The Insurer’s Silence in Life Insurance Claims: Current Status of the Commercial Court of Appeals’ Case Law

Pursuant to Article 56 of the Insurance Law (included within its general provisions) an insurer must issue its decision as to whether or not the insured has a right to collect under the policy within 30 days from receiving notice of the loss or from receiving the relevant complementary information on the loss requested in due course to the insured. Failure to timely communicate its decision to the insured is deemed by law as a tacit acceptance of coverage (Article 56 of the Insurance Law).

However, Article 49 of the Insurance Law (also included within its general provisions), when referring to the terms for payment of the insurer’s obligation, distinguishes between non-life (e.g., property, liability, and the like) and life insurance contracts. The first paragraph provides that in non-life insurance contracts, the insured must be paid within 15 days from the date when the damages are assessed, following the 30-day term established in Article 56 of the Insurance Law. The second paragraph of Article 49 provides that in life insurance contracts, payment must be made within 15 days from the date the loss is reported or the complementary information requested by the insurer has been provided to the insurer.

It would therefore seem that Article 49 provides a guideline as to what types of contracts fall within the scope of Article 56: only non-life insurance contracts. Nevertheless, this is not the understanding of Tribunal E.

The ruling in Canale is not the first rendered by Tribunal E on this regard. The tribunal held the same in 2006 in Bizarro v. Caja de Seguros de Vida S.A.

With minor differences, other tribunals of the Commercial Court of Appeals also held Article 56 of the Insurance Law applicable to life insurance contracts (Tribunal A: 10/26/2006, in Cespi v. Caja de Seguros de Vida S.A.; 11/23/2006, in Taffarel v. Caja de Seguros de Vida S.A.; Tribunal B: 06/30/2005, in Duarte v. Caja de Seguros de Vida S.A.; Tribunal C: 06/05/2006, in Ullman v. Sur Seguros de Vida S.A.; Tribunal D: 09/18/2009, in Rodríguez v. Caja de Seguros S.A.).

The reasoning of these tribunals of the Commercial Court of Appeals to conclude that the insurer’s silence constitutes a tacit acceptance of the loss also in life insurance contracts could be briefly summarized as follows:

1. Article 56 is included within Chapter 1 of Title I of the Insurance Law (General Provisions) and, therefore, applies to all types of insurance contracts; and
2. a construction to the contrary would create uncertainties in respect of the insured’s right under the policy.

Although the criteria set forth by the different tribunals of the Commercial Court of Appeals is that Article 56 of the Insurance Law is applicable to life insurance contracts, the issue is still open to debate.