrative claim, the Regional Intendant of Guayaquil, based on the report from the Directorate of User Attention and Education, contained in Memorandum No. DAyEU-2014-346 of August 8, 2014, issued Resolution No. IRG-DAYEU-SSP-2014-108 of August 8, 2014, in which, in its sole article (first), resolved as follows:

"(...)

SOLE ARTICLE.- ORDER, in accordance with what is provided in the fourth paragraph of Art. 42 of the General Insurance Law, that INTEROCEANICA C.A. INSURANCE AND REINSURANCE, pay to the company LENCO S.A. the indemnity for the accident that occurred to container No. MORU0601396, inside which there were 1,540 boxes of bananas, the sum of TWENTY-TWO THOUSAND SIX HUNDRED SIXTY-TWO AND 50/100 DOLLARS OF THE UNITED STATES OF AMERICA (US$ 22,662.50); having to deduct from said indemnity the values agreed upon in the Transport Insurance Policy No. GYE-0000005865.

(...)" (sic);

THAT through Communication No. QGG-0575-2014 of August 18, 2014, entered into the regulatory body on the 20th of the same month and year, Mr. Francisco Rivadeneira Serrano, General Manager of Interoceánica C.A. de Seguros y Reaseguros, with the professional sponsorship of Dr. Luis Larrea Benalcázar, filed an appeal against the Banking Board regarding the administrative act contained in Resolution No. IRG-DAYEU-SSP-2014-108 of August 8, 2014, a resource that was granted by the Regional Intendancy of Guayaquil through Resolution No. SB-IRG-DASSP5-2014-026 of September 18, 2014;

THAT the appellant based his appeal on the following:

2.1.1 That the claim was pending before the insurer and that, therefore, the 45-day period established by the General Insurance Law to pay or object to said claim had not concluded, since as stated in the appealed resolution itself, the date of presentation of the last document is March 21, 2014, and not January 14 of the same year as alleged by the claimant, and the administrative claim is presented with a date of April 24, 2014;

2.1.2 That the insured has not demonstrated the insurable interest on the container, an essential element of the insurance contract, since according to Proforma No. 1113740 for container No. MORU0601396, it indicates that the importer is Tuchok S.A., the owner is Mitsui / Ecx and the agency is Remar; and, consequently, if the owner is not Lenco S.A., how can the insurer order payment in its favor, if no loss has been suffered, given the non-existence of insurable interest; and,

2.1.3 That the salvage was sold without the insurer's authorization, without the latter being able to establish the damage to the merchandise affected in the accident. The insured only informed of the sale of the merchandise, but this is not the same as requesting authorization;

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THAT Article 42 of the General Insurance Law, in force at that time, states as follows:

"Art. 42.- Every 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 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, together with interest calculated from the aforementioned forty-five days, 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 and Insurance to ask that it order the insurance company to pay the claim, and if there are grounds for the refusal of said payment, it will analyze them to determine their justification, that is, their relevance or lack of legal relevance. The Insurer, may at any stage of the claim process, even before the delivery of all required documentation is verified, object to the payment of the claim, by establishing the existence of some fact that in its opinion exempts it from its payment responsibility;

THAT Articles 1 and 22 of Supreme Decree 1147 published in the Official Register No. 123 of December 7, 1963, provide:

"Art. 1.- Insurance is a contract by which one of the parties, the insurer, obligates itself, in exchange for the payment of a premium, to indemnify the other party, within the agreed limits, for a loss or damage caused by an uncertain event; or to pay a capital or an annuity, if the eventuality provided for in the contract occurs." (Underlining is mine)

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"Art. 22.- It is incumbent upon the insured to prove the occurrence of the accident, which is presumed to have been caused by fortuitous event, unless proof to the contrary is provided. Likewise, it is incumbent upon the insured to prove the amount of the indemnity owed by the insurer. It is incumbent upon the latter, in both cases, to demonstrate the facts or circumstances excluding its responsibility.";

THAT from the transcribed norms in the preceding paragraph, it follows that an insurance company is obligated to pay the indemnity covered by the insurance policy, provided that the eventuality provided for in the contract occurs, and that in addition, the occurrence of the accident and the amount of the indemnity are proven. Regarding this, the file contains the police report for the accident that occurred on October 22, 2013, to vehicle plate GOA0700 driven by Mr. Jacinto Allan Peña Cerezo, on the Perimetral Avenue, in Guayaquil. Regarding the amount of the indemnity, there is the communication sent by the general manager of Tuckok S.A. to the insured Lenco S.A. on January 2, 2014, through which the total amount of the loss is recorded;

