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Contracts

General

What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?

The rules governing the conclusion of insurance contracts are contained in the Commercial Code (6102). Where there are no applicable provisions within the scope of the Commercial Code, the appropriate provisions of the Code of Obligations apply. In addition, as per Article 11 of the Insurance Law, the main content of insurance contracts is arranged in accordance with the general conditions approved by the Undersecretariat of the Treasury General Directorate of Insurance and must be applied by all insurers in a similar way.

Mandatory/prohibited provisions

Are (re)insurance contracts subject to any mandatory/prohibited provisions?

Articles 1452, 1486 and 1520 of the Commercial Code set out mandatory provisions for insurance contracts. Most of the rules relate to provisions that cannot be changed to the detriment of the policyholder, insured or beneficiary. The mandatory provisions under the Commercial Code apply to all contracts.

Implied terms

Can any terms by implied into (re)insurance contracts (eg, a duty of good faith)?

The duty of good faith can be implied into (re)insurance contracts.

Standard/common terms

What standard or common contractual terms are in use?

The main content of insurance contracts is arranged in accordance with the general conditions approved by the undersecretariat and must be applied by all insurers in a similar way. However, insurers can set special conditions in certain cases.

‘Smart’ contracts

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?

There is no specific regulation governing the conclusion of contracts based on the use of such financial technology.

Breach

What rules and procedures govern breach of contract (for both (re)insurer and insured)?

The Commercial Code contains specific provisions regarding the breach of an insurance contract in certain instances, as well as the rights of the parties in case of breach. Under the code, breach of an insurance contract includes:

  • failure to pay the insurance premium;
  • breach of the duty of disclosure;
  • failure to pay the indemnity;
  • breach of the duty to provide information and allow for the conduct of investigations; and
  • failure to take measures to prevent or mitigate the loss.

Article 1449 of the Commercial Code governs the violation of the duties stipulated in the contract. Provisions to the effect that the insurer will be discharged from its obligation of performance by terminating the contract entirely or partly if the policyholder breaches a contractual duty towards the insurer shall be ineffective if the breach was not negligent, unless otherwise provided by the Commercial Code or other legislation. If the breach was negligent, the right to terminate shall be forfeited if not exercised within one month of the date of becoming aware of the breach (unless a different period is provided by the Commercial Code). The insurer may not terminate the contract if the violation had no effect on the materialisation of the risk or the extent of the insurer’s obligation to be fulfilled.

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