Current Status of the Insurance System

The Peruvian insurance market has expanded significantly in the post-pandemic period, which has naturally led to an increase in insurance-related disputes.

The most frequent conflicts concern health insurance (coverage denial based on the insurer’s interpretation of policy clauses) and motor vehicle accidents.

Corporate insurance, which covers complex or high-value operations, is often issued abroad, with disputes commonly resolved through arbitration outside Peru.

General Regulatory Framework for Insurers

Insurance companies are governed by a special regime established under the General Law of the Financial and Insurance System (Act No 26702). This statute sets forth specific requirements for the incorporation and operation of local insurers, including the obligation to maintain reserve funds that guarantee solvency and liquidity, restrictions on indebtedness, and a prohibition on granting guarantees in favour of directors and employees.

Insurers are supervised by the Superintendencia de Banca y Seguros (SBS), which must pre-approve policies and general contract clauses. The SBS is also empowered to sanction administrative infringements, including requesting the Supreme Court to dissolve an infringing company. In addition, the consumer protection authority, Indecopi, has sanctioning powers when insurers violate consumer rights, as provided in the Consumer Protection and Defence Code (Act No 29571).

The Insurance Contract Law (Act No 29946) complements this framework by regulating the contractual relationship between insurers and insureds, covering policy content, prohibited clauses, limitation periods, and dispute resolution mechanisms (judicial and arbitral).

Finally, certain types of insurance are compulsory under special laws, such as mandatory vehicle insurance (SOAT, Act No 27181) and insurance for high-risk work (Act No 26790).

Dispute Resolution Mechanisms

Insurance disputes may be addressed through different procedures outlined below.

• Administrative proceedings before the SBS (Act No 26702): For claims filed by policyholders or investigations initiated ex officio.
• Administrative proceedings before Indecopi (Act No 29571): Aimed at sanctioning insurers and ordering corrective measures in cases of consumer rights violations, such as misleading information or inadequate services.
• Administrative proceedings before Susalud (Supreme Decree No 031-2014-SA): Focused on monitoring insurers’ compliance with health insurance contracts.
• Judicial proceedings (Civil Procedure Code and the Extrajudicial Conciliation Law, Act No 26872): Available for any dispute involving insurers, reinsurers, insureds, and related parties.
• Arbitration (Legislative Decree No 1071): If agreed by the parties. Arbitration is not mandatory for any type of insurance, and the law grants preference to judicial proceedings, as arbitration can only be agreed upon after the occurrence of the insured event.

Conclusion

Insurers in Peru operate under a regime of strict state oversight. Accordingly, a variety of procedures exist to resolve disputes, most of which are designed to monitor and, where necessary, sanction insurers for failure to comply with their obligations.

Legal System in Insurance Disputes

Peru follows the civil law tradition, in contrast to common law systems, relying primarily on statutes as the principal source of law.

To address the lack of consistency in judicial decisions, the Peruvian system has incorporated binding precedents through two mechanisms:

• pleno casatorio (plenary session of the Supreme Court) – where the justices unify their interpretation on significant issues frequently litigated; and
• binding precedents – also issued by the Supreme Court, generally in disputes originating from administrative proceedings.

In insurance disputes, the Supreme Court has not yet issued a plenary session or binding precedent; however, this is likely to occur in the near future, given the growing number of cases.

Currently, there are consistent judgments regarding vehicle leasing contracts and liability for traffic accidents. The Supreme Court has held that a leasing company must get its clients to insure the leased vehicles; otherwise, the company itself will be held liable for damages.

Judicial Structure

Insurance disputes are heard by specialised commercial courts (Justicia Comercial, Administrative Resolution 006-2004-SP-CS). These courts also handle other commercial matters, such as promissory notes, checks, and disputes related to foreign trade.

• First instance: Commercial Courts.
• Second instance: Commercial Chamber of the Superior Court.
• Supreme Court: Only for cassation appeals.

These specialised courts have greater familiarity with insurance law and the technical evidence required to assess claims (eg, loss adjusters’ reports).

