Peru: Claims Made Policies still valid

Machu Piccu

1. There has been a lot of talk, perhaps too much talk, following the recent non-binding opinion of the legal counsel of the local regulator SBS against the universally-accepted “claims made” system of insuring certain liability risks.  The SBS opinion is unhelpful and misguided, but relatively inoffensive, and the markets can continue underwriting on this basis.

2. This is the conclusion we and the rest of the market that attended a recent market-wide discussion on the topic we organised in Lima have arrived to.  Certain carriers also explained that they are taking this up jointly, under the auspices of industry association APESEG, to try and get SBS to reverse its opinion as it does no justice to market practice locally or the law in Peru.

3. Our partners in Peru have lodged numerous queries with SBS on a number of issues in the past.  This query was no different.  Several carriers and underwriters had queried whether “claims made” was accepted in Peru and therefore, unilaterally, this firm decided to ask SBS for its opinion.  Our apologies for any confusion in this respect.

4. Although the Insurance Contract Act of 2013 is silent about “claims made”—whilst earlier drafts of the law expressly allowed it—it is a constitutional right in Peru to allow whatever is not prohibited.  That, and the market reality that the SBS knows well, as there are several carriers with “claims made” policies registered with the regulator, and reserves set up and notified accordingly, should have been the guiding principle of the response.

5. Instead, the SBS responded that, per article 78 of the Act, the limitation period for the insured to request coverage under any insurance policy is 10 years, and therefore, policies should be underwritten under “occurrence” basis, and that any shortening of the limitation period would render the policy null and void.  It is hoped that the SBS will reconsider, as under “claims made” the rights of the insured insofar as limitation goes are intact.  It is just that the period of cover is restricted to “claims made” against the insured in the policy period, for events that took place in the past. This system provides underwriters with greater certainty, as the insured is requested to disclose any known third party claim or circumstance (defined widely) upon each renewal, therefore allowing the closure of years of account more quickly and efficiently managing reserves.

6. No doubt the SBS was well intended in their attempt to protect insureds—always an overriding concern of regulators—but “claims made” is legal, not against the limitation rights under local law, and equally as important for insureds, priced competitively thanks to the availability of several reinsurance markets that prefer it to “occurrence” as they can bracket the risk more accurately.

7. In the recent market event in Lima, it became apparent that local carriers and reinsurance brokers intend to continue to offer “claims made” policies.  It is also clear that APESEG is taking the matter forward with the SBS, and perhaps lawmakers, in order to get the Act to expressly recognise “claims made” as in akin jurisdictions such as Mexico, Spain, or Brazil (via regulatory circular).  In Colombia, whilst “claims made” is expressly allowed in the law and the insurance regulator is of the view that insureds are adequately protected under such policies, the Contraloria, the watchdog for adequate funding of public works, is fudging the issue, as will be discussed in our next article and the upcoming Miami Latin American Claims (Re)Insurance Forum. See the program HERE

8. The SBS has no power to declare policies illegal.  It is highly unlikely insureds would take this matter to court, as asking the courts to declare policies null and void, if by chance granted, would have unintended consequences, as there would be no cover at all, with premium being returned to the insured in exchange for resolving the contract.

9. Unfortunately, there is no “large risk” provision in the Insurance Contract Act making it clear that the contract has been entered into by grown-ups, making the intervention of regulators or courts unnecessary in their quest to protect the rights of the insured, who is usually (but often mistakenly) seen as the weaker party in need of tutelage by the authorities.  As ever, clear language evidencing that the policy was entered into consciously, and that the insured understands and agrees its terms and conditions, including “claims made”, would be welcome.  A signature by the insured would also help.

This article was written by Marco Rivera Noya – Partner at Kennedys in Peru and Alex Guillamont – Head of Latin america and Caribbean practice for Kennedys CMK

Posted in (re) Insurance articles Latin America, (re) Insurance articles Peru, Other | Tagged , , | Leave a comment

2019 Miami Latin American Claims (Re)Insurance Forum is almost sold-out. Just a few seats left!

Forum2019_header_blog-03 logos BLACK

The 2019 Miami Latin American Claims (Re)Insurance Forum, organized by Kennedys CMK and QLDG, is pleased to announce that it has reached almost 90% of venue capacity.

