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18 July 20233 minute read

Insurance in Brazil Campos Mello Advogados in cooperation with DLA Piper

Insurance Market Overview

In recent years, the insurance market in Brazil demonstrated remarkable flexibility and resilience in overcoming several obstacles, notably the impact of the COVID-19 pandemic and the economic consequences from the Russia-Ukraine conflict. Systems and resources have been improved, while agile talent and technology strategies proved to be effective.

The outlook for the sector for the new year ahead is challenging, given the current political polarization, interest rates and rising inflation, which often create a potentially uninviting environment for business development. Yet, it is somewhat positive, given the context of growth.

We have briefly described below the most recent developments in the local market, such as changes to the legal and regulatory landscape.


Main changes in the legal and regulatory landscape

Surety bonds

In April 2022, the Brazilian Insurance Regulator SUSEP published Circular No 662/2022, aimed at adjusting the rules on surety bonds according to current risk management policies and hiring flexibility. The most significant changes are:

  • the exclusion of standardized contractual conditions, with emphasis on contractual freedom and creation of new customizable clauses;
  • the possibility of contracting policies in phases, work instalments, or for a period shorter than the term of the insurance contract;
  • the introduction of transparency mechanisms and reduction of information asymmetry; and
  • regulating the inclusion of third parties as beneficiaries of the policy.

Such changes are viewed as initial steps towards transforming the surety bonds’ policies as customizable according to the clients’ needs in a more assertive way, albeit with transparency and objectivity.

Reinsurance, retrocession and contracting of insurance abroad

In December 2022, a new regulation (Regulation) was published providing rules for the operations of assignment and acceptance of reinsurance and retrocession and its intermediation, coinsurance operations, operations in foreign currency, and insurance contracts abroad.

The Regulation removes the 50% limit of retention for reinsurance and retrocession assignments, previously provided for. Now, insurers must retain at least 10% of the premiums relating to the risks they have underwritten; however, it is possible to assign an amount greater than 90% upon presentation of a technical justification to SUSEP.

In the case of local reinsurers, the retrocession limit is now 70%, and the Regulation extends the list of exceptions to groups of financial, rural, and nuclear risk branches, which will not have a limit for assignment in retrocession.

Another change brought by the Regulation concerns the risk acceptance in retrocession by insurers: the maximum of risks accepted in retrocession by an insurer is now 2% (instead of the previous normative limit of 3%) of the insurance premiums issued relative to the risks it has underwritten, considering all its operations, in each financial year.

Sustainability management in the insurance market

Following the trend of other countries, on 27 June 2022 SUSEP issued Circular No 666/2022, which regulates the mandatory adoption of instruments for managing climate, social and environmental risks (ESG).

Based on this new regulation, insurers must create processes and control mechanisms to identify, evaluate, measure, treat, monitor, and report the risks to which they are exposed. For that purpose, three specific instruments must be adopted:

  • policies for managing sustainability risks,
  • sustainability policy, and
  • a sustainability report.


In Summary

As a result of the newly implemented changes, and in view of some proposed regulatory updates, we are noticing that Brazil is looking to become more aligned with other countries in terms of being a better place to do business and providing a more flexible environment for innovation and foreign business.