Proceedings

The applicable procedure depends on two factors:

• the amount in dispute:
1. proceso de conocimiento (ordinary proceedings) – claims exceeding approximately USD 152,000;
2. proceso abreviado (abbreviated proceedings) – claims between USD 15,000 and USD 152,000; and
3. proceso sumarísimo (summary proceedings) – claims up to USD 15,000; or
• whether the claim is supported by an enforceable instrument:
1. proceso único de ejecución (special enforcement proceeding) – applicable when the claimant holds an enforceable title (eg, arbitral award), regardless of the amount.

All proceedings generally follow five stages: postulatory, evidentiary, decisional, appellate, and enforcement.

• In the postulatory stage, the claimant files the lawsuit and the defendant may submit preliminary objections or substantive defences. Before admission, parties must attempt extrajudicial conciliation.
• In the evidentiary stage, admitted evidence is produced, including expert reports and witness testimony.
• In the decisional stage, the court issues a judgment, which may order payment, performance, or interpretation of policy terms.
• Judgments may be appealed; cassation appeals to the Supreme Court are exceptional and limited to questions of law.
• Once final, judgments are subject to enforcement.

Limitation Periods

Under Article 78 of the Insurance Contract Law (Act No 29946), claims arising from insurance contracts are subject to a ten-year limitation period, running from the occurrence of the insured event. This period may be suspended or interrupted under Articles 1994 and 1996 of the Civil Code.

Conciliation as State Policy

Since the enactment of the Extrajudicial Conciliation Law (Act No 26872), Peru has promoted conciliation as an ADR mechanism to reduce the judicial backlog. Conciliation is now a prerequisite to filing most lawsuits, including insurance disputes, and is conducted in private conciliation centres.

Conciliation in Insurance Disputes

Results of conciliation in insurance cases can be categorised as follows:

• low-value or simple disputes – conciliation has been successful, as parties often prefer settlement to avoid costs and delays; and
• high-value or complex disputes – parties generally reject conciliation, preferring judicial proceedings where judges and experts can resolve technical issues such as damage quantification.

Conciliation may also take place before Indecopi as a preliminary phase to sanctioning proceedings.

Negotiation During Litigation

Given the duration of judicial proceedings, parties often negotiate in parallel with litigation. Negotiations may last months or years, but are usually prompted by a court ruling, when the losing party seeks to obtain more favourable settlement terms. Technical experts play an important role in insurance-related negotiations.

Applicable Rules

In Peru, insurance disputes are primarily governed by the Civil Code (Articles 2057 et seq on jurisdiction and Articles 2096 et seq on choice of law) and the Civil Procedure Code. These are complemented by special statutes, including the Insurance Contract Law (Act No 29946) and the General Law of the Financial and Insurance System (Act No 26702).

In both questions of jurisdiction and choice of law, the primary reference point for courts is the insurance policy or contract itself. If the parties have agreed on a jurisdiction or applicable law, such provisions will usually be upheld unless they conflict with mandatory or exclusive jurisdiction rules under Peruvian law.

Jurisdiction

The Civil Code provides that Peruvian courts have jurisdiction over disputes concerning persons or property located in Peru. Where the dispute involves immovable property situated in the country, the jurisdiction of Peruvian courts is exclusive.

Nevertheless, the law also recognises party autonomy to submit disputes to foreign courts, provided the matter is not one of exclusive jurisdiction of Peruvian courts (Article 2060 of the Civil Code). In practice, international insurers frequently agree on a foreign jurisdiction, especially for complex risks or corporate insurance programs.

Choice of Law

Peruvian law provides for broad freedom of choice of law. Article 2096 of the Civil Code expressly recognises the parties’ right to determine the law applicable to their contract. Thus, insurance policies may be governed by either Peruvian law or foreign law, depending on the parties’ agreement.

If the parties do not expressly designate a governing law, the Civil Code establishes that the law of the place of performance governs contractual obligations. This default rule has particular relevance in insurance contracts covering cross-border risks, where the place of performance may vary depending on the insured event.

