CHL CMF First-Party Surety Insurance

On Nov. 27, CHL CMF issued first-party surety insurance clarifications.

  • CHL CMF issued circular proposing clarifications to first-party surety insurance scope.
  • Complements circular 972, of 2017, which specified the scope of the final paragraph of article 583 of the Commercial Code, relating to surety or guarantee insurance.
  • Circular Background
  • Commercial Code states surety insurance may be on first demand, in which case the compensation must be paid to the insured within the period established by policy.
  • Paid without the opposition of exceptions being able to condition/defer payment.
  • Given the particularity of the surety insurance indicated in the last paragraph of article 583, and in order to avoid different interpretations, circular 972 was issued in 2017.
  • However problems in understanding these insurance policies have continued to exist.
  • Seen in general text and claims of contracts in which the insured believed to have contracted surety insurance upon first request and this was not necessarily effective.
  • This circular further clarifies scope so policyholders have complete clarity regarding whether or not insurance offered corresponds to first-party surety insurance.
  • Proposed Improvements
  • Incorporation of an important note in advertising and insurance proposals that will allow first demand guarantee insurance to be distinguished from those that do not.
  • Especially useful for policyholders who must present a guarantee slip to beneficiary.
  • Mandatory paragraph in first article of general conditions of these insurance policies to distinguish type of insurance that is contracted and for which insurer is obligated.
  • For surety or guarantee insurance that is not on first demand, the general conditions models may not contain expressions such as without settlement or without liquidator.
  • Nor may general conditions models contain other expressions that lead to confusion.
  • It will be the responsibility of the companies that the insurance policies they contract are written in a clear and understandable manner, and that they are not misleading.
  • Written policies must also not contain clauses that are contrary to the applicable law.
  • In case of doubt about the meaning of a provision in the model general condition of the policy, the most favorable interpretation for the contracting party will prevail.
  • Policies authorized through exempt resolution, Office of the Comptroller General of the Republic or National Geology and Mining Service mining operation closures exempted.
  • Jan. 2024 CHL CMF Modifications Adopted
  • On Jan. 29, 2024, CHL CMF finalized modifications to surety insurance regulations.
  • Circular 1312 is effective as of May 1, 2024, the date from which only surety or guarantee policies that comply with the modified requirements may be marketed.

Regulators CHL CMF
Entity Types Ins
Reference PR, 1/29/2024; Cir 1312, 1/26/2024; Cir, Nt, 11/27/2023
Functions Advertising; Claims/Accelerated Benefits; Compliance; Financial; Product Administration; Underwriting
Countries Chile
Products Insurance
Regions Am
Rule Type Final
Rule Date 11/27/2023
Effective Date 5/1/2024
Rule Id 192621
Linked to N/A
Reg. Last Update 1/29/2024
Report Section International

Last substantive update on 02/01/2024