Glossary

Accident
An unexpected, sudden and involuntary event that may cause damage to people or property regardless of their will.

Actuary
A professional who relies on mathematics, statistics, probability calculation and actuarial calculation to determine the cost of insurance premiums, installments and reserves, so that the amount of these sums is sufficient to pay indemnities and is fair to the client.

Agreement of the parties
A decision adopted by the parties regarding the conflict raised, either out of court or during the proceedings of the lawsuit in question, to resolve it and bring it to an end.

Aggravation of risk
A decision adopted by the parties regarding the conflict raised, either out of court or during the proceedings of the lawsuit in question, to resolve it and bring it to an end.
 

Amparo (coverage)
Coverage; the events for which the insurer will be liable should they occur.

Annulment
The rescission of the effects of a policy, either because circumstances contractually foreseen as grounds for it occur, by mutual agreement of the insurer and the insured, or by unilateral decision of either party.

Insured
The person who, through payment of the premium, is entitled to payment of indemnities as a result of a loss caused by the occurrence of an event covered by the insurance contract.

Insurer
The company that assumes coverage of the risk, previously authorized to operate as such by the Superintendencia Financiera de Colombia.

Insurance advisor
The person, authorized by the Superintendencia Financiera de Colombia, who acts as an intermediary between the person who wishes to purchase insurance and the insurance company. This person carries out the intermediation activity by promoting the execution of insurance contracts and advising prospective insureds.

Bancassurance
Sales channel. Marketing of simple insurance products through banking distribution networks.

Beneficiary
Role of a person in a contract. Each of the persons in whose favor an insurance policy, pension, annuity or other benefit has been established. A beneficiary may be designated gratuitously or for valuable consideration. A gratuitous beneficiary is one designated at the insured's sole discretion and may be revoked at any time during the policy term. A beneficiary for valuable consideration is one designated when the insurance has been taken out to protect an economic interest; it may only be revoked with the beneficiary's consent.

Contingent beneficiary
Role of a person in a contract. Person or entity named to receive the benefits of a product such as Life Insurance or an Annuity, conditional upon an event by which the primary beneficiary loses their right.

Primary beneficiary
Role of a person in a contract. Beneficiary named as the first choice to receive the benefits of a product.

Secondary beneficiary
Contingent beneficiary.

Gratuitous beneficiaries
Those designated freely and at the will of the Insured. They are usually the Spouse or Partner, Children, Parents, Siblings, etc.

Legal beneficiaries
When no beneficiaries are designated or the designation becomes void for any reason, the Insured's Spouse shall be considered beneficiary for 50% and the Insured's heirs for the other half.

Beneficiaries for valuable consideration
Mandatory beneficiaries arising from financial commitments made by the Insured, whose liability is backed by an insurance policy in the event of death or disability. E.g., mortgage loans or debts with individuals.

Contract lapse
Suspension of the effects of the guarantees contained in a contract due to certain specified circumstances, such as the end of the specified term or the failure to pay the full insurance premium. From this date, the policy no longer generates charges until the lapse is lifted.

Cancellation with proportional term
Cancellation of a contract when the client pays only the premium advance; the contract therefore remains in force for a period proportional to the payment received. This occurs in life and health insurance. The cancellation is then recorded to take effect from a future date.

Contract cancellation
Termination of a contract, either at the request of the client or of the Company. In capitalization, the equivalent concept is the total withdrawal of the balance by the client.

Cancellation due to non-renewal
Cause of contract cancellation. It occurs when, after a grace period following its expiration, the client does not renew the contract.

Client portfolio
Complete list of the clients of a company or of a part of it.

Outstanding receivables
Set of premiums payable by clients. Applies to insurance and annuity products.

Cause of cancellation
CONTRACT STATUS CAUSE. Reason why a contract is canceled.

Cause of claim
Event that directly caused a claim or that led to a chain of events resulting in the claim.

