Chile: new regulation for adjusters and brokers and amendments to insurance law

For the last three and a half years the Chilean government, through its regulatory agency (La Superintendencia de Valores y Seguros) has been proposing to amend and clarify Supreme Decree No. 863 of 1989, which regulated and controlled the activities, responsibilities and obligations of adjusters and insurance brokers as well as the adjustment process.

After the massive catastrophic earthquake that occurred in Chile on 27 February 2010, the need to clarify Regulation No. 863 became more pronounced. Notwithstanding the fact that this regulation had positively impacted the Chilean insurance industry, even after being tested by the 2010 earthquake , the disaster revealed some deficiencies in the adjustment processes including a general lack of standards for the provision of claim information to insureds. Additionally, the delayed payments of claims, the obsolete methodology of communications – only through certified letters – and the absence of special rules for catastrophic events (even though a month after the earthquake the Regulator issued special procedures and authorised communication through emails to confront the emergency) were further indications that these procedures were ready for modernisation to incorporate the sophisticated technologies available today.

Regulation 1055 was enacted on 1 June 2013 to tackle these issues for losses occurring from that date onwards. The previous regulation will still be applicable to the adjustment of losses reported prior to such date. The main purpose of the new regulation is to improve the level of service provided to the insured, particularly regarding the quality and timeliness of claim information and the use of information technology not only to keep the insured advised of developments, but also to allow him to participate in the adjustment process. However, there is no definition of “appropriate mechanisms” and it could therefore be subject to interpretation.


In contrast to Regulation No. 863 of 1989, Regulation No. 1055 places a heavier burden on insurers and adjusters with respect to how they assist and communicate with insureds. In the 25 years since the previous regulation, the Chilean insurance market has progressed tremendously and achieving a more expedited adjustment process was the priority. Additional aspects of how the previous regulation has been modified include:

Improvement on the registration and control of adjustment reports available. Insurers are required to expand the claim notification mechanisms available to the insured by allowing claims to be notified by way of electronic tools, web sites, call centers and even other entities authorised by insurers. Once the notification has been completed, Insurers will have to confirm, by way of receipt, that the notification was received successfully.

  • In accordance with Article 19 of the new regulation, the adjustment process will now need to be carried out swiftly and with due speed, without unjustified interruptions and extra expenses. Adjusters will have the obligation of driving the process and shall take all actions required to issue their reports as soon as possible, avoiding delays with unnecessary proceedings and requests. The adjuster’s participation in the process must be strictly objective and subject always to a technical criteria. Furthermore, the parties involved will have the right, at any time of the process, to access the adjuster’s file in order to verify the status of the claim. This is a noteworthy innovation and clearly demonstrates the intention of having a transparent and flawless process.
  • The 90 day period considered in the previous regulation for issuing the adjustment report has now been reduced in this new regulation to a maximum of 45 days from the date of loss notification by the insured or his/her representative. Certain extended reporting exceptions are contemplated, i.e. 180 days for marine hull losses and 90 days for first group policies (in this last case provided that losses are consistent with individual policies with premiums exceeding UF 100 or USD 4,636). These periods can be extended subject to the insured and the regulator being informed by the adjuster of the reasons for requesting such deferral and the steps required to finalise the adjustment process. In this case, the regulator will have the power to decline the extension based on the grounds considered by them, establishing a period in which the final adjustment report should be issued. This is critical, as it would seem that 45 days is a very short period of time for issuing a final adjustment report, especially when dealing with complicated claims. However the adjuster, acting on his behalf or by request of the insured, has the possibility of issuing an “article 24” report (article 21 under the previous Regulation) in order to attempt to seek consensus with the parties on coverage and quantum matters. This procedure could be an effective method to bring forward the conclusion of the adjustment or at least a good reason on which to base an extension request, as both insurers and insured can object to such report.
  • Under the new regulation, settlement agreements can only be finalised with the assistance of adjusters after their final report – or their answers to any challenges submitted by the parties – have been issued.
  • While the 10 day period for challenging adjusters report remains unaltered, the new text gives adjusters an extra day (6 days from the previous 5 days) to respond to challenges. Additionally with regard to indemnity payments (including the undisputed amount), a 6 day period is established once insurers have notified an insured of its decision to accept a claim. As one would expect, insurers may feel this period to be insufficient, specifically if collection from the reinsurance market is necessary.
  • The new Regulation also provides special guidelines concerning the adjustment process for catastrophic events, especially when dealing with property housing claims. In this case, the regulator can establish special deadlines and instruct communication alternatives for contacting insurers, brokers and adjusters. The Regulation refers to catastrophic events as defined in law No. 16.282 and alternatively as an event affecting a significant number of persons or insured goods giving rise to several claims. This definition does not seem to include large losses or complex claims as the market knows them- however it is likely that the regulator will issue further guidance. The term “significant number” is not defined, so how many claims are required in order for an event to be “catastrophic” will have to be defined by the regulator, further legislation, or case law.
  • Insurers and adjusters are requested to maintain, at all times, valuation and adjustment handbooks as well as contingency plans for special situations (additional obligations and duties for insurers and adjusters). There is no mention of how long, after settlement of claim, the documents have to be retained.



guillamont, alex (smaller files size)

Alex Guillamont. Director Kennedys Latin America & Caribbean    Twitter: @KennedysLATAM

Download full version of the article: Chile: new regulation for adjusters and brokers and amendments to Insurance law (PDF, 1.15MB) 


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