Contracts

General 

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

While insurance and reinsurance contracts can be evidenced by any proven means, some documentary proof must exist demonstrating that the oral or written contract has been transmitted or recorded electronically, physically or otherwise. The insurer must issue and deliver the insurance policy within five days of its conclusion. 

Mandatory/prohibited provisions 

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

In respect of insurance, mandatory norms in the Code of Commerce apply to insurance contracts that do not qualify as ‘significant risks’ – that is, those contracted by juridical persons that pay an annual insurance premium in excess of UF200 (approximately $8,200). Mandatory norms regulate the obligations of insureds and insurers, including general obligations regarding:

  • the duty of disclosure;
  • the aggravation of risk;
  • the non-payment of a premium;
  • causation;
  • termination;
  • bankruptcy; and
  • conflict resolution. 

In respect of those contracts considered significant risks, there is ample freedom of contract.  

In respect of reinsurance, there is also ample freedom of contract, but the insurer cannot delay payment of the insurance indemnity on any grounds relating to the reinsurance.

Insurance and reinsurance contracts for Chilean risks are subject to Chilean jurisdiction. However, the parties to a reinsurance contract may apply foreign law and international arbitration may be agreed.  

Implied terms 

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

As in many civil law systems, the Civil Code and Code of Commerce set out terms and conditions that apply to all contracts, including insurance contracts – for example, good faith. Other terms are deemed to belong to the specific type of contract, such as the indemnity principle and specific requirements for aleatory contracts.    

Standard/common terms 

What standard or common contractual terms are in use?

The minimum requirements imposed by General Norm 124 also establish the standard terms, including:

  • general conditions, such as:
    • risks covered;
    • insured matters;
    • exclusions;
    • definitions for terms;
    • the rights, duties and burdens on the parties; and
    • conflict resolution methods;
  • particular conditions – that is, general conditions that have been modified to fit a particular insurance contract; and
  • additional clauses which expand insurance coverage. 

‘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?

In Chile, ‘smart’ contracts are in their infancy and barely used.

Breach 

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

Breach of contract is governed by the norms on insurance contracts set out in the Code of Commerce and complemented by the general rules on contracts in the Civil Code. In significant risk contracts and reinsurance, the parties may submit to foreign law (but not to a foreign jurisdiction).

In general, under Chilean law, breach of the insured’s duties may entitle the insurer to terminate the contract and, in case of a loss, not to indemnify it. However, in this case, it is generally considered that the breach must be significant and have a causal relationship with the loss. 

Consumer protection

Regulation 

What consumer protection regulations are in place to safeguard the rights of purchasers of insurance products and services?

The Consumer Protection Law 2004 plays a role in this regard. Under it, insureds can request the government body in charge of consumer protection to demand information from the (re)insurer and verify its fulfilment of obligations regarding the contract. However, the norms regulating the insurance contract should prevail over the Consumer Protection Law in respect of actions to claim insurance indemnity. 

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