An insurance claim in Panama can become a dispute when the policyholder and insurer disagree over coverage, exclusions, the amount of the loss, required documentation, or the indemnity payable under the policy.
A delayed, reduced, or denied insurance claim can be concerning, but it does not automatically mean that the insurer has acted in “bad faith.”
Under Panamanian law, the insurer’s conduct should be analyzed based on the insurance policy, applicable legislation, insurance regulations and, where relevant, principles of contractual or civil liability.
Panama’s Law 12 of 2012 establishes obligations for insurance companies, including duties to act with transparency, integrity and fairness toward insurance consumers.
Learn more about LAC Legal’s Insurance and Reinsurance practice.
What Does “Bad Faith” Mean in an Insurance Claim?
The term bad faith insurance claim is commonly used to describe situations in which a policyholder believes an insurer has handled a claim unfairly, arbitrarily or without reasonable justification.
However, insurance bad faith is particularly associated with legal doctrines developed in jurisdictions such as the United States. Those doctrines and remedies should not be assumed to apply in the same way in Panama.
Under Panamanian law, the relevant questions may include whether the insurer:
- breached the insurance policy;
- failed to comply with a legal obligation;
- violated a policyholder’s rights;
- committed a regulatory violation; or
- caused legally compensable damage.
A delay or denial may therefore justify further review, but it does not by itself establish unlawful conduct.
What Obligations Do Insurance Companies Have in Panama?
Panamanian insurance law establishes obligations concerning how insurers interact with policyholders and handle insurance claims.
These include providing access to the applicable policy terms, handling claims diligently, providing clear and accurate information, and acting in accordance with applicable law, fair commercial practices and principles of fairness.
This does not mean that an insurer must automatically approve every claim.
Disputes may arise over policy coverage, exclusions, the amount of the loss or whether the policyholder has provided the documentation required under the policy.
Warning Signs When an Insurance Claim Is Being Handled
Certain circumstances may justify taking a closer look at how an insurance claim is being handled, including:
- excessive delays without a clear explanation;
- inconsistent positions from the insurer;
- denial without identifying the relevant policy exclusion or condition;
- failure to consider relevant evidence;
- reduction of the claimed amount without sufficient explanation;
- repeated requests for documents already provided; or
- prolonged failure to provide a written response.
These circumstances do not automatically prove unlawful conduct, but they may indicate that the policy and the insurer’s handling of the claim should be reviewed more carefully.
What Should You Do If an Insurance Claim Is Denied or Delayed?
If an insurance company denies, reduces or significantly delays a claim, maintaining a clear record of the claim and communications with the insurer can be important.
A policyholder should generally consider:
- Reviewing the insurance policy and endorsements, including coverage, exclusions, limits and deductibles.
- Requesting the insurer’s position in writing, particularly following a denial or reduction.
- Identifying the policy provisions relied upon by the insurer.
- Preserving relevant evidence and communications relating to the loss and claim.
- Evaluating available options if the dispute cannot be resolved directly with the insurer.
Keeping an organized claim file can become particularly important when there is a dispute over what information was provided, when it was submitted and how the insurer responded.
Can You Challenge a Denied Insurance Claim in Panama?
Depending on the circumstances, a denied or unpaid insurance claim may require further action when there is a potential breach of the policy, a significant disagreement over coverage or a dispute that cannot be resolved directly.
The available options may include negotiated, regulatory, judicial or arbitral mechanisms, depending on the policy and the facts of the case.
It is particularly important for international policyholders and businesses not to assume that remedies available in other jurisdictions also exist in Panama.
For example, concepts such as punitive damages or automatic compensation associated with certain bad faith insurance claims in foreign jurisdictions should not be directly imported into Panamanian law. Any additional damages would need an appropriate legal basis and supporting evidence.
When an insurance dispute requires formal dispute resolution, learn more about our Litigation and Arbitration practice.
Frequently Asked Questions About Insurance Claims in Panama
Request the insurer’s decision in writing, identify the policy provisions supporting the denial, review the relevant coverage and exclusions, and preserve all documents and communications relating to the claim.
Not necessarily. A claim may require investigation, expert reports or additional documentation. However, an excessive or unexplained delay may justify further review.
Disagreements may arise over the amount of the loss, policy limits, deductibles, exclusions or other policy conditions. Whether a reduction is justified depends on the policy and the circumstances of the claim.
Depending on the circumstances, different mechanisms may be available to challenge or resolve the insurer’s position. The appropriate route will depend on the policy, the nature of the dispute and the facts of the case.
The term should be used carefully. Legal doctrines and remedies associated with insurance bad faith in jurisdictions such as the United States should not be assumed to operate in the same manner under Panamanian law.
A claim against an insurer in Panama must be analyzed under the applicable policy, Panamanian legislation and the specific facts involved.
Legal Advice for Insurance Claim Disputes in Panama
Insurance disputes may involve questions of policy interpretation, exclusions, coverage, loss valuation, adjuster reports, expert evidence and regulatory requirements.
LAC Legal advises policyholders and other parties on insurance and reinsurance matters, complex claims, coverage disputes, negotiations and dispute resolution.
Learn more about our Insurance and Reinsurance practice or contact our team to discuss an insurance claim or coverage dispute in Panama.