General Rule

Peruvian courts consistently recognise and enforce foreign judgments, including those involving insurance contracts, through the exequatur procedure. This process is regulated by Articles 2102–2112 of the Civil Code and Articles 837–840 of the Civil Procedure Code.

Judicial Approach

The Peruvian judiciary generally favours recognition and enforcement of foreign judgments, subject only to limited exceptions. One such exception is the absence of reciprocity: if the foreign jurisdiction does not recognise Peruvian judgments, a Peruvian court may deny enforcement. However, reciprocity is presumed under Article 838 of the Civil Procedure Code, and the burden of proving its absence falls on the party opposing enforcement.

Requirements

For a foreign judgment to be recognised, it must meet specific requirements: that it does not concern matters under the exclusive jurisdiction of Peruvian courts (Article 2058, items 1 and 2 of Civil Code); that the foreign court had jurisdiction and the defendant was duly served with sufficient time to appear; that the judgment has res judicata effect; that no parallel proceeding between the same parties and concerning the same subject matter was initiated earlier in Peru; that it is not incompatible with another judgment already meeting the recognition and enforcement requirements; that it does not contravene public order or good morals; and that reciprocity exists with the state of origin.

In Peru, there are certain procedural features that international insurers should carefully consider.

• Judges are constantly moved from their offices and reassigned to other locations to handle new cases. This causes judges not to thoroughly understand each case, which certainly affects the quality of their judgments.
• The judiciary has no prior preparation in insurance technical issues, such as the valuation of damages. That means a judge will decide a case using limited tools, essentially their legal knowledge, when an insurance case requires much more.
• It is required to obtain a conciliation as a prerequisite before filing lawsuits concerning free disposable rights. Failure to comply with this step results in the claim being dismissed or placed on standby until conciliation is completed.
• Peruvian judiciary faces a heavy case backlog, which often results in excessive delays before a final and enforceable judgment is obtained.
• Regarding appeals, it should be noted that the cassation is exceptional in nature and does not function as a third instance. Its purpose is to ensure the correct application of the law and the uniformity of jurisprudence.
• Under Article 388 of the Civil Procedure Code, it may only be admitted when the judgment or order suffers from specific defects, such as violations of constitutional guarantees, serious procedural errors, misapplication or misinterpretation of the law, lack of reasoning, manifest illogicality in reasoning, or departure from binding precedents of the Constitutional Court or the Supreme Court.
• When the first and second instance decisions are consistent, the “cassation” is rejected. In such scenarios, only an extraordinary admission may be pursued. The Supreme Court will evaluate on a discretionary basis when deemed necessary for the development of jurisprudence.

Peruvian courts consistently uphold and enforce arbitration clauses, not only in commercial insurance and reinsurance contracts but also in virtually all contractual relationships. This obligation derives from Legislative Decree No 1071, which grants arbitration agreements the same binding force as judicial jurisdiction clauses.

Accordingly, if one party files a judicial claim despite an arbitration clause, the counterparty may raise the arbitration agreement as a defence, and the court is required to decline jurisdiction.

Even in cases where the validity of the arbitration agreement is challenged, it is the arbitral tribunal itself that has the authority to decide on its jurisdiction. This principle, known as kompetenz-kompetenz, is expressly enshrined in Article 41 of Legislative Decree No 1071, which empowers arbitrators to resolve any objection regarding the validity or scope of the arbitration agreement.

Peru is a State party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This adherence is particularly relevant because it eliminates the requirement of “double exequatur,” meaning that a foreign arbitral award does not need to be recognised in its country of origin before being recognised and enforced in Peru.

Foreign arbitral awards may be recognised and enforced in Peru pursuant to Articles 74–78 of Legislative Decree No 1071 (see below).

Recognition

Jurisdiction lies with the Civil Chamber specialised in commercial matters of the Superior Court of Justice, where the respondent is domiciled, or otherwise with the competent Civil Chamber. The request is processed as a non-contentious proceeding, and the counterparty has 20 days to respond. An appeal to the Supreme Court (recurso de casación) is available only if recognition is fully or partially denied.

