Insuralex´s exclusive member in Colombia comments on the Draft decree regarding D&O policies on a claims made basis
The Colombian Ministry of Finance has published a draft decree intending to regulate the operation of the D&O policies on a claims made basis.
The Ministry of Finance has published for comments a draft decree by which a new article will be added to Decree 2555/2010 providing certain rules determining how D&O insurances on a claims made basis should operate. Local insurers were enabled to offer claims made policies, pursuant to article 4 of Law 389/97.
Firstly, as a general rule, it would be established that the D&O insurance that should be triggered would be the one in force on the date in which the insured becomes aware, for the first time, of the claim against him, for events occurring within the validity of the insurance or within the agreed retroactive period.
Additionally, the decree would include the following technical concepts necessary for the operation of the D&O insurance on a claims made basis:
a. Claims: Occurrence of the insured risk. In all cases, except for the fiscal liability proceedings, it would be understood as a claim: 1) a notice to the insured of any legal proceeding against him; 2) whenever the insured becomes aware of a legal proceeding against him; 3) any notice or claim alleging the insured’s liability; 4) any criminal investigation against the insured or 5) any investigation (internal or led by the relevant authorities) against the insured.
On the other hand, when related to fiscal liability proceedings, the claim would be either the notification to the insured of the commencement of the proceeding or of the commencement of a previous investigation.
b. Policy period: Duration of the coverage provided under the policy.
c. Retroactive date: A date from which the insurer has agreed to cover the negligent conducts of the insured. Any claims that arise from events prior to this date would not be covered.
d. First claim: When several insurances written over the years to cover the same risk exist and a unique event could give rise to various claims, the only coverage to be triggered would be the one under the policy in force when the first claim was made. In case of upcoming claims arising from the same event, those would also find coverage under the policy in force when the first claim was made, even after its expiry.
e. Notice of circumstances: A notice to be given by the insured to the insurer of acknowledged circumstances that could be expected to give rise to claims against the insured. If such claims are filed thereafter, they would preserve the coverage under the policy period attached to the notice of circumstances.
f. Prior known claims or facts exclusion: Claims raised against the insured or the facts of which an insured first became aware of, or should have become aware of, prior to the commencement of the policy period would be excluded of the scope of coverage.
g. Event clause: Every claim arising from the same event, would be considered as the same loss to trigger the policy in force when the first claim was made.
About Insuralex in Latin America
Insuralex is a group created by independent law firms that specialise in Insurance and Reinsurance coverage, defence, litigation and all other related legal services.
Insuralex works for a wide range of clients including insurance and reinsurance companies, Lloyd’s syndicates, insurance and reinsurance brokers as well as captives and self insured companies.
Each member of Insuralex is considered to be a leading practice in this specialist field within its national jurisdiction.
Insuralex Latin American insurance law practice covers countries such as: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay and Venezuela.