Thank you to those of you who already registered, we have more than 180 delegates and experienced industry speakers. (Re)Insurance companies confirmed: AGCS, AIG, Aseguradora General, Aspen-Re, ASSA, AXA-XL, Axis Capital, Beazley, Brit, Chubb, Continental Seguros, Everest Re, Generali, Hannover Re, Helvetia, Hiscox MGA, IRB Brasil Re, Liberty, Munich Re, Rimac, Scor, Starr, StarStone, SURA, Swiss Re, Trans Re, Validus Re, Zurich.

Many thanks to our welcome cocktail patron Abaco as well as Advanta, Crawford, Envista Forensics, IRB Brasil Re, J.S. Held, Rimac, R&G Espinosa and Sedgwick for their continued sponsorship.

This is an exclusive event, attendance is by invitation and only 15 seats are available.

The Program can be found HERE.

To register, please click HERE and use the code FORUM2019 (case sensitive)

Simultaneous translation in Spanish and English available.

For information about the Forum, please contact:
Juan E. Lopez-Santini:
Hilda Welcker:

ALL 9 sponsors

Posted in Conferences, Events, Insurance Event, Miami Latin America Claims (re) Insurance Forum, Other | Tagged , , , , | Leave a comment

Join us tomorrow in Miami for the next Women in (Re)Insurance event

women in reinsurance april 2019

Image | Posted on by | Leave a comment

Update: 2019 Miami Latin American Claims (Re)Insurance Forum

Forum2019_header_blog-03 logos BLACK

June 11 to 14 will mark the fifth edition of the annual Miami Latin American Claims (Re)Insurance Forum. Organized by Kennedys CMK and QLDG, it brings together key international and Latin American industry experts that will analyze top underwriting and claims issues, trends and developments in the region.

Roundtables by global and regional market leaders on industry-wide topics will precede practical sessions on a range of issues including:

• cyber related to property risks, social engineering under BBB
• a mock mediation on environmental liability case study
• ALOP to BI issues on a project from construction to operational phase
• business interruption on energy and mining losses
• class actions and regulatory developments in Colombia and Peru

Topics and case studies have been carefully chosen based on current affairs and the feedback received by attendees from last year.

Many thanks to our welcome cocktail patron Abaco as well as Advanta, Crawford, Envista Forensics, IRB Brasil Re, J.S. Held, Rimac, R&G Espinosa and Sedgwick for their continued sponsorship.

The Program can be found HERE.

This is an exclusive event, attendance is by invitation only, places are limited and selling out quickly.

Simultaneous translation in Spanish and English available.

For information about the Forum, please contact:
Juan E. Lopez-Santini:
Hilda Welcker:

To register, please click HERE and use the code FORUM2019 (case sensitive)

ALL 9 sponsors

Posted in Conferences, Events, Insurance Event, Miami Latin America Claims (re) Insurance Forum, Other | Tagged , , , , , , | Leave a comment

Risk of Politics in Latin American claims-upcoming panel discussion in London on March 14th

Aerial View of Rainforest in Brazil

Join us in London on March 14th for a timely panel discussion on how politics affect claims in Latin America.

Focusing on Brazil, Mexico, Peru and Venezuela we will discuss:

• Geopolitical risk including legal institutions, delay and corruption
• Natural disasters and environmental issues – the shortcomings of local regulation and  compensation parameters
• Brexit – potential trade challenges
• International arbitration
• Dispute resolution

16:15 pm Registration and refreshments
16.30 pm Panel discussion begins
17:45 pm Drinks and canapés

Where: Kennedys. 25 Fenchurch Avenue. London

Registration: RSVP clicking HERE

Full programme and speakers HERE

Posted in Conferences, Events, Insurance Event, insurance seminar | Tagged , , , , , , | Leave a comment

Is LATAM ready for BIM?

construction worker on construction site

BIM (Building Information Modeling) which will be mandatory in Brazil from 2021, is an intelligent 3D/4D and 5D model-based process providing architects, engineers, contractors and developers with greater insight into their projects. It is perceived to provide enhanced integration of project processes, improved project performance (e.g. cost, time and environmental performance) and outcome predictability.