Certificate
Document in which the insurer describes the insurance plan covering a specific risk under a group policy. It is treated as a contract, with the particularity of being linked to a master contract or policy.

Risk class
Categories under which an underwriter classifies a risk based on the insurance application, the statement of insurability, the confidential report, the medical examiner's report and the other insurability requirements.

Types of insurance
Insurance was designed to cover risks affecting people and risks affecting property; similarly, there is insurance for individuals or for groups of people (group plans). For each of these divisions there are different types of insurance, such as life, auto, health, home and fire insurance, among others.

Clause
Each of the conditions, provisions or stipulations of an insurance contract by which the original conditions of the policy are extended or limited.

Client
User of the Company's products or services.

New client
Client whose enrollment date falls within a given period.

New client with product
Client whose client-with-product enrollment date falls within a given period.

Coinsurer
Each of the insurance companies participating in a coinsurance arrangement. It must pay the lead coinsurer its corresponding share of the commissions paid.

Ceding coinsurer
Lead coinsurer.

Lead coinsurer
Coinsurer that takes responsibility for administering the business. It is responsible for issuing the policy, collecting premiums, settling claims and paying the indemnities that will ultimately be borne by the coinsurers in proportion to their respective shares. It is also responsible for paying commissions, sales tax and withholding tax.

Coinsurance
Article 1095 of the Commercial Code defines it as the contract “by virtue of which two or more insurers, at the request of the insured or with their prior consent, agree to distribute a given insurance among themselves”.

Coinsurance is a contract by which several insurance entities decide, in a certain way, to join or partner with the purpose of insuring large events such as those mentioned above. This is done to minimize costs for the insurer, since on certain occasions the insured economic values exceed the limits appraised by the insurers.

In coinsurance, the insured person or entity can choose who may insure them and in what respect; more clearly, each person can choose which insurer protects each part of their assets. It is worth mentioning that in this insurance process, just as two insurers may participate, there may also be up to eight, and more if necessary.

The parties to the coinsured contract decide individually what percentage of the risk they wish to cover, since some insurers have higher percentages to cover in any eventuality. Although this split is generally 50/50, the total percentage may be distributed as desired among the parties to the contract. It should be noted that, although the risk is split by each insurer, the split is not carried out if the client disagrees with it.

Today, thanks to the great usefulness of this type of insurance contract, there are several types of coinsurance offering different advantages; some of these types are:

• Direct coinsurance: the contract by which the primary (leading) insurance entity decides to cede some risks to other insurance entities; this entire process is always carried out with the insured being informed.
• Internal coinsurance: the contract by which the primary entity cedes some risks to other entities internally, without informing the insured. It should be noted that, in the event of any claim, the entity will respond for the insurance as if it were a single entity.

• Imposed coinsurance: in this coinsurance contract, it is the insured who decides to which entity or entities they will delegate the percentages to be covered in the event of a claim, and they may in turn accept or reject proposals made by those entities.

   

Coverage
The way in which Insurers represent or describe the commitment they acquire when selling a product, particularly delimiting it in terms of its Sum Insured, Term, Deductibles and Premiums.

Affected coverage
Coverage subject to a claim.

Intermediation commission
The payment the company makes to intermediaries for selling policies or securing insurance business. It is expressed as a percentage of the premium amount, which may follow predefined rules of the Plan, the Type of Advisor or a particular agreement with the intermediary. Commission.

Continuity
Acceptance into a contract of insureds coming from another policy (from the same or another company) without requiring new insurability requirements. It is common in group health and life policies.

Contract
Legally enforceable agreement between two parties. It is each of the plans entered into by the Company with its clients. In Insurance and Funds, it is the individual or group policy and the certificate. In Capitalization, it is the Capitalization Bond. In Annuities, it is the Life Annuity Policy. Throughout its life, a contract may be associated with different branches, agents and executives.

Lapsed contract
Contract status. Contract that was canceled due to non-payment (total or partial) or non-renewal after its expiration date.

Canceled contract
Contract status. It means that the obligations of the parties have ended due to one of the various causes of cancellation by the client or the Company.

