Important precedent for the (re)insurance market in Colombia

Waving Colombian Flag National Capitol in Bogota, Clolombia

Just a week after the second of our articles relating to fiscal liability proceedings in Colombia, the Comptroller General or Contraloría (CGR) have agreed with our direct revocation request in the Institute for Urban Development (IDU) matter.

The strategy of providing full coverage considerations with the revocation request worked. The CGR let itself be educated on insurance issues and, for the first time, agreed that fiscal proceedings and insurance contracts may be interrelated, but should be approached differently. The CGR admitted that their previous analysis was incomplete, and concluded correctly that the policy in effect when the investigation commenced in 2014 is the only one that should respond in observance of “claims made” underwriting principles.

The CGR expressly recognized that their decisions now being revoked were unduly detrimental to the insurers previously condemned and has ordered the full return of funds.

The CGR decision is final as no appeal is allowed. It remains to be seen whether the CGR will apply the reasoning behind the revocation in similar investigations, whether they involve civil servant or more standard D&O wordings.

Authors: Monica Tocarruncho, Partner in Kennedys Colombia and Alex Guillamont, Head of Latin America and Caribbean at Kennedys.

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