The Chilean Insurance Association has reached an agreement with Lloyd’s in order to use a new wording for the Control Clause in Reinsurance Contracts. Such a clause is agreed between parties allowing reinsurance companies to take over the adjusting process and aftermath of the claims. According to the Chilean law, all disputes arising from reinsurance contracts must be subject to the Chilean jurisdiction. Nevertheless, parties could agree that the applicable law for the case be the one authorized by the Chilean International Arbitration Law, which allows the application of any country’s law.
Now, Lloyd’s has agreed a new Control Clause, accepting expressly that the adjusting process be executed according to Chilean Law and if any disputes arise between parties in connection with the Reinsurance contract, shall be subject to Chilean jurisdiction and the applicable law for the case will be the one stated in the Reinsurance Contract in accordance with Chilean insurance law. The latter means that Lloyd’s is willing to be subject to Chilean law to resolve cases.
That clause clarified the Chilean insurance market’s concerns related to the adjusting process and the outcomes of disputes between Reinsured and Reinsurer, but more importantly, that insurance companies will have more certainty about not only the jurisdiction but also the law applicable for resolving disputes arising from insurance contracts.
Certainly, this agreement means a concrete recognition from the London insurance market to the strength and credibility of the Chilean insurance market.