Non-renewed contract
Contract status. Contract whose grace period has ended and which has been neither renewed nor canceled.

Contract not in force
Contract in any status other than In Force.

Contract in force
Contract status. Contract whose effects are valid on a given date.

Broker
Type of advisor. It is a general partnership with legal personality, bound by a commercial contract, with a guaranteed minimum capital. It is supervised by the Superintendencia Financiera de Colombia, which certifies its suitability from its incorporation.

Quote
Document setting out the business conditions under which the Company accepts the risks requested for an insurance policy.

Account holder
Holder of a bank account that is used, for example, to deposit an annuity or to pay a premium by automatic debit.

Claim statement
Report submitted by the insured or the beneficiary on the facts and circumstances under which the event covered by the insurance occurred, as well as the damages suffered as a result of it. These details will allow the insurer to determine its liability with respect to the facts and the amount of the indemnity under the terms of the insurance contract.

Deductible
A previously agreed amount that is invariably subtracted from the amount to be indemnified. It may be stipulated as a fixed amount, as a percentage of the loss, or as a percentage of the insured or insurable value. It is the portion the insured must bear before the insurance Company makes any benefit payment. Its purpose is to avoid paying a large number of small indemnities that could arise in a given line of insurance.

Minimum deductible
The minimum amount stipulated for each protection or coverage that the insured must bear before the Company becomes liable. Minimum deductible value.

Mandatory deductible
A deductible set by the insurer for two purposes: to reduce administrative costs by not handling claims of small value, and to encourage the insured to avoid claims, since they will have to share in every loss that occurs.

Discount
A reduction in the premium or some other financial incentive not stated in the policy, offered as an inducement to purchase it. Discounts include not only cash (as a percentage of the premium or an absolute amount), but also personal services and items of value. Attributes: type of discount, percentage of the premium amount, and total amount.

Commercial discount
A type of discount. It is granted on commercial grounds, that is, to close the sale, rather than on technical grounds.

Days in arrears
Number of days of delinquency in the payment of premiums, counted from the contract's effective start date.

Customer days in arrears
The sum of the days in arrears of all contracts in which a customer is the Policyholder or First subscriber.

Risk address
Address, city, and phone number where a risk is exactly located.

Portfolio status
Classification of contracts according to the status of their payments.

Contract status
Classification of the products held by customers according to their current situation. In the insurance transactional environment, it is known as Policy Situation.

Policy status
Contract status.

Claim status
The condition of a claim at a given point.

Risk status
The situation of a risk within a given contract and protection.

Exclusion
The clause by which the insurer limits the policy's coverage; it may be set in terms of time, place, age, amount, or event.

Contract exclusion
Circumstances under which a protection or coverage is not in force. It specifies perils, property, locations, or losses that the contract does not pay. In some contracts they are expressly stated, while in others, called Named Risk contracts, any coverage not expressly indicated is included.

Waiver of premium
A contract clause under which the policyholder is released from paying premiums permanently or for a period of time, upon fulfillment of a predetermined condition.

Contract issuance
The act of formalizing a contract.

Exposure
The property or person facing a condition in which a loss may occur. A risk covered by a protection in a policy. The word risk is generally used to refer to the exposed risk.

Extra premium
Surcharge.

Claim opening date
The day on which the policy is affected by the occurrence of a claim. It is the date on which the file is opened and the reserve is created, or on which the claim is reopened.

Claim notification date
The date on which the Company is notified of the occurrence of a claim.

Contract lapse date
The start date of the contract's «Lapsed» status. The date from which a contract is declared lapsed.

Contract cancellation date
The start date of the contract's «Canceled» status. The date on which the policy is actually canceled by the Company. It is the date from which the contract ends.

Investment closing date
The date on which the savings option is withdrawn from a life policy. It is the exclusion date of the coverage associated with the investment.

