Law No. 21,314, published in the Official Gazette on April 13, 2021, establishes New Transparency Requirements and Reinforces the Responsibilities of Market Agents, among other matters, introduced a series of amendments in the aforementioned matters, in various regulatory bodies.
Andrés Ossa G.
In particular, the new article 538 bis was incorporated into the Commercial Code, by virtue of which the contracting of certain insurances was prohibited, in the same act or jointly with the granting or renegotiation of financial products or services. This legal change was intended to give the client greater freedom, trying to avoid the conditioning that he could be suffered in obtaining a loan or other financial product or service, pressured to contract certain insurance in the same act or jointly.
By virtue of the provisions of said article, the insurance that cannot be contracted on the occasion of the granting or renegotiation of financial products or services will be determined by the Financial Market Commission by means of a General Standard (“GS”). The GS is currently under review from July 2, 2021 to July 16, 2021, in order to receive comments from those who are interested, especially all insurance entities, insurance brokers, banks, issuers of payment cards, managing agents of mortgage loans and cooperatives supervised by the Commission for the Financial Market and the general public.
For the purposes of regulating the insurance subject to article 538 bis, the GS makes a distinction between (i) those insurances that, in the terms of article 538 bis, are intended to ensure the payment of the debt to the creditor or the protection of assets given as collateral, and (ii) those that do not meet such characteristics.
- Insurance that is intended to ensure the payment of the debt to the creditor or the protection of the assets given as collateral.
Regarding this type of insurance, and in line with the provisions of article 538 bis, its contracting may be required or allowed in the same act or jointly with the granting, or renegotiation of financial products or services.
In order to determine the concepts used in the aforementioned article, in the first place, it is necessary to define what is meant by “contracting in the same act or jointly”. The GS does so in the following way: “when the insurance(s) are contracted in the same act in which the request for granting or renegotiation of the financial product or service is made, and until the financial operation is completed.” In this way, a distinction is made between those insurances that can be contracted in conjunction with the financial product or service and those that cannot be contracted and require subsequent ratification.
Second, you need to determine what you mean by financial products or services. These will be understood as “those contracts between a financial client and a supplier that generate or may generate a debt with said supplier or another creditor in the event of the assignment of a contract. That is, the granting of credits, credit and debit cards and checking accounts with a credit line”. Provider will be understood as any entity that can provide financial products or services, including entities supervised by the Financial Market Commission that are authorized to do so, such as first group and second group insurers, banks, payment card issuers, agents mutual mortgage managers and cooperatives supervised by said Commission.
According to the GS, these insurances must meet a series of characteristics such as, for example, that their exclusive purpose is to ensure the payment of the debt to the creditor or the protection of the assets given as collateral. When the object of the insurance is the payment of the debt to the creditor, the insured amount will correspond to all or part of the unpaid balance of the debt, in accordance with the conditions established in the policy. During the term of the contract, the main beneficiary will be the creditor without renouncement up to the amount of his insurable interest and the financial client in the remaining part. Insurance may not be contracted if there are sections that can be contracted separately in which a beneficiary other than the creditor can be established, nor that can continue its validity once the debt is extinguished or the financial product to which the insurance was linked has been closed.
The risks subject to said insurance are indicated in letter B of Title III of the proposed rule, among which are, (i) in relation to risks related to debt payment, death, disability, unemployment and others, and (ii) in relation to risks related to the asset given as collateral, fire, damage, theft, among others.
- Insurance that is not intended to ensure the payment of the debt to the creditor or the protection of the assets given as collateral.
These are regulated in Title IV of the GS and their contracting in the same act or jointly with the granting or renegotiation of financial products or services is prohibited. However, the contractor may ratify them in writing, without a mandate to the creditor, personally or by email or other equivalent means within a maximum period of 30 days from the subscription of the insurance.
Notwithstanding the foregoing, the GS expresses that the granting or renegotiation of financial products or services may not be conditioned in any way to the contracting of these insurances. Other voluntary contracting insurances may only be offered, in which case they must be informed of their voluntary nature and they may only be contracted after the financial operation has been completed.
In relation to the validity of the GS, Title V establishes that it will be effective as of 60 days from its date of issuance.