Enforcement

Once the award is recognised, enforcement jurisdiction corresponds to the specialised commercial judge or, failing that, to the civil judge of the respondent’s domicile, or the location of assets if the respondent is not domiciled in Peru.

Grounds for Refusal

Peruvian law incorporates the standards of the New York Convention, including incapacity of the parties or invalidity of the arbitration agreement, lack of notice or due process, the award addressing matters beyond the scope of the arbitration agreement, irregularities in the constitution of the tribunal or procedure, lack of binding effect of the award, or annulment in the country of origin. Recognition may also be denied if the subject matter is not arbitrable under Peruvian law or if the award is contrary to international public policy.

Arbitration is a relevant mechanism for resolving insurance disputes in Peru, particularly in cases that exceed the monetary threshold of 20 UIT established by the Superintendencia de Banca, Seguros y AFP (SBS). As a result, arbitration is commonly used in lines of business involving high-value operations or assets, where the commercial significance of the dispute justifies this form of resolution.

The rules governing arbitration depend largely on the parties’ agreement, including the choice of arbitral seat and applicable law. Where Peru is the chosen seat, arbitration is governed by Legislative Decree No 1071.

Arbitration proceedings are private. Arbitral awards are final and binding, and they cannot be appealed on the merits. The only recourse available is an annulment action (proceso de anulacion de laudo), which is limited to the specific grounds exhaustively listed in Article 63 of Legislative Decree No 1071.

Under Peruvian law, the content of insurance contracts is regulated by the Insurance Contract Law (Act No 29946), which establishes certain obligations that are incorporated into every policy by operation of law. Among the most relevant are:

• the duty of the insured to provide accurate and complete information regarding the risk;
• the insurer’s obligation to deliver the policy or coverage certificate;
• the prohibition of abusive or invalid clauses, such as those that exclude liability for the insurer’s own fraud or bad faith; and
• the recognition of limitation periods and subrogation rights.

These provisions apply regardless of whether they are expressly included in the policy, since they form part of the mandatory legal framework of insurance contracts in Peru.

Insurance companies are protected regarding the presentation of the risk prior to the inception of the policy, as established in Articles 8 to 13 of the Insurance Contract Law (Act No 29946).

The insured is obliged to respect the principle of good faith in contracts, which also applies at the pre-contractual stage. Accordingly, the insured has the duty to disclose all relevant circumstances and situations that may influence the assessment of the risk.

Failure to comply with this duty is subject to legal regulation. Article 8 of the Act No 29946 provides that concealment or misrepresentation made with fraud or gross negligence renders the contract void. In such a case, the insurer has a period of 30 days to invoke the nullity of the policy. If a loss occurs before the expiration of this period, the insurer is released from the obligation to pay the indemnity. However, the rejection of the claim requested by the insured may ultimately need to be judicially justified by the insurance company.

On the other hand, according to Article 10 of the same law, when concealment or misrepresentation is due to slight negligence, the insurer may offer to revise the contract within 30 days of becoming aware of it, proposing an adjustment of premiums and/or coverages. If the policyholder does not accept within 10 days, the insurer is entitled to terminate the contract, in which case the insurer is entitled to the premiums accrued on a pro rata basis up to the date of termination.

Over the past 12 months, the courts have seen a rise in claims related to two main issues:

• health insurance, where the company has denied coverage to policyholders and the parties involved are disputing the interpretation of the policy clauses; and
• car and major vehicle insurance, where, in the event of an accident, the company has again denied coverage based on its interpretation of the policy.

In addition to these cases, the Peruvian market will face a significant and highly complex claim from Petroperu, the public oil company, against Mapfre for the denial of coverage. This denial is once again a result of an interpretation of the insurance contract.

In Peru, when a conflict arises regarding insurance coverage, the insured may initiate administrative or judicial proceedings to report the company’s refusal to fulfil its obligation. Thus, the competent administrative entities are SBS, INDECOPI or the courts.