Claim closing date
The date on which the claim is closed, whether due to payment of the obligation, objection to the claim, withdrawal by the customer, or administrative closure due to genuine suspicion of willful misconduct or fraud.

Quote date
The date to which the proposal presented to the customer corresponds.

Customer termination date
The date on which a person ends their last relationship with the Company in general and in each customer role.

Customer termination date by product
The date on which a person ends their last relationship with each level of the product hierarchy in general and in each customer role.

Coverage exclusion date
The date on which the validity of a coverage for a specific risk in a policy ends. It is equivalent to the exclusion date of the coverage associated with the investment.

Contract issue date
The date on which a policy or a certificate is issued. When a contract is converted or reinstated, there may be a new date, but the original one is retained.

Coverage end date
The date until which a coverage provided protection.

Contract end date
The date on which each term of the contract ends.

Contract effective date
The date on which each new period of validity of a contract begins. In insurance, it is the effective start date of the coverages.

Risk change date
The date of an event related to a risk within a policy, for example an increase in the insured amount, the exclusion of an asset, or the exclusion of a protection.

Risk and coverage change date
The date of an event related to a risk within a coverage of a policy.

Claim payment date
The date on which a claim payment or refund is made.

Claim submission date
The date on which the insured submits the formal claim to the Company.

Next contract renewal date
The date on which the policy term ends and on which it must be renewed. It is useful for sending expiration or renewal notices to customers.

Contract cancellation recording date
The date on which the manual or automatic cancellation process of the contract is carried out.

Contract reinstatement date
The date on which a policy that had been canceled is revived or reinstated. The start date of the in-force status with the event cause «Reinstatement».

Claim date
The date on which the claim occurred.

Application date
The date on which the insured completes and signs the application with the advice of the intermediary.

Customer onboarding date
The date on which a person establishes their first relationship with the Company in general and in each customer role.

Payment mode
The frequency with which a payment is made.

Occurrence
An event that causes an insured loss. Coverage based on occurrences is generally considered to differ from accident-based coverage in that an occurrence connotes gradual or cumulative damage regardless of the exact time or place, whereas an accident does not. In other words, an occurrence can be defined as an event or repeated exposure to certain conditions that results in an injury during the policy term. Depending on its magnitude, an occurrence may be called a catastrophe.

Increase in insured amount
A percentage increase applied automatically and periodically to the insured amount. The frequency may be every five years, annual, monthly, etc., and the growth may be geometric, semi-geometric, or arithmetic.

Indemnity
The insured amount that the insurer pays to the beneficiaries of an insurance policy when they submit a claim.

Insurable interest
A person has an insurable interest when their assets may be affected, directly or indirectly, by the occurrence of a risk (claim). Any interest that, in addition to being lawful, can be valued in money is insurable.

Intermediary
Sales advisor.

Claim settlement
The act and effect of formally adjusting an insurance claim. It consists of taking an inventory of the losses incurred for their valuation, taking into account the type of protection purchased and the particular, general and special conditions of the policy. It is determined as: Amount claimed – Insured's share – Withholdings (at Source, VAT, ICA) – Financial or prompt-payment discounts.

Means of payment
An option through which a payment can be made, either from the customer to the Company (for example, premiums) or from the Company to the customer (for example, surrender values).

Amendment
Any type of change made to the original conditions of the policy, which may or may not affect the amount of the policy premium.

Cancellation reason
The reason why a customer decides to cancel or not renew a plan.

Claim notification
Notice of claim.

Contract number
A number assigned to each contract to uniquely identify it.

Premium payment
Receipt for an insurance premium payment made by a client.

Grace period
Period during which a contract remains in force, even though the premium has not been paid or the renewal has not been made.

Persistency
Minimum number of days a contract is expected to last.

Plan
Product defined with a set of specific features and values for marketing purposes.

Underwriting policy
Condition established by the Company for accepting or declining a risk under a given coverage of an insurance plan.

Policy
INSURANCE CONTRACT. Document that formalizes the insurance contract. It sets out the rules governing the contractual relationship between the parties.

