Insurance Comparative Guide

• Published date: 27 January 2022
• Subject Matter: Insurance, Insurance Laws and Products, Reinsurance
• Law Firm: Dentons Paz Horowitz
• Author: Mr Gabriel Santelices

1 Legal framework

1.1 Which legislative and regulatory provisions govern the insurance sector in your jurisdiction?

The insurance sector is primarily regulated by Book III of the Monetary and Financial Organic Code and the accompanying regulations.

Another important source of law is the resolutions and regulations issued by the Superintendency of Companies and Securities. These provisions set out numerous obligations relating to the operation of insurance companies, such as:

• the preparation of monthly and yearly reports regarding the reserves;
• the number of policies;
• policyholder data; and
• the approval of insurance plans.

Other relevant provisions are set out in the Commercial Code, which regulates the insurance contract and its obligations from a commercial perspective.

1.2 Which bilateral and multilateral instruments on insurance have effect in your jurisdiction?

There are no specific instruments in Ecuador regarding insurance matters. However, Ecuador has ratified certain conventions of the International Labour Organization that set out guidelines on insurance in the work environment - for example, Convention 24 on Sickness Insurance (Industry).

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

In general, the Superintendency of Companies and Securities is responsible for enforcing the law and regulations applicable to private insurance companies and brokers. In the case of medical insurance, in addition the Superintendency of Companies and Securities, the Health Ministry - through its Control Agency - is in charge of controlling of the medical aspects of the plan.

1.4 What is the regulators' general approach in regulating the insurance sector?

The insurance regulators in Ecuador focus on preventing scams by:

• analysing the policies issued by insurance companies and the total amount insured;
• requesting appropriate reserves and reinsurance contracts; and
• preventing money laundering through continuous reporting to a specialised office.

In the medical context, the supervisory agencies centre their attention on ensuring compliance with:

• the minimum coverage determined by the law; and
• the effective and accurate coverage of claims presented by policyholders.

2 Insurance contracts

2.1 What are the main types of insurance available in your jurisdiction?

Insurance contracts are classified in the Commercial Code into two types: property insurance and people's insurance. The former encompasses:

• tort insurance;
• fire insurance;
• liability insurance; and
• transportation insurance.

The second area includes life insurance and medical insurance.

2.2 Are all insurance contracts regulated? What terms do they typically include?

Ecuadorian law recognises different kinds of insurance contracts, as long as they contain the following mandatory clauses:

• the start and finish dates;
• the details of the insurer;
• the details of the insured;
• a (valid) insurable object;
• an insurable risk;
• the insurance cost or premium;
• the obligation of the insurer to pay the claim fully or partially, depending on the extent of the insured event;
• the payment method; and
• the insured amount or the insurer's liability limit.

For medical insurance contracts, the law requires additional mandatory clauses:

• an obligation to cover catastrophic and chronic diseases if they arise;
• obligatory coverage for medical emergencies, without limitation of which hospital, clinic or medical provider the client chooses to go; and
• free of deductible coverage for certain diseases and medical conditions determined by the heath authority.

2.3 What are the formal and documentary requirements for conclusion of an insurance contract?

In general, under Ecuadorian law, to assume obligations:

• a person must have legal capacity and express consent; and
• there must be a licit object and cause.

The only formality required by law is that the insurance contract be written and signed by the parties. Two copies must be signed, one by each party.

2.4 What are the procedural requirements for conclusion of an insurance contract?

There are no procedural requirements required by law. The only requirement that insurers must observe is to retain a written and signed document in their files.

2.5 What are the respective obligations and liabilities of insurer and insured, both on concluding an insurance contract and during its term? What are the consequences of any breach?

Before the contract is concluded, the insured must declare his or her risk conditions in a questionnaire given by the insurer. If the insured lies or intentionally hides important data, the contract may be declared invalid. The insurer must start an administrative process before the Superintendency of Companies and Securities to declare the contract void.

The insured must pay the insurance premium within 30 days of signing of the contract; if he or she fails to pay at this time, the insurer can deny coverage until the premium is paid.

Ecuadorian consumer law requires that all terms be written in Spanish and in plain language, without unnecessary technical terminology. The insurer must make clear:

• the final cost of the insurance;
• the base price; and
• a detailed description of all additional costs.

If the insurer fails to comply, the insured can...