Bill Amending the Insurance Law

As a general principle, the bill establishes that, in case of doubt, in situations affecting relationships between insureds and insurers, the interpretation most favorable to consumers should prevail.

The bill establishes new obligations on insurers. Mainly that, upon entering into an insurance contract, insurers must explain to the insureds, in a truthful, comprehensive, effective and sufficient manner, the information the insurers need to assess the risk. Insurers must subject the insureds to clear and accurate questionnaires.

The main changes of the bill are probably those concerning time periods affecting the process of entering into an insurance contract and the payment of benefits or compensations.

The bill requires insurers to deliver the policies to the insureds within five days of entering into an insurance contract. Insurers shall be liable to insureds for damages caused by the late delivery of a policy.

The period for reporting a loss is extended from three to ten days.

The period for insurers to analyze whether to accept or repudiate liability for a loss is reduced from thirty to five days.

In non-life insurance, compensations are to be paid within five days from the date the amount of the compensation is ascertained or from the date when the compensation offer is accepted by the insured, once the five-day period of the previous paragraph has expired. As for life insurance, payments are to be made within five days from the date a loss is notified to the insurer or from the date when the information requested by the insurer has been submitted.

The bill also establishes that the late reporting of a loss should not affect an insured’s right to compensation, although compensation is to be reduced pro rata to the damage suffered by the insurer. Additionally, the late reporting of a loss may not affect third parties’ rights.

Another change introduced by the bill is that insurers are to compensate damages caused by defects in the thing insured, unless otherwise agreed in the policy.

The bill also provides that compensation for property damage must also include loss of profits, but only up to the amount of the sum insured.

In liability insurance, insureds shall not be entitled to compensation when the loss is caused intentionally, but not when it is caused by gross negligence.

The bill unifies the current criteria in relation to limitation periods for claims arising from insurance contracts. Claims by insureds, regardless of whether they are consumers or not, would expire in three years, while claims by insurers would expire in one year.

The Economy Committee of the House of Deputies has recently sent the bill to the General Legislation Committee. Considering the imminent parliamentary changes, it is likely that the bill will need to be reconsidered by the Economy Committee next year, with its new composition.