Compared with reinsurance contracts, the situation is different: these are agreements between insurance and reinsurance companies, so consumer protection mechanisms do not apply.

In such situations, reinsurers may seek judicial proceedings to protect their rights or turn to arbitration if an agreement for it has been established. Once they engage in these processes, the stages and methods of protection will remain consistent.

Consequently, the approach to a reinsurance contract should be treated as a commercial case.

The Insurance Contract law establishes that when the insured qualifies as a consumer, the rules contained in the Consumer Protection and Defence Code will apply. Therefore, the question arises as to when an insured qualifies as a consumer.

In this regard, the Consumer Protection and Defence Code states that consumers are:

• natural or legal persons who acquire, use, or enjoy a good or service for their own benefit or that of a family member (a person does not qualify as a consumer if, in relation to the acquired good or service, they carry out an economic activity); and
• micro-entrepreneurs who are in a situation of informational asymmetry regarding goods or services that are not part of their business activity.

The qualification as a consumer is relevant in a dispute, since the consumer will be considered the weaker party in the contract, and the existence of an informational asymmetry will be presumed.

The regulation creates stronger standards for information, transparency and a more advantageous environment for consumers. For example, it includes the following provision: “In cases of uncertainty regarding the terms of adhesion contracts, the interpretation must be made in the most favourable way for the consumer.”

In conclusion, if the insured qualifies as a consumer, they will be entitled to certain advantages in administrative proceedings. In judicial proceedings, although the procedural rules formally provide for equality of arms, courts are often inclined to empathise with the insured as the weaker party to the contract.

There are circumstances (exceptionally) in which a third party may assert rights against the insurance company. For example, if a family member is designated as the beneficiary in a life insurance policy, that third party acquires the right to demand payment upon the occurrence of the insured event.

This situation can be framed within Article 54 of the Insurance Contract law, as it constitutes insurance for the benefit of another. Another case arises in liability insurance. For example, if an insured driver causes a traffic accident that injures a pedestrian, the latter may bring a direct claim against the insurer to collect compensation.

Peruvian law does not contain a written concept of bad faith, even when the term is mentioned repeatedly; laws do not specify the elements that should form a bad faith behaviour. However, one can find numerous case law examples that illustrate what constitutes bad faith.

Notwithstanding, the Insurance Contract law indicates situations that reflect bad faith on the part of the insurer, particularly when abusive clauses and practices are prohibited (Articles 39, 40, and 41 of said law). Again, using examples, the legislator provides sufficient details to grasp a concrete concept of bad faith.

Insurers may be sanctioned for delays in the payment of claims, primarily pursuant to the Ley del Contrato de Seguro (Act No 29946) and the Reglamento para la Gestión y Pago de Siniestros (Resolution SBS No 3202-2013).

According to this regulation, once the claim has been accepted, the insurer has 30 days to make the corresponding payment. If this deadline is not met, the insurer must pay the insured or beneficiary default interest equivalent to 1.5 times the average lending rate in Peru, calculated in the currency of the insurance contract, for the entire period of delay.

Likewise, the policyholder, even if in possession of the policy, cannot collect the indemnity or benefit without the express consent of the insured, unless the policy has been endorsed in their favour.

There is no express legal provision establishing that the insured is automatically bound by the statements made by their broker. In practice, the interpretation of insurance contracts is governed by the principle of good faith and by what is effectively agreed upon in the policy. Generally, the broker’s statements do not create direct obligations for the insured vis-à-vis the insurer, unless they have been expressly incorporated into the contract.

They are not common, as the regulation issued by the Superintendencia de Banca, Seguros y AFP (SBS) can be interpreted to mean that both underwriting policies and managing and paying claims are non-delegable functions of insurers.

Insurers usually finance the defence of the insured in claims covered by the policy, mainly in areas such as civil liability or property damage. It may also include defence in transportation, maritime, labour, and environmental insurance. This obligation is limited to the terms, insured sums, and specific conditions of the contract.