Insurance policy
In short, an insurance policy is a contract between two parties that specifies the transfer of a risk from one party to the other in exchange for a premium, which must be clearly established. This is done by detailing conditions regarding the times and events covered, exclusions, maximum and minimum amounts covered, and other necessary conditions.

Pre-existing condition
A problem for which an individual received medical care during a period prior to the effective date of the coverage proposed in a health policy.

Premium
Consideration that the insured undertakes to pay to the insurance Company in payment of the obligation the latter assumes to cover the risk, and which represents the cost of the insurance.

In non-insurance products, the value of the capitalization installment is treated as equivalent to the term premium.

It is the agreed price to be paid by the person who is transferring their risk to an insurer.

Annual premium
Premium paid only once to cover a risk for twelve months.

Installment premium
A premium that, instead of being paid annually, is paid semiannually, quarterly or monthly, with an established surcharge.

Outstanding premium
A premium whose amount has not yet been paid by the policyholder.

Contract extension
Agreement by which the term of a contract is extended.

Prospect
A person who has no products in force and is therefore a potential candidate for marketing them.

Line of business
A grouping of products aimed at meeting a set of related client needs. In insurance, it is a category covering risks with similar characteristics. Each line of business is assigned to one, and only one, company.

Lines of insurance
The way in which the different products are grouped.

Sum insured range
Each of the groups into which the insured amount reached by the coverages of a contract is classified.

Reinsurer
A company that assumes the risk of another insurer that has transferred or ceded it, partially or totally, undertaking to reimburse it for the losses it incurs, in the proportion in which it assumed that risk.

Reinsurance
The partial or total transfer of some of its risks by an insurance company (ceding company) to another entity (reinsurer). It is, in other words, «insurance for insurers». This operation is transparent to the client.

Claim
The process by which a person formally requests, in writing, the insurance indemnity from the insurer.

Loss claim
A demand made to the insurer by the insured or the beneficiary for payment of an indemnity or benefit, in accordance with the terms and conditions stipulated in the insurance contract, as a result of the occurrence of a loss. The insured or the beneficiary must prove the occurrence of the loss, as well as the amount of the loss, if applicable. Therefore, they must obtain at their own expense, and deliver or disclose to the insurer, all details and all information that the insurer is entitled to require regarding the claim, the origin and cause of the loss, and the circumstances under which the losses occurred or that relate to the insurer's liability or the amount of the indemnity.

Recollection
A new attempt to collect payment from the client through automatic debit at a financial institution, when previous attempts have been unsuccessful.

Reimbursement
The money returned to the client when they have filed a claim and paid for it themselves; it also applies when the client cancels the policy having paid the full premium for the entire year, in which case the reimbursement is made as a refund of unearned premiums.

Claim reimbursement
The amount received from a reinsurer corresponding to its share of a claim. It constitutes income for the ceding Company. These reimbursements include salvage recoveries and other reimbursements, among them the proceeds of subrogation against third parties.

Reinstatement
Under the conditions of most life insurance policies, the insured has the right to reinstate a lapsed (canceled) policy within a reasonable time after the lapse, provided they present satisfactory evidence of insurability. This right is generally denied if the policy has been surrendered for its cash value or lapsed for non-payment.

Contract reinstatement
Putting a previously canceled contract back into force. The contract keeps its number, but its conditions may be modified. The issue date may be kept or changed to a new one.

Renewal
The clause by which the insurance contract is extended for another term; most policies have this clause as automatic renewal.

Annuity
Line of business. Type of insurance that, upon payment of a premium, guarantees the client the payment of a periodic sum (annuity) to beneficiaries for as long as their right remains.

Annuitant
Role of a person in a contract. An Insured or Annuity Beneficiary whose right is effective because they are receiving its payment at the time of the analysis.

Insurability requirement
A condition defined by the Company as necessary for the full assessment of the risk by the evaluator of a given insurance plan.

