By Resolution of January 16, 2025, the Colombian Financial Superintendency (hereinafter, the “CFS”) issued a warning to an insurer for violating financial consumer protection regulations by offering products with conditions different from those disclosed to consumers.

In this case, the CFS sanctioned the insurer for marketing a product under the “all risk” designation through an insurance agency. However, after reviewing the general terms of the insurance, the CFS concluded that the conditions did not correspond to an all-risk insurance policy but rather a named-peril policy.

Although the insurer argued that its product met the characteristics of an all-risk insurance and that other insurers in the market offered similar products under the same designation, the CFS upheld the sanction based on the following.

Considerations:

1. Duty of care and transparency: 
   
   Insurers, as professionals in their field, have the duty to act with due diligence and transparency when offering products, ensuring that the information provided to financial consumers is clear, sufficient, and truthful.
   
   "(…) it is important to highlight that insurance companies must fulfill special obligations that go beyond the limits of contracts due to the nature of their professional activities, particularly those established under Law 1328 of 2009, under the principles of due diligence and transparency of information set forth in Articles 3(a) and 3(c) and Article 7(b) of the same law, where the obligation to provide clear, truthful, and timely information to the consumer about their products and services offered in the market. It is important to highlight that this duty aims to reduce the imbalance between the entities and the financial consumer inherent in a consumer relationship."
    
2. Third-party actions are not a defense: 
   
   The insurer argued that other companies marketed similar products under the same designation, even through the same insurance agency. However, the CFS dismissed this argument, stating that third-party actions do not exempt the insurer’s responsibility for compliance with regulatory requirements.
   
   "In this order, with respect to the aforementioned documents, in compliance with the provisions of the aforementioned ruling, it must be emphasized that the analysis of the breach of regulations that is being made here is made with respect to the investigated party, (...); without the conduct(s) of third party(ies) to whom the regulation is addressed constituting a justification or an exemption of liability in the framework of the action at hand”.
    
3. No strict legal definition between all-risk and named-peril insurance: 
   
   The CFS clarified that there is no regulatory provision establishing a strict classification between all-risk insurance and named-peril insurance. Instead, the Basic Legal Circular only defines the insurance lines within which insurers may operate.
   
   Regarding the term "all risk," the CFS noted that while it is specifically used for a particular insurance line (all-risk contractor’s insurance), it may also be used to market products from other lines. However, it warned that this designation implies coverage for all risks, except for those exclusions expressly stated in the contract.
   
   "Furthermore, it cannot be considered that it is only under this line of business that this type of products may be marketed, since it is important to insist that the policies called “all risks” correspond to a type of insurance in which the risks to which the insurable interest is exposed are covered, with respect to which exclusions are established as a limitation to the assumption of the risk by the insurance company."
    
4. Consistency between product conditions and its name: 
   
   Finally, the CFS emphasized that, although the term “all risk” lacks a specific legal definition, its use in offering an insurance product must align with the product’s actual conditions. Otherwise, it may lead consumer confusion.
   
   "In this regard, it is important to recall that the term 'all-risk' implies that the insurer assumes all risks, except for those duly described exclusions in the contract. Considering the general conditions of [the insurer's] policies, it is evident that they limit liability by defining the specific coverages established in the insurance contract. The general conditions do not provide for the possibility of assuming all risks, as claimed by the company, since the covered risks are clearly delimited in the policy wording.
   
   Additionally, nowhere in the general conditions does it mention what was advertised to consumers in the promotional material under review—namely, that it is an all-risk policy.
   
   Accordingly, the designation 'all-risk,' which corresponds to a market or commercial classification, must align with the product’s actual conditions to prevent misinterpretations at the time of subscription and during any potential claims process."