New Bill Amending the Insurance Law

The bill seeks to impose on insurers the burden of notifying insureds of the decision as to whether a loss is covered or not within 30 days from the date the loss is reported. If an insurer fails to issue a decision and to notify the insured within this term, the loss would be deemed to have been accepted.

The current wording of the Insurance Law sets forth that insurers must issue a decision on liability for a loss within 30 days. This means that notifications of these decisions to the insureds may be delivered after this period. The current wording is consistent with Article 15 of the Insurance Law, which sets forth that “statements imposed by this law or by the insurance contract shall be considered to have been fulfilled if they are issued within the established term”. If the bill were passed, in the event of repudiation of a loss, issuing a decision within 30 days would not be sufficient for the insurer. It would also need to notify the insured of the decision within this same term.

Not only would this shorten the term for insurers to accept or repudiate liability for a loss, but it may also raise interpretation problems when notifications cannot be served to insureds, for instance, when the insured has moved, when the address where the notification is sent to does not exist or is wrong or incomplete, etc.

The bill also seeksto include an Article 56 bis to the Insurance Law, establishing the insurers’ burden to issue a decision as to the rights of the “third party” within 30 days. We understand that this provision is aimed at reaching third parties who suffer a loss covered under liability policies. If the bill were passed, one single event giving rise to different claims by third parties may have different consequences depending on whether the insurer rejects or not the claim to each third party within 30 days.

It cannot be ruled out that this inclusion is also intended to encompass beneficiaries under life insurance policies, who are third parties with respect to the insurer and the policyholder. Beneficiaries could be also reached by the 30-day period. This would also implicitly extend the 15-day period set forth in Article 49 of the Insurance Law for an insurer to pay benefits under life policies.

The argument for introducing these changes is that certain principles of the Insurance Law may be outdated in relation to consumers’ rights introduced by Article 42 of the Argentine Constitution and by the Consumer Protection Law.

The bill, submitted to the Senate, was sent to the General Legislation Committee, where it is currently being analyzed.