No significant changes are expected in the areas where insurers fund the defence of their insureds.

Coverage will most frequently continue to apply in cases of civil liability, property damage, transportation, labour risks, or environmental risks. At the same time, new scenarios may always arise (such as those related to cyber risks), but the general trend is for these areas to remain stable in the years to come.

The complexity of litigation is directly related to the existence of a greater number of coverages in insurers’ policies, which requires lawyers to have higher specialisation and, consequently, increases the costs.

For example, providing advice on a claim related to a motor vehicle accident coverage does not carry the same cost as handling a case linked to an insured Project Finance, where the sophistication of risk coverage and the analysis required are considerably greater.

Upon analysing last year’s cases, a trend toward more complex conflicts in insurance involving technology and e-commerce policies emerged.

Claimants can obtain protection against the risk of costs related to their claims through legal expenses insurance.

This type of policy covers expenses arising from their participation in administrative, arbitral, or judicial proceedings, including legal advice and assistance, claims management, and defence against liable third parties.

The insurance contract law recognises the insurer’s right of subrogation. This means that the insurer who has paid the indemnity is subrogated to the rights of the policyholder and/or insured against third parties responsible for the loss, up to the amount of the indemnity paid.

The right of subrogation is defined in Article 99 of the Insurance Contract Law (Act No 29946) and in Articles 1260 and following of the Civil Code. Under this provision, when an insurer compensates the insured for a loss, the insurer gains the insured’s rights against the third party responsible for the damage. This means that the insurer effectively steps into the insured’s position, allowing them to file a claim in the insurer’s name.

The COVID-19 pandemic led to an increase in claims related to health insurance, business interruption, liability, and travel insurance.

On the other hand, international conflicts, such as the wars in Europe, have affected international trade insurance as well as political risk coverage. Insurers have faced a rise in claims for damages, supply chain interruptions, and political risks, which has increased both the volume and complexity of litigation.

The situation regarding insurance litigation is likely to remain unchanged in the next 12 months, as many claims related to COVID-19 are still in the initial stage of judicial proceedings.

Even after the pandemic is behind us, the uncertain landscape concerning international conflicts remains. Factors such as geopolitical tensions, fluctuations in financial markets, and major infrastructure projects intertwined with political issues may continue to lead to complex insurance disputes.

Although global factors such as international conflicts have increased litigation and the complexity of certain claims, no test cases or judicial precedents have yet arisen that alter the interpretation of existing coverages.

There is no evidence that the above-mentioned factors have significantly affected the scope of insurance coverage available in the Peruvian market or the risk appetite of insurers.

ESG factors are increasingly impacting insurance underwriting and litigation in Peru. In underwriting, environmental risks – such as climate change and natural disasters, which are common in the country – lead insurers to adjust premiums or even limit coverage for companies with significant environmental impacts.

Social factors, such as inadequate labour practices or a lack of corporate social responsibility, are also carefully assessed. Companies that fail to meet minimum standards of ethics and good practices may face greater difficulty accessing certain insurance products. Additionally, corporate governance, evaluated in terms of transparency, compliance, and ethics, is critical, as deficiencies in this area can signal significant legal and financial risks.

For proper determination of the insurance rate, insurers must ensure that they collect, process, and store policyholders’ information in order to accurately assess the risk to be covered.

However, the handling of such information must comply with the requirements outlined in Act No 29733, Personal Data Protection Law, and its regulations. This requires careful evaluation of which data can be used to set insurance rates or determine coverage, avoiding practices that could be considered invasive or discriminatory.

Improper handling may expose insurers to liability for violating privacy rights, potentially leading to litigation.

This year, the SBS issued a regulation that promotes the comprehensive management and structuring of risks associated with assets and liabilities. Specifically, through the Regulation on Asset and Liability Management for Insurance Companies (SBS Resolution No 1660-2025), published on May 9, 2025, it seeks to implement a methodological framework and guidelines for the integrated management of assets and liabilities in general and life insurance, covering both short- and long-term policies.