In a recent 2025 sanction, the Financial Superintendence of Colombia (hereinafter, the “SFC”) imposed a fine on an insurance company for violating financial consumer protection regulations in connection with a debtor life insurance taken out by a credit institution.

The sanction originated from an on-site inspection conducted by the SFC at both the insurer and the bank that had procured a group debtor life insurance policy intended to cover, for the benefit of the bank, the outstanding balance of payroll-deducted loans in the event of the borrower’s death.

As a result of this inspection, the SFC identified several irregularities that affected the rights of financial consumers and brought charges for alleged breaches related to (i) the insurer’s duty of due diligence in assessing the insured risk, (ii) the timely payment of insurance compensations arising from covered events, and (iii) the obligation to provide fair treatment to financial consumers. Below we summarize the charges brought by the SFC and the considerations underlying each of them:

1. First Charge: Breach of duty of due diligence and fair treatment of financial consumers
   
   The SFC concluded that the insurer failed to comply with its duty of due diligence and fair treatment toward financial consumers by not implementing adequate, effective, and timely controls for obtaining and safeguarding the borrowers’ statements of insurability under the bancassurance scheme.
   
   In its analysis, the SFC highlighted two key aspects: (i) both the insurer and the bank had previously identified the absence of effective mechanisms for obtaining and retaining the statements of insurability but failed to adopt the necessary corrective measures; and (ii) the deficiencies in such controls affected the timely payment of indemnities to the bank.
   
   The SFC further emphasized that the obligation to inquire into the conditions of the insurable risk is a professional and non-delegable duty of the insurer. Consequently, delegating the operational tasks of collecting and retaining the statements of insurability to the bank does not exempt the insurer from verifying the existence, traceability, and proper preservation of such documents.
    
2. Second Charge: Failure to timely pay insurance claims
   
   The SFC determined that the insurer failed to comply with the one-month period established under Article 1080 of the Colombian Commercial Code for the payment of insurance claims filed by beneficiaries. In several cases, the claims remained in “pending” status for more than one month, and payment was not made within the statutory term. The SFC stated that:
   • The period established in Article 1080 of the Commercial Code for the payment of an insurance claim is one (1) month, counted from the date on which the occurrence of a covered loss and the amount of the loss are duly proven, in accordance with Article 1077 of the same Code.
   • The lack of a statement of insurability does not constitute valid grounds to suspend the statutory term or postpone payment of the indemnity.
   • Once the legal period has expired without payment being made, the insurer is required to pay default interest in favor of the insured or the beneficiary.
      
3. Third Charge: Abusive practice of requesting the statement of insurability only after the occurrence of the loss
   
   The SFC found that the insurer had been denying certain claims on the grounds that no statement of insurability had been provided, a practice that, in effect, meant verifying insurability requirements only after the occurrence of the loss rather than at the time the insurance contract was entered into. The SFC emphasized that:
   • The statement of insurability is an instrument intended for the underwriting of the insurance contract and the assessment of risk, not a requirement for proving the occurrence of the insured event. Requesting or reviewing this document only upon the occurrence of a loss constitutes an abusive practice under Section 6.2.18, Part I, Title III, Chapter I of the Legal Basic Circular.
   • Article 1058 of the Colombian Commercial Code imposes on the policyholder the duty to truthfully provide risk statements, but it also establishes a qualified duty for the insurer: if the insurer fails to request or verify the information provided by the insured, it is presumed to have full knowledge of the risk as declared. Consequently, the insurer may not rely on the lack of a declaration of the risk as a defense when a claim is filed by the insured.
   • The financial consumer may not be adversely affected by the negligence of the bank and/or the insurer in maintaining adequate document custody.
      
4. Conclusion
   The SFC imposed a fine on the insurer for the aforementioned conduct, considering as mitigating factors the subsequent payment of certain indemnities and the adoption of internal measures aimed at preventing future claim denials based on the absence of statements of insurability.