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What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?
The Argentine Superintendence of Insurance (SSN) must approve the wording and conditions of all insurance policies.
Insurers must provide policyholders with policies that are signed, clearly written and easy to read, and which contain the following:
- the name and domicile of the parties;
- the interest or life insured;
- the risks written by the insurer;
- the inception date;
- the term for which risks are covered;
- the premium;
- the sum insured; and
- the general conditions.
Exclusions must be written in prominent and clear writing and included in an annex to the policy.
Insurers must deliver the policy to the insured, through a means that allows them to prove receipt, within 15 days of the date on which the contract is entered into.
Policies must be written in Spanish, except for marine insurance policies, which can be written in a foreign language.
Parties to a reinsurance contract are free to agree on most of the conditions.
Are (re)insurance contracts subject to any mandatory/prohibited provisions?
The Insurance Law (17,418) includes a number of terms that are implied into the insurance contract, which can be divided into three categories:
- Mandatory terms – terms that, due to their wording, nature or legal provision are mandatory (eg, misrepresentation and non-disclosure and their effects).
- Implied terms – terms that can be modified only to the insured's benefit (eg, the possibility of mitigating the effects of misrepresentation in the absence of bad faith, the term for reporting a loss and the notice that an insurer must give if it rescinds a policy).
- Terms that can be freely modified by the parties – any other term that does not fall within any of the previous categories.
Reinsurance contract In reinsurance contracts, certain clauses are mandatory.
For instance, contracts must be governed by Argentine law and disputes will be resolved within the Argentine jurisdiction.
They must include a clause whereby, in the event of liquidation of the cedant, the reinsurer will pay directly to the liquidator any outstanding balances, regardless of whether the cedant has complied with its obligations to the insured.
All of the brokerage commissions and expenses agreed in each operation must be specified in both the cover notes and reinsurance contracts.
Other terms can be freely negotiated between the parties.
Can any terms by implied into (re)insurance contracts (eg, a duty of good faith)?
All contracts must be made, interpreted and performed in good faith. Contracts mandate not only what is formally expressed, but also any consequences to which parties acting with care and diligence may reasonably be obligated. This particularly applies to insurance contracts, where both the insured and the insurer are deemed subject to the duty of utmost good faith.
What standard or common contractual terms are in use?
In insurance contracts, common contractual terms in use are:
- the risk covered;
- the exclusions;
- the term to report a loss;
- the premium payment requirements;
- misrepresentation and non-disclosure;
- aggravation of risks; and
- a rescission clause.
Reinsurance In reinsurance contracts, common contractual terms are:
- the claims control clause;
- follow the fortune;
- the applicable law;
- termination; and
What is the state of development in your jurisdiction with regard to the use of ‘smart’ contracts (ie, blockchain based) for (re)insurance purposes? Are any other types of financial technology commonly used in the conclusion of (re)insurance contracts?
We are not aware of any developments with smart contracts or other types of financial technology locally used in the conclusion of (re)insurance contracts.
What rules and procedures govern breach of contract (for both (re)insurer and insured)?
The breach of an insurance policy by an insurer enables the insured to claim on the basis of ordinary contractual liability. Liability can also extend to foreseeable indirect damages.
Punitive damages can be awarded to a consumer for violations of the Consumer Protection Law. The maximum amount that can be awarded to a consumer is Ps5 million (approximately $280,000 at the time of writing).
If the Insurance Law does not determine the effect of non-compliance with a condition or obligation on the insured, the parties may agree on the forfeiture of the insured’s rights if the breach is due to its negligence, according to the following regime (Article 36 of the Insurance Law):
- If the condition or obligation must be fulfilled before the loss, the insurer must claim that the insured has forfeited its rights within a month.
- When the loss occurs before the insurer can claim that the insured has forfeited its rights, the insurers will be bound to cover if the breach had no influence on the occurrence of the loss or on the extent of the insurer’s obligation.
- If the condition or obligation must be executed after the loss, the insurer will decline liability if the breach had an effect on the extent of the insurer’s obligation.
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