THAT the file shows that on January 14, 2014, the last documents necessary to support and prove the present claim were sent, through the insurance producer advisory agency, with which the insurer could object to it or proceed with the corresponding payment. Any documentation subsequent to that date, which the insurer continued to request, does not exempt it from the obligation to pay or object to the claim that should have been made within the 45 days established by law, starting from January 14, 2014, a fact that did not occur;

THAT from the review carried out on the file formed around the appeal resource being analyzed, it is verified that the prerequisites mentioned in the preceding paragraph were met, since LENCO S.A., in its capacity as insured, proved the occurrence of the accident, and quantified the indemnity for it by presenting the pertinent documents to the insurer for that effect;

THAT it is important to mention the regulation contained in Article 21 of Supreme Decree No. 1147, which establishes:

"Art. 21.- The insured is also obligated to prevent the extension or spread of the accident and to seek the salvage of threatened things. The insurer must bear the useful expenses that the insured reasonably incurs in compliance with these obligations, and all those that are made with its prior acquiescence. These expenses in no case can exceed the value of the insured sum";

THAT in concordance, in the particular conditions of the Transport Insurance Policy No. GYE-0000005865, contracted by Lenco S.A., it states:

"(...)

SALVAGE

It is agreed and declared that in case of loss or damage, the Policy to which this clause is incorporated will extend to cover the saved property wherever it may be, the Insured agreeing to notify the Company within 72 (hours) about the location and value of such saved properties.

(...)";

THAT regarding this, also in the general conditions of the present policy it indicates:

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"Art. 23.- Notification of Loss or Damage and Salvage: The insured must notify the Insurer immediately of any loss or damage that comes to their knowledge.

Furthermore, in case of loss or damage, it is the duty of the Insured to immediately take all necessary measures for the preservation and salvage of the merchandise and to reduce the loss or damage. The Insurer may also take such measures.

All right to indemnity is lost in the case of non-compliance with these obligations.";

THAT it is recorded in the file that, upon notifying of the accident, the insurer was notified about the sale of the banana boxes, a necessary measure to avoid greater loss, and therefore, a greater indemnity payment by the insurer, since it was a highly perishable product. The obligation of the insured was, therefore, to notify the insurer of this measure and did not require its authorization, as it alleges;

THAT regarding the lack of insurable interest of the insured on the damaged container, which Interoceánica C.A. de Seguros y Reaseguros alleges, it is important to clarify the concept of this essential requirement of the insurance contract, without which the contract (policy) is not perfected or may degenerate into another contract;

THAT regarding this, the Mapfre Insurance Dictionary defines insurable interest as follows:

"Requirement that must concur in whoever desires coverage of a certain risk, reflected in their sincere desire that the accident does not occur, since as a consequence of it, a detriment to their patrimony would originate.

This principle will be understood more easily if it is taken into account that what is insured, that is, the object of the contract, is not the thing threatened by a fortuitous danger, but the interest of the insured that the damage does not occur";

THAT in analyzing the present case, the insured company has an evident insurable interest in protecting both the container and the merchandise contained within it, due to its economic and commercial activity being road transport and cargo, an object that is also reflected in the Particular Conditions of the Transport Insurance Policy contracted by stipulating in the insured object: "CONTAINER, GENERATOR AND MERCHANDISE: DRY, REFRIGERATED PROPERTY OF SHIPPING COMPANIES THAT ARE TRANSPORTED BY THE INSURED FOR THE MOVEMENT OF THIRD-PARTY CARGO". (Emphasis added). Hence its present insurable interest from the beginning in the contracting of the corresponding Policy signed by the parties;

THAT the National Legal Intendancy, through Memorandum INJ-DNJ-SAL-2015-0206 of March 9, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the General Manager of Interoceánica C.A. de Seguros y Reaseguros;

and,

IN exercise of its legal powers,

RESOLVES:

ARTICLE 1.- REJECT the claim contained in the appeal filed

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by Mr. Francisco Rivadeneira Serrano, General Manager of Interoceánica C.A. de Seguros y Reaseguros; and, consequently, CONFIRM Resolution No. IRG-DAYEU-SSP-2014-108 of August 8, 2014, issued by the Regional Intendant of Guayaquil, with which it ordered that Interoceánica C.A. de Seguros y Reaseguros pay to the Company Lenco S.A. the indemnity for the accident that occurred to container No. MORU0601396, inside which there were 1,540 boxes of bananas, for the sum of US$ 22,662.50, as provided in the fourth paragraph of Article 42 of the General Insurance Law; having to deduct from said indemnity the values agreed upon in the Transport Insurance Policy No. GYE-0000005865.

ARTICLE 2.- ORDER that the insurance company comply with what is established in the previous article within a period of fifteen days, under legal warnings. If it does not do so, it would be subject to what is provided in letter a) of Article 55 of the General Insurance Law.

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

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

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

Signature: Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD