Norm for the Authorization of Insurance Policies

Resolution No. CD-SIBOIF-958-2-SEP6-2016
Dated September 6, 2016

NORM FOR THE AUTHORIZATION OF INSURANCE POLICIES

The Board of Directors of the Superintendence of Banks and Other Financial Institutions.

CONSIDERING

I
That Article 5, numeral 1), and Article 6, numeral 11) of Law No. 733, "General Law of Insurance, Reinsurance and Surety Bonds," published in La Gaceta, Official Gazette No. 162, 163 and 164, on August 25, 26 and 27, 2010 (General Insurance Law), empowers the Board of Directors of the Superintendence of Banks and Other Financial Institutions to regulate the activity of insurance, reinsurance and surety bonds, their intermediation and commercialization, in such a way that the insurance market is dynamic, transparent and organized.

II
That Article 6, numeral 7) of the aforementioned Law, empowers the Superintendent to create a registry in which updated copies of the models of the text of the policies and general conditions, particular conditions and addenda, insurance application, questionnaire and all those documents related to the issuance of the authorized insurance policy are available. Likewise, said article establishes that insurance and surety bonds with policy models that are not registered cannot be issued.

III
That Article 73 of the General Insurance Law provides that the Superintendent will review and approve the general conditions, particular conditions, insurance application, questionnaires, addenda and other documents that form an integral part of the policies, as well as the respective technical notes for new plans and/or modifications to existing ones.

IV
That in accordance with the considerations set forth above, and based on the powers provided for in Article 4 of the General Insurance Law; and Article 3, numeral 13, of Law 316; Law of the Superintendence of Banks and Other Financial Institutions, and its reforms.

In exercise of its powers,

HAS ISSUED

The following:

Resolution No. CD-SIBOIF-958-2-SEP6-2016
NORM FOR THE AUTHORIZATION OF INSURANCE POLICIES

CHAPTER I
CONCEPTS, OBJECT AND SCOPE

Article 1. Concepts.- For the purposes of this norm, the concepts indicated in this article, both in uppercase and lowercase, singular or plural, shall have the following meanings:

a) Insured: Natural or legal person referred to in Article 3 of the General Insurance Law. b) Beneficiary: Person defined in Article 3 of the General Insurance Law. c) Policy renewal certificate: Document issued by the insurance company through which the subscribing parties agree, expressly or tacitly, to renew the policy that was in effect until that moment, under the same conditions or modifying them; and which forms part of the policy. d) Special conditions: Set of provisions that form part of the insurance policy in which modifications, expansions or derogations of the general or particular conditions of the policies are collected, in accordance with what is established in Article 3 of the General Insurance Law. e) General conditions: Set of basic principles established by the insurer to regulate the aspects referred to in Article 3 of the General Insurance Law. f) Particular conditions: Document that forms part of the policy and which collects the aspects established in Article 3 of the General Insurance Law. g) Policyholder: Person who subscribes to a policy or insurance contract with an insurance entity, as established in Article 3 of the General Insurance Law. h) Insurance contract: Commercial contract for the provision of future services, by which an insurance company obligates itself, through the payment of a premium, to indemnify another natural or legal person for losses or damages suffered as a consequence of probabilistic, fortuitous or force majeure events, or to pay a sum according to the duration or events of the life of one or more persons, as established in Article 3 of the General Insurance Law. i) Underwriting file: Set of documents gathered by the insurance company before the issuance of the policy, to be able to qualitatively and quantitatively assess the convenience or not of accepting the risk it intends to assume, and to be able to establish the characteristics of the insurance contract. Once the decision to underwrite it is taken, both the general, particular and special conditions of the insurance policies issued, as well as the applications, declarations of the contracting parties and any document that has served as a basis for the underwriting, become part of this file.

j) Indemnification: Amount that the insurance entity is contractually obligated to pay in the event of a claim, in accordance with what is established in Article 3 of the General Insurance Law. k) Superintendence Law: Law No. 316, Law of the Superintendence of Banks and Other Financial Institutions and its reforms. l) General Insurance Law: Law No. 733, General Law of Insurance, Reinsurance and Surety Bonds, published in La Gaceta, Official Gazette No. 162, 163 and 164, on August 25, 26 and 27, 2010. m) Technical note: It is the document that describes the actuarial calculations that, for each plan or modality of insurance, give rise to the determination of the premiums and surcharges that an insurance entity will apply, as well as the justification of its management and administration expenses and systems for calculating technical provisions. n) Insurance policies: They are the documents that make up the insurance contract, which include, among others, the insurance application, the cover page, the general conditions, the particular conditions, questionnaire, consent, the individual certificate for life insurance and the addenda. o) Tariff Premium: Value of the quota or payment that the policyholder or insured must satisfy to an insurance company, as consideration for the coverage of the risk specified in the insurance, reinsurance and surety contract, which is composed of the pure or risk premium and surcharges for administration and acquisition expenses, reinsurance cost, safety margin and profit margin. p) Risk: Fortuitous, lawful and uncertain event that does not depend on the will of the applicant, insured or beneficiary, nor on that of the insurer, and whose occurrence makes the insurer's obligation enforceable. Certain facts, except death and physically impossible ones, do not constitute risk and are, therefore, extraneous to the insurance contract. q) Claim: It is the realization of the insured risk provided for in the insurance contract, from which arises the indemnity obligation of the insurer, in accordance with what is established in Article 3 of the General Insurance Law. r) Insurance companies: Entities authorized by the Superintendence, which operate in insurance, reinsurance, surety bonds and reinsurances, national or foreign, private, state or mixed ownership, in accordance with what is established in the General Insurance Law. s) Applicant or policyholder: Natural or legal person who contracts the insurance, either on their own behalf or on behalf of a third party determined or determinable who transfers the risks to the insurer. t) Sum insured: Value attributed by the holder of an insurance contract to the goods covered by the policy and whose amount is the maximum quantity that the insurer is obligated to pay, in accordance with what is established in Article 3 of the General Insurance Law.

u) Superintendence: Superintendence of Banks and Other Financial Institutions. v) Superintendent: Superintendent of Banks and Other Financial Institutions. w) Type of insurance: Modality of an insurance plan that groups the risks to be covered according to their nature and specific characteristics, which have a certain similarity and relationship of homogeneity, such as, in the life branch, individual life insurance, whole life, collective, and, in the property branch, vehicle insurance, fire, civil liability, surety, personal accidents, health, hospitalization and microinsurance.

Article 2. Object.- The purpose of this norm is to establish the general guidelines to be followed by insurance companies for the authorization, modification and delivery of insurance policies.
Article 3. Scope.- These provisions are applicable to insurance companies.

CHAPTER II
REQUIREMENTS FOR THE AUTHORIZATION OF INSURANCE POLICIES

Article 4. Information requirements.- Insurance companies, prior to commercializing their insurance policies, must submit to the Superintendent a request for their authorization, which must contain the following minimum information:

a) Description of the product, market or target to which it is directed, form of commercialization and any other information that is important for its understanding; b) Type of insurance and, where applicable, product name; c) Currency in which the corresponding policy will be issued; d) Risk or risks to which coverage will be given; and e) List of documents attached to the application.

The application together with the documents referred to in Article 5 of this norm must be sent to the Superintendent in original and simple photocopy.

Article 5. Documents to be submitted with the application. Insurance companies must attach the following documents to the application for authorization of insurance policies:

a) Texts of the policy, which must include at least the following:
1) Application form proposed by the insurance company to be filled out by the policyholder or insurance applicant through which they request the coverages described in said document and the issuance of the corresponding insurance policy. In said form, the applicant must declare the existence of other insurance on the same objects and, in general, all circumstances that may influence the valuation of the risk. For the case of tenders, the basis documents will qualify as an application.
2) General conditions of the policy as established in Article 6 of this norm.
3) Particular conditions of the policy as established in Article 7 of this norm.
4) Special conditions, addenda and assignments, if any.
5) Declaration by the insured that the insurance contract or policy was delivered to them for reading, that their doubts were clarified and that they sign with full knowledge of the conditions established in said document.
6) In the case of collective insurance policies, present individual certificate of life insurance, which is the document issued by the insurance company and delivered to each insured person of a collective insurance policy. This certificate must contain the following minimum information:
i. Names and addresses of the insurance company, policyholder and insured;
ii. Name, ID number and percentage of beneficiaries. In the case of minor beneficiaries, designate the guardian;
iii. Policy and certificate number;
iv. Validity of the policy or certificate with dates and times of initiation and expiration;
v. Insured amount or method of specifying it;
vi. Date of issuance of the document;
vii. Coverages and exclusions;
viii. Procedure and deadlines in which the insured and/or beneficiary must proceed in case of claim;
ix. Documents necessary for the claim; and
x. Authorized signature of the insurance company.
7) Other underwriting documents used by insurance companies such as, renewal certificates and provisional certificates.

b) Technical notes prepared by an actuary registered with the Superintendence, which must comply with the guidelines established in the regulations governing the matter for the preparation of technical notes and actuarial studies.

Article 6. General conditions of the insurance policy and content of the surety bond contract.- The general conditions of the insurance policies and the clauses that make up the surety bond contract must be clear and precise, and contain, according to the branches established in Article 66 of the General Insurance Law, the following minimum information:

a) For property insurance:
1) Integration of the contract;
2) Definitions;
3) Coverages;
4) Exclusions;
5) False or inaccurate declarations;
6) Payment of premium;
7) Limits of liability;
8) Beneficiaries;
9) Obligations of the policyholder;
10) Aggravation of risk;
11) Obligations of the insured in case of claim;
12) Early termination;
13) Renewal;
14) Prescription;
15) Resolution of disputes;
16) Notifications;
17) Other insurance;
18) Subrogation; and
19) Method of calculating the amount to be indemnified.

b) For life insurance:
1) Integration of the contract;
2) Definitions;
3) Coverage;
4) Exclusions;
5) Suicide;
6) Age;
7) Payment of premium;
8) Beneficiaries;
9) Obligations of the policyholder;
10) Payment of benefits;
11) Lapse;
12) Grace period;
13) Rehabilitation;
14) Prescription;
15) Resolution of disputes;
16) Incontestability;
17) Notifications; and
18) Guaranteed values, when applicable.

c) For the surety bond contract, the following minimum clauses:
1) Integration of the contract;
2) Definitions;
3) Coverage;
4) Territoriality;
5) Payment of premium;
6) Limits of liability;
7) Obligations of the beneficiary in case of claims;
8) Renewal;
9) Prescription;
10) Resolution of disputes; and
11) Notifications.

When for each of the types of property, life or surety insurance, any of the clauses referred to in this article, in the opinion of the insurance company, does not apply, the corresponding justification must be presented.

Article 7. Particular conditions of the insurance policy.- The particular conditions of the insurance policies must contain the following information:

a) The name and address of the insured and/or policyholder; b) The name of the beneficiary; c) Concept in which it is insured, that is, if the applicant contracts on their own behalf (if they are both policyholder and insured) or if they contract on behalf of another (when the insured is a person different from the applicant). d) Validity of the contract, with expression of when its effects begin and end; e) Amount of the premium; f) Surcharge, issuance fee and taxes; g) Insured objects; h) Covered risks contracted and their status; i) Sum insured or scope of coverage; j) Form and periodicity of payment and maturity of the premium; and k) Other.

The particular conditions of the policies are variable by nature and therefore, can be freely modified by consent of the parties. The latest such modifications signed by the contracting parties prevail over those previously agreed.

Article 8. Procedure for authorization of insurance policies.- Once all the information referred to in the preceding articles has been presented, the observations issued by the Superintendence during the policy review process have been remedied, and it complies with the requirements established in this norm, the requesting insurance company will be required to present three physical copies and on magnetic media, of the documents making up the policy to be approved, for the Superintendent to issue the authorization resolution within the 15 business days following presentation. In case of denial of the application, the corresponding resolution will be notified to the insurance company.

Article 9. Modification of insurance policies.- The request for modification to the texts of the policies and/or their approved technical notes, prior to their commercialization, must be submitted to the Superintendent for authorization. For this purpose, the request must contain the information indicated in items a) and e) of Article 4 of this norm, as well as the following information:

a) Number and date of the Superintendent's resolution with which it was approved; b) Description of the proposed change; and c) Justification of the modification.

Attached to the application, the insurance company must present the new texts of the policies and/or technical notes to be registered.