Both the construction and insurance industry have embraced BIM.  The use has grown exponentially in the UK where it originated in 2011 (according to the BIM study released in May 2018, 75% of project teams in the UK are using BIM and it has grown year on year). This growth is in part due to the UK government mandating the use of BIM for all centrally procured government projects from April 2016.

According to research by Teeside University, BIM is used by 85% of Brazil’s biggest contractors, with a focus on cost control in the construction phase rather than collaboration at design stage. Brazil’s transport department is also embracing BIM with a 30% costs saving target. A notable project utilising BIM was the 44,000-seat Amazon Arena in Manaus.

Elsewhere in LATAM, BIM was used from the outset on the Panama Canal expansion, allowing designers in five different offices worldwide to collaborate on one 3D model. Construction of Mexico City’s new airport (which was cancelled mid-way through) involved the use of BIM, including modelling of geotechnical conditions – the site is in a seismic zone – to help civil works. The use of BIM for seismic zones should prove very useful for the region.

Benefits of BIM

Providing for more certainty in respect of construction risks underwritten, BIM is a tool that should be welcomed by insurers, helping to identify fault when problems arise. BIM can also be used for asset management so that the insurer has full understanding and visibility on the exact specification and make and model of all fixtures and fittings within a building, avoiding debates with insureds about underinsurance or lack of cover.

The Brazilian army already uses OPUS (similar to BIM), but elsewhere the cost of implementing BIM can be prohibitive on an industry which is already tightly squeezed since the Lava Jato scandal significantly impacted the industry.
In countries like Chile, Colombia or Peru it is being used but at a slow pace and only for large projects.


Whilst studies indicate that by 2020 the BIM market will increase to 11% in LATAM, the region does not have a well-developed professional indemnity market which could be a potential spanner in the works to further growth. In most LATAM jurisdictions, it is not compulsory for architects or engineers to hold professional liability insurance, which prevents claims against professionals as there is no guarantee of a recovery.

Great reliance is placed on Construction/Engineering All Risks (CAR) policies which may capture some elements of design (but usually for on-site activities only and with many exclusions).

If there is insurance, it is important that the insurer knows about the use of BIM from the start and that the project is procured clearly, as a common problem will be the possible blurring of responsibility between consultants.

Where professional indemnity insurers of construction professionals do exist, they should obtain confirmation from their insureds of the incorporation of BIM into agreements by competent lawyers, to ensure the correct obligations are being allocated to the insured and additional duties are not being adopted in error.

A more comprehensive version of this article is available at

Anna Weiss, Head of Construction for Latin America and Caribbean at Kennedys CMK

Posted in (re) Insurance articles Latin America, Other | Tagged , , , , , | Leave a comment

Upcoming Miami Seminar: Insurance industry challenges when handling claims in Venezuela

aerial falls

Please join us to discuss perspectives on the scope of OFAC sanctions on Venezuelan entities and individuals, their implications when handling claims in Venezuela and other difficulties reinsurers face when handling Venezuelan claims as disparities in official exchange rates and underinsurance.

lorena avilaLorena Avila
Lorena is a Venezuelan qualified lawyer since 2005 and a Foreign Legal Consultant in Kennedys’ Miami office.
She works for major insurers and reinsurers on large and complex claims in Venezuela and Latin America. Her practice is also focused on regulatory matters and providing legal assistance to international reinsurers and intermediaries to comply with the regulatory framework for insurance activity in Latin America and the Caribbean.
Before joining Kennedys in 2012, Lorena worked for a boutique law firm in Venezuela for six years. She has more than 10 years of legal experience in Latin America.
Lorena is the main researcher for the third edition of The Guide of insurance and reinsurance law in Latin America and Iberian Peninsula.

Date: January 15th, 2019
5:15 pm Registration
5.30 pm Conference
6:00 pm Informal discussion
6:15 pm Networking
Where: Malbec Room at Novecento 1414 Brickell Ave, MIAMI, FL 33131
Registration deadline: January 14th, 2019 at 1:00 pm. Only 40 tickets available.
To register, please email:
Business casual attire. Cost: Free

Posted in Conferences, Events, Insurance Event, insurance seminar, Other | Tagged , , | Leave a comment