Non-disclosure
Omission of information that would lead the insurance company to modify the original insurance conditions (extra premium, exclusion rider), unilaterally cancel the policy or deny a claim.

Risk
In the insurance business, it is used both to refer to each of the assets or persons protected by a policy's coverage (exposed risk) and to a possible event (risk of fire, theft, etc.).

Moral hazard
The effect of personal reputation, character, associates, personal living habits and financial responsibility, apart from physical health, on the individual's overall insurability.

Objective risk
It is represented by the characteristics and/or circumstances of the insurable person; different procedures exist to assess it as appropriate.

Subjective risk
The risk affecting a person due to factors unrelated to their health, morality, habits and customs, usually arising from the environment. Examples include the risk of kidnapping, or of being extorted or threatened by criminals.

Current Legal Daily Minimum Wage
Current Legal Daily Minimum Wage established by the government, in force for a period that is usually one year. It is treated as a Currency type.

Current Legal Monthly Minimum Wage
Current Legal Monthly Minimum Wage established by the government, in force for a period that is usually one year. It is treated as a Currency type.

Salvage
If the amount of the damage was fully indemnified by the insurer, the salvage will be the insurer's property.

If the amount of the damage was partially indemnified due to an insufficient sum insured or because a deductible was agreed, the salvage must be divided proportionally between the insured and the insurer.

If the amount of the damage was partially indemnified because it is first-loss insurance, the salvage will be the insurer's property up to the indemnified amount.

Life insurance
Insurance in which the risk insured against is the death of a particular person, called the insured; the insurance company agrees to pay a specific sum or an annuity to the beneficiary upon the death of the insured, provided that it occurs within a specified term, or at any time if the contract so stipulates.

Group life insurance
A form of life insurance covering a group of people who generally share a common interest, whether as employees of the same company, members of the same union or association, etc.

Loss ratio
Indicator of the magnitude of claims relative to production.

Claim
The event covered by the insurance. It occurs when the risk insured under the policy materializes and causes damage. It is the concrete manifestation of the insured risk, causing damages guaranteed under the policy up to a certain amount. A harmful event that gives rise to a claim under an insurance contract and for which the insurer must respond according to the guarantees provided by the policy and its cause.

It is an event that entails harm to a person or property and that has been agreed to involve the payment of an indemnity.

Paid claim
Amount of the claim and its associated expenses (adjustment and others) for which the Company is responsible before deducting the reinsurance share. The coinsurers' share in the claim has already been deducted from this amount.

Outstanding claim
A claim whose economic consequences have not yet been fully indemnified by the insurance company. It may be pending payment, if it has already been valued by the company; pending settlement, if its valuation is under review; or pending notification, if it has not been reported.

Application
Document by which a person requests from an insurance company coverage of one or more specific risks, providing all the information necessary for the company, where appropriate, to accept them.

Subrogation

a) Definition

Article 1096 of the Commercial Code defines it as follows: “The insurer that pays an indemnity shall be subrogated, by operation of law and up to the amount thereof, to the rights of the insured against the persons responsible for the loss. However, such persons may raise against the insurer the same defenses they could assert against the injured party.

Subrogation to the rights of the insured shall also apply when the insured, as a creditor, has taken out the insurance to protect their right in rem over the insured property”.

b) Requirements for it to operate

An analysis of the various rules applicable to subrogation arising from insurance contracts shows that the requirements for it to operate are the following:

• That there is a valid insurance contract.
• That the insurer pays the indemnity.
• That the payment is valid.
• That subrogation is not prohibited.

c) Characteristics

The main characteristic of subrogation in the insurance contract is that it operates by operation of law; that is, it transfers to the insurer the same right the insured had against the third party. It is sufficient for the legal conditions to be met for the rights of the insured or beneficiary to vest in the insurer, but only up to the amount of the indemnity. Otherwise, it could result in unjust enrichment for the insurer.

d) Limit

Subrogation cannot exceed the amount of the indemnity, because the indemnity may not represent full compensation of the rights of the insured or beneficiary arising from the contract or from the harmful conduct attributable to the person causing the damage.