Once all the information referred to in this article has been presented and the observations issued by the Superintendence during the review process of the application have been remedied, the Superintendent will require the requesting insurance company to present three physical copies and on magnetic media of the documents of the policy to be modified, in order to issue the authorization resolution within the 15 business days following presentation. In case of denial of the application, the corresponding resolution will be notified to the insurance company.

Article 10. Submission of copies with resolution number.- Within the period of 10 business days following the notification of the authorization resolution of the policy or its modifications, the insurance company must submit a copy containing the documents making up the same, with the number and date of the Superintendent's resolution through which it was approved.

CHAPTER III
REQUIREMENTS FOR THE DRAFTING AND DELIVERY OF THE POLICY

Article 11. Drafting and printing of policy texts.- Insurance policies must be drafted in Spanish, in a clear and precise manner, ensuring that there is congruence between the technical and legal aspects, in such a way that they are easy to understand and apply by the policyholder, insured and beneficiary.

On the cover page of the general conditions and particular conditions, and in all documents making up the policy, the number and date of the Superintendent's resolution through which it was approved must appear in prominent characters.

Article 12. Delivery of the policy or individual insurance certificate.-
1 In the case of individual insurance, insurance companies or the intermediary, if applicable, are obligated to physically deliver the copy of the insurance policy to the insured, obtaining from them or their intermediary, if applicable, the corresponding receipt of delivery expressing the hour and date of its delivery, archiving the foregoing in the respective underwriting file. In the case of group or collective insurance, insurance companies are obligated to physically deliver the individual insurance certificates to the policyholder and these in turn, to the insured, obtaining from the policyholder or their intermediary, if applicable, the corresponding receipt of delivery expressing the hour and date of the delivery of the corresponding certificates, archiving the foregoing in the respective underwriting file.

Without prejudice to what is established in the previous paragraph, insurance companies may deliver insurance policies and the documents that make them up by electronic means, when the client has expressly authorized it. In the case of group or collective insurance, insurance companies may deliver the individual insurance certificates to the policyholder who expressly authorizes it and these in turn, to the insured, by these same means.

The sending by electronic means of the policy and other documents that make it up must be carried out in a protected manner, establishing auditable processes that allow to leave a record of the delivery and receipt by the recipient or recipients, as the case may be, individual or group or collective insurance, under the terms indicated in the previous paragraph.

Together with the policies and the documents that make them up, insurance companies must deliver, either physically or electronically, the brochure for filing claims referred to in Article 13 of this norm.

Insurance companies must send the policies and the documents that make them up within a maximum period of five (5) days counted from the payment of the premium.

Article 13. Delivery of brochure for filing claims.- In accordance with Article 83 of the General Insurance Law, additionally, companies must deliver to the insured or policyholders, in a verifiable manner, together with the policy or individual insurance certificate, as the case may be, a brochure in which the following is clearly stated:

1 Art. 12, amended on August 25, 2017 - Resolution No. CD-SIBOIF-1012-2-AGOS25-2017

a) Express indication to the insured that if they do not agree with the terms of the contract signed or policy issued by the insurance company, they may resolve it within thirty (30) days following its receipt, if it does not concord with the terms of their application; as well as the faculty they have to request within the same period the modification of the text regarding the special conditions of the contract. b) The areas of the company responsible for receiving notification of claims, indicating their location and telephone; the procedure, requirements and deadlines for filing claims with the insurance company and for responding to them; and c) The period of thirty (30) calendar days that the insured has to file claims with the Superintendence in case they have not received a response from the insurance company or consider that it does not satisfy their request.

The brochure referred to in this article must faithfully reflect the content of the insurance policy.

CHAPTER IV
TRANSITIONAL AND VALIDITY

Article 14. Transitional.- Insurance companies will have a maximum period of three months counted from the entry into force of these provisions, for the preparation and delivery of the brochure referred to in Article 13 of this norm.

Article 15. Validity.- This norm will enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Gazette. (f) S. Rosales C. (f) V. Urcuyo V. (f) Gabriel Pasos Lacayo (f) Fausto Reyes B. (f) illegible (Silvio Moisés Casco Marenco) (f) illegible (Freddy José Blandón Argeñal) (f) U. Cerna B. Secretary.

URIEL CERNA BARQUERO
Secretary of the Board of Directors SIBOIF