In Official Gazette 218, published in 10 April 2018, The Superintendency of Companies, Value and Insurance issued the Resolution to determine the mandatory and prohibited clauses within all kinds of insurance contracts.

Regarding the mandatory clauses that must be included in the insurance contract, following are the most important changes:

1. Changes regarding the way the Insurance Companies finance premiums. This is a remarkable change because Insurance Companies can set measures to avoid payment delays from now on.

2. The underinsurance will be applied exclusively to partial losses.

3. When the Insurance Company alleges over–insurance, it must return the premium collected in excess.

4. When the Insurance Company alleges that the insurer needs a resolution from court to access a third-party liability, the Statute of limitation will be effective from the date when the Court notifies said Resolution.

5. The payment of Claims from the Insurance Company will be made–from now on—via electronic payments or transfers; this means that checks will no longer be accepted for these payments.

Under the prohibited clauses are the following:

1. Clauses banning the insurer to file Administrative claims before the Regulator Entity or to file the claim before the Judicial Courts.

2. Clauses that limit the evidence that may be used by the insurer.

3. Clauses that intend to limit the insurer to demand for compensation when the Insurance Company asks for duties that are impossible to be executed or are not in balance with the severity of the claim.

Under this resolution, Insurance companies must follow some conditions for the issuance:

1. The Insurance Company must deliver to the insurer a copy of the policy with the general and specific conditions via e-mail.

2. The font size shall not be less than 10.

3. A summary of the policy with the relevant conditions and the Insurance Certificate shall be submitted to the insurer, upon its request.

4. The observations of the regulator, after the approval, have to be inserted in the policy.

5. The issuance of the policy must be made in a digital format, in compliance with the E-commerce law.

This Resolution is a remarkable advance in the insurance sector since it implies a modernization in terms of the issuance of the policies and the way in which the insurers must make payments to their insured.

It is recommended for Insurance Companies to analyze the implications of this Regulation and to adjust to this new reality, emphasizing the revision of the policy clauses in the different lines of businesses in which they operate.

• Published in the Second Supplement to Official Gazette Nº 825, dated August 24, 2016.
• The aim of the agreement is to govern teleworking as a mechanism for rendering services in the private sector.
• Teleworking is a manner of rendering services from home during ordinary and special workdays, in which the worker performs activities outside of the employer’s facilities, provided the needs and nature of the work allow for this, making use of information and communication technologies for management, administration and control.

Teleworking could be:

• Full-time: when work is always performed outside of the employer’s facilities. The teleworker may go to the employer’s facilities when required by the employer.
• Part-time: Work is performed outside of the employer’s facilities up to a maximum of 24 hours per week, and the remaining hours are fulfilled in the employer’s facilities.
  The application of this form of rendering services is voluntary, and there must be a written agreement between the parties to implement this type of work. Teleworking may be included in the initial description of work, or it may be incorporated subsequently.
  This type of contract must include, in addition to the requirements established in the Labor Code, the following:
• A clear description of the work to be performed, conditions of performance, remuneration and other benefits, and information related to this type of work;
• Identification of the instruments to be used by the employer to supervise and control the work;
• Identification of the instruments to be used by the teleworker and determination of the party responsible for providing, installing and maintaining work equipment;
• The organizational unit that the teleworker belongs to, as well as an indication of the name and position of their immediate superior or other individuals who may be contacted regarding professional or personal matters;
• With regards to part-time teleworkers, the days in which the work will be performed under this regime, or the manner in which this is determined;
• Methods for presenting work reports; and,
• Other specifics regarding teleworking, depending on the work being performed.
• When a worker has become a teleworker, they may return to the modality of work initially agreed upon by agreement of the parties or at the request of one of the parties. In this case, save a contractual provision to the contrary, a minimum of 90 days must be respected for the teleworking commitment, and the communication to return to the initial modality of rendering services must be notified with at least 15 days’ anticipation to the other party.

On March, 17th the Association of Private Banks of Ecuador (Asobanca) adopted two temporary measures to address the economic crisis that is facing the national economy. 1) Restructuring loans by deferring payment for 60 days with no surcharge for late payment at the end of the originally agreed period, and 2) Allocation of US $12 billion dollars for restructuring, renewal and adoption of new loans. These measures are aimed for microcredits, SMEs and the general public.

On March 17, the Association of Private Banks of Ecuador (Asobanca) adopted two temporary measures to address the economic crisis the national economy is undergoing. The restructuring of loans by deferring payment for 60 days, with no late fee at the end of the originally agreed period and the allocation of US $ 12 billion for restructuring, renewal and new loans. These measures are aimed for microcredits, SMEs and the general public.

Just a few days ago the national government announced the adoption of urgent economic measures, consisting in tax measures and cuts in the general state budget. In contrast, and with the objective of maintaining the economic stability of the national productive force, Asobanca ordered measures to generate liquidity, trying to preserve the economic stability of the country while the health emergency caused by COVID-19 lasts.

Debtors may request to refinance their credits or, the deferment of 60 days without late payment at the end of the originally agreed period for the collection of: personal credits, microcredits, as well as those granted to small companies. However, these measures announced by Asobanca will not be of general nature since a case-by-case analysis is required.

The announced measures do not yet have clear implementation guidelines. It is not clear who will assume the cost of refinancing the loans nor the transparency criteria that will applied to do so. In the same way, a pronouncement from the Superintendence of Banks on the applicability of the measures remains pending as well as the incorporation of similar measures in public banking.

According to Julio José Prado, president of the Association of Private Banks

“[B]anking plays a fundamental role in two aspects: maintaining dynamism in the economy and keeping the financial system operational, despite the emergency. That is why, the bank will allocate $ 12 billion, both for restructuring and renewal of existing loans, and new credit. This is possible because the bank has achieved a sustained capitalization process, which allows it to respond in complex moments like now.”

It should be noted that the financial sector remains open during the health emergency. However, private financial institutions have embraced teleworking, to the extent possible.

Disclaimer: This document is informative and does not, and is not intended to, constitute legal advice.