Now, in cases where the amount of the indemnity is lower than the damage caused by the party responsible for the loss, since subrogation only entitles the insurer to recover up to the amount it paid, it is clear that, for the excess damage not covered by the insurance, the insured retains the right to obtain full compensation for the financial damage suffered.

e) Cases in which it does not operate

Article 1099 of the Commercial Code states the following: “PROHIBITION OF SUBROGATION: The insurer shall not be entitled to subrogation against any of the persons whose acts or omissions give rise to liability of the insured under the law, nor against the party causing the loss who is, with respect to the insured, a relative in the direct or collateral line within the second civil degree of consanguinity, an adoptive parent, an adopted child or a non-divorced spouse.

However, this rule shall have no effect if the liability arises from willful misconduct or gross negligence, nor in fidelity, surety and credit insurance, or if it is covered by an insurance contract. In the latter case, subrogation shall be limited in scope according to the terms of that contract”.

In addition, Subrogation is prohibited in personal insurance by express mandate of Article 1139 of the Commercial Code.

f) Evidence

In order to bring the actions arising from subrogation, usually those of ordinary proceedings, the existence of the insurance contract must be demonstrated by submitting a copy of the respective policy, or the original when it is in the insurer's possession, and it must also be proven that a payment was made, which determines the exact amount up to which the insurer was subrogated.

Policyholder
The person (natural or legal) who transfers the risks in order to insure a certain number of people, and who is responsible for paying the premiums.

Role of a person in a contract. Natural or legal person who, acting on their own behalf or on behalf of a third party, contracts with an insurer for the transfer of risks. Contracting party.

Transfer of the insured interest
Article 1106 of the Commercial Code sets out Transfer upon death as follows: “The transfer upon death of the insured interest, or of the property to which the insurance is linked, shall keep the contract in force in the name of the acquirer, who shall be responsible for fulfilling the obligations outstanding at the time of the insured's death.

However, the awardee shall have a period of fifteen days from the date of the judgment approving the partition to notify the insurer of the respective acquisition. In the absence of such notice, the contract shall terminate”.

In turn, Article 1107 of the Commercial Code sets out Transfer inter vivos of the insurable interest: “The transfer inter vivos of the insured interest or of the property to which the insurance is linked shall automatically terminate the contract, unless an insurable interest remains with the insured. In this case, the contract shall remain in force to the extent necessary to protect such interest, provided that the insured informs the insurer of this circumstance within ten days following the date of the transfer.

Termination shall create an obligation for the insurer to return the unearned premium.

The express consent of the insurer, granted generally or specifically, shall render ineffective the termination of the contract referred to in the first paragraph of this article”.

Finally, Article 1108 establishes that the insurer shall be entitled to raise against the acquirer of the insurance all defenses relating to the contract that could be raised against the principal insured in the two cases previously mentioned (Arts. 1106 and 1107).

Insurable value
Economic value of the insurable interest. For property insurance, it is the maximum sum insured that allows the insurance contract to fully perform its indemnity function. Accumulation and exposed-risk analysis is used.

Sum insured
Amount the Company undertakes to pay the client for a risk if the claim occurs. It is the insurer's maximum limit of liability. Some products allow the sum insured to increase automatically at a rate agreed with the client.

Attained sum insured
Sum insured of a risk for a given coverage as of the date of analysis. It corresponds to the initial sum insured plus increases (by variable index or by growth percentage), or to subsequent changes in the sum insured.

Initial sum insured of the contract
Amount of the sum insured at the start of a policy's term.

Initial sum insured of the risk
Amount of the sum insured at the start of the term of a risk with a coverage.

Assignment value
In life insurance, it is the value of the savings premiums plus their earnings in the participation fund.

Term
The period of time during which an insurance policy provides coverage. This is an important concept because the period the client has to pay the premium begins to run from the start date of the policy's term.