In a recent 2025 sanction, the Colombian Financial Superintendence (the “SFC”, for its acronym in Spanish) imposed a penalty on a bank for deficiencies in the management and safekeeping of insurance declarations in group life insurances associated with credit products offered by the bank.
Background
The sanction arose from an inspection by the SFC conducted on the bank and an insurance company as part of the SFC’s supervisory and oversight functions. The purpose of the inspection was to verify the administration of group debtor life insurance for consumer, housing, payroll deduction, and credit card loans.
The SFC identified multiple shortcomings by the bank in obtaining, safeguarding, and maintaining control over the insurance declarations. It was found that, in many instances, the bank failed to retain the required declarations, leading to delays and objections in payment of claims by the insurer, thus harming beneficiaries of the debtor life insurance policies.
As the basis for the sanction, the SFC took the following considerations into account:
Duty of due diligence
The bank, as the policyholder of the group debtor life insurance, was contractually obligated to obtain and safeguard the insurance disclosures.
The omission of this duty and the failure to preserve the insurance disclosures constituted a breach of the principle of due diligence and the duty of fair treatment of financial consumers, as it prevented the insurer from accessing these documents to verify the risk disclosure, resulting in delays in the payment of claims.
Contractual obligation of safekeeping
The sanction was also based on the fact that the bank was expressly obligated to retain the records of the insurance disclosures, pursuant to the contract executed with the insurer.
This duty was essential to allow the insurer, in the event of a claim, to verify the condition of the risk and determine whether to proceed with the payment of indemnity. The failure to safeguard these documents resulted not only in a breach of the bank’s duty of due diligence, but also of the contractual obligations it had assumed with the insurer.
Impact on the rights of insureds and beneficiaries
The failure to safeguard these documents led the insurer to dispute certain claims and pay indemnities beyond the term established in Article 1080 of the Colombian Commercial Code.
This conduct by the bank unjustifiably harmed insureds and beneficiaries, who were forced to assume the unpaid balance of the debt and continue making loan payments to the bank while the insurer determined whether the claim was admissible.
Legal basis of the sanction
The sanction was based on the violation of Articles 3 and 5 of Law 1328 of 2009 (the Colombian financial consumer protection law), which require supervised entities to act with due diligence and ensure that consumers receive products and services in accordance with the conditions offered. It was also grounded in the obligations set forth in the SFC’s Basic Legal Circular regarding the fair treatment of financial consumers.
Determination of the sanction
The SFC considered as mitigating factors the bank’s acknowledgment of the facts and the adoption of corrective measures. However, it concluded that the conduct affected a significant number of consumers and resulted from structural deficiencies in the bank’s internal controls. Therefore, it imposed a monetary fine, reiterating the importance of due diligence, compliance with contractual obligations, and the effective protection of insureds’ rights.
Lucas Fajardo Gutiérrez | Partner of the Insurance and Reinsurance Team
Daniel Delgado Jaramillo | Associate of the Insurance and Reinsurance Team
Luis Alejandro Peña | Associate of the Insurance and Reinsurance Team
Brigard Urrutia
Insuralex´s Exclusive Member in Colombia
