New Law Seeks to Strengthen Consumer Protection in the Insurance Sector

The recent proposed law aimed at establishing the Independent Authority for the Defense of Financial Customers has sparked extensive debate in the insurance sector. This initiative is part of an effort to enhance customer protection in their interactions with financial entities. The law not only amends the current Article 119 of Law 20/2015 but also introduces a new system for extrajudicial conflict resolution that promises to be a more accessible channel for consumers. The creation of this Authority aims to provide an additional resource for customers facing disputes with their insurers by generating an alternative dispute resolution system. This mechanism seeks to be a less bureaucratic and more agile solution than direct access to the judicial system. Furthermore, it is established that this system will be voluntary for the customer but mandatory for the entities, reinforcing insurers' commitment to customer service. One of the most relevant features of this law is that the Authority will be able to address claims from all customers who consider themselves affected, whether they are individuals, legal entities, or even organizations without legal personality. This significantly broadens the scope of the system, allowing a larger number of consumers to voice their complaints and conflicts with insurers. In this sense, the new regulation is expected to help balance the relationship between entities and their customers, who often find themselves in a disadvantaged position. The regulation also stipulates that the Authority will handle claims related to violations of customer rights and interests. However, it is limited to those cases that do not require the assessment of experts in technical matters outside the sector's regulations. This means that if the resolution of a claim involves specialized knowledge, the case must be directed to the Complaints Service of the Directorate General of Insurance and Pension Funds (DGSFP). Additionally, the law thoroughly defines what is meant by codes of conduct and best practices in the insurance sector. Insurance entities must comply with these guidelines, which range from proper pre-contractual information to the duty of advising on the purchase of products. In this way, it is expected that transparency and ethics in the insurance sector will be strengthened, which in turn could improve consumer trust. Another important aspect of the law is the establishment of the possibility that certain resolutions from the Authority will be binding, particularly those involving violations of conduct regulations and abusive clauses. This could provide consumers with greater confidence in the process, knowing that their claims can be effectively addressed with a compliance obligation on the part of the entities. However, it is relevant to note that not all resolutions will be binding. Claims exceeding 20,000 euros, or those that do not have a clear economic content, will not be subject to this same obligation, which could create some uncertainty for consumers regarding the effectiveness of their complaints in those cases. The draft law also delineates which types of conflicts fall outside the jurisdiction of the new Authority. For instance, conflicts related to collective insurance or pension plans, as well as those affecting personal data protection, must be resolved by other bodies, such as courts or specialized tribunals. This exclusion could limit the Authority's reach in some significant cases, which consumers seeking its assistance should consider. In conclusion, the establishment of the Independent Authority for the Defense of Financial Customers represents a significant advancement in consumer protection in the insurance sector. Through the implementation of an extrajudicial conflict resolution system and the possibility of binding decisions in certain cases, it is expected that customers will have a more solid backing for their claims. However, the effectiveness of this new regulation will depend on its proper implementation and the commitment of insurance entities to adhere to the ethical and transparent practices required of them. Thus, the future of the relationship between insurers and customers could finally be on a more balanced and fair path.