This piece explores a recent ruling by the Colombian Supreme Court confirms that when a pension fund takes out insurance to cover shortfalls in survivor’s pensions, the insurer must automatically pay the difference, without questioning the beneficiary’s right to the pension, as established under Colombian law.
On November 19, 2024, the Colombian Supreme Court of Justice (hereinafter, the “SCJ”), issued judgment SL3101-2024 addressing cassation appeals filed by a pension fund administrator (hereinafter, the “PFA”) and an insurance company. The case involved key issues in insurance law, specifically: (i) whether the insurer was obligated to cover a shortfall to the PFA for funding a survivor’s pension under a pension insurance, and (ii) whether the insurer had standing to challenge the claimant’s right to such a pension.
The insurance company argued that the claimant had not sufficiently demonstrated economic dependence on the deceased affiliate, which is a legal requirement to access the survivor’s pension. Therefore, the insurer maintained that there was no legal basis to recognize or pay the pension.
The SCJ rejected these arguments and confirmed the insurer’s obligation to cover the shortfall under the pension insurance. It also clarified important legal principles, highlighting three main points:
1. Obligations Under Article 77 of Law 100 of 1993:
The SCJ reaffirmed that, according to Article 77, the insurer’s sole responsibility is to cover the shortfall in the savings account needed to fund a survivor’s pension. The SCJ emphasized that this obligation is automatic and tied to the nature of pension insurance in the social security system.
Furthermore, the insurer is not entitled to challenge the recognition of the claimant’s right to the pension, as this falls outside its scope of duties. The judgment emphasized that the insurer’s role is limited to filling the funding gap required to grant the pension. Pension insurance coverage is triggered automatically, and insurers must reassess conditions to ensure any additional shortfall is met.
2. Recognition of the Pension by the PFA:
In this specific case, the SCJ noted that the PFA had already acknowledged the claimant’s entitlement to the survivor’s pension. This acknowledgment constituted the “triggering event” for the automatic activation of the insurer’s obligation to cover the shortfall under the terms of the insurance policy. The judgment further clarified that the insurer must finance the additional amount needed to fully fund the pension in accordance with the collective insurance in effect at the time of the insured event.
3. Disputes Between the Insurer and the PFA:
The SCJ reiterated the principles established in its earlier judgment (SL6094-2015), affirming that any disputes between the insurer and the PFA regarding the pension insurance should be addressed as a separate matter. Such disputes should not, under any circumstances, affect the rights of affiliates or beneficiaries of the social security system. The judgment emphasized that the financial responsibilities between the PFA and the insurer cannot undermine the fundamental right to social security, which is protected by the Constitution as an inalienable and essential guarantee.
This judgment strengthens the legal framework surrounding survivor’s pensions and reaffirms the automatic nature of pension insurance coverage, providing additional safeguards for beneficiaries within Colombia’s social security system.
Lucas Fajardo
Luis Alejandro Peña
Brigard Urrutia. Insuralex´s Exclusive Member in Colombia
