SUSEP opens public consultation on new P&C Insurance Resolution, in line with the Insurance Contract Law

Contributions from the market must be sent by November 25

The Superintendence of Private Insurance (SUSEP) has placed for public consultation a draft resolution that establishes rules and criteria for drafting, structuring, selling and operating property and casualty (P&C) insurance contracts in Brazil.

The proposal regulates and updates the P&C insurance regime in response to the changes introduced by the Insurance Contract Law (Law No. 15,040/2024), expressly repealing SUSEP Circular No. 621/2021 and specific provisions of Circulars No. 639/2021 and 642/2021.

The draft resolution expressly provides that it will apply to all P&C insurance contracts, including those that cover large risks “as provided for in the specific regulation”, as well as those marketed by insurance cooperatives.

Although the draft does not explicitly repeal CNSP Resolution No. 407/2021, SUSEP has explained that it will be reviewed. As such, we believe that “P&C insurance for large-risk coverage” will remain in force and applicable as long as this resolution is not amended.

Regarding the criteria for applying deadlines exceeding 30 days (and up to 120 days) for more complex loss adjustment and settlement proceedings, Articles 75 and 76 of the draft resolution replicate the wording of the Insurance Contract Law, but add that “in the case of insurance to cover large risks, the period described in the head paragraph may be up to 120 days.” (paragraph 6).

Although paragraph 6 does not expressly mention CNSP Resolution No. 407/2021, SUSEP has clarified in the comparative chart that this 120-day deadline must apply to all contracts governed under this regulation, as the 30-day deadline “would be misaligned with reality, given the complexity of these contracts.”^[1]Given this gap in the new draft, we believe that the 120-day deadline should be included in the contractual conditions for products classified as large-risk coverage (defined by branch; maximum coverage limit; value of the insured/policyholder’s assets or revenue).

Below, we highlight other relevant forecasts regarding the remaining topics covered in the draft Resolution, in addition to the changes already introduced by Law No. 15,040/2024 and in comparison with what was foreseen by the repealed Susep Circular No. 621/2021:

• Product registration:

Article 23 of the draft provides that general, special, and specific conditions must be registered electronically with SUSEP. The provision fails to specify that it does not apply to large-risk insurance, but we understand that, on this point, the exemption provided for in CNSP Resolution No. 407/2021 prevails.

On the other hand, the rule innovates by providing for the registration of particular conditions. In our view, this is at odds with the purpose of such conditions: to particularize the conditions applicable to a given insured according to the risk presented.

• Formalization of the insurance proposal:
• Regarding Article 42, paragraph 3, of the Insurance Contract Law, the draft resolution clarifies in Article 13, paragraph 1, that the signing of the proposal for acceptance purposes is optional and that there may be other forms of expression of intent.
• Regarding unequivocal acts by the recipient, SUSEP comments that the Insurance Contract Law does not specify what such acts would be, but that the “recipient” would be the potential insured. In this case, the draft resolution provides that both the expression of intent and the unequivocal act must be verifiable by the insurer (paragraph 2).
• Finally, the payment of the premium will not be deemed an unequivocal act of acceptance by the insured when the charge is made jointly with amounts for other products (paragraph 3).
• Insurance proposal made by the insurer:

Susep clarifies that the proposals used in the market before the Insurance Contract Law came into force correspond to what the new law defines as proposals presented by the insured. Thus, the insurance proposal made by the insurer is, in fact, an innovation of the Insurance Contract Law.

SUSEP indicates that this landscape would apply to insurance policies taken out via ticket and which do not require a questionnaire or risk analysis, as in the case of extended warranty insurance or personal accident insurance for bus passengers, for example.

• Form of contracting:

The contract must provide for the form of contracting for each coverage – whether under total risk, relative risk, or absolute risk. If no form is defined, coverage will be deemed as aboluste risk (Article 40, paragraphs 1 and 2).

• Maximum limit of indemnity:

The contractual conditions must describe the criteria for determining the maximum indemnity limit (Article 50). In our view, this requirement relates to the need to define how the Maximum Indemnity Limit (LMI) for each coverage interacts with the policy’s overall Maximum Guarantee Limit (LMG), as well as the need to establish a specific limit for coverage of containment and/or salvage expenses, as indicated by SUSEP in the explanatory memorandum of the regulation.

• Deductible:
• The draft resolution emphasizes that the self-retention of the insured (POS) is a type of deductible and its enforcement must comply with all rules that apply to deductibles (Article 54, paragraph 3).
• When the indemnity amount for the depreciation of the insured asset is reduced, the deductible amount, defined in monetary value, must be reduced by an equivalent amount (article 54, paragraph 4).
• In our view, this provision does not take into account the possibility of establishing a POS to be deducted from the indemnity payable to the insured, even if the indemnity reaches the coverage’s Maximum Indemnity Limit (LMI) or the policy’s overall Maximum Guarantee Limit (LMG).
• Premium:
• In the event of default on any premium installment after the first, the suspension or termination of the insurance contract cannot take effect before the end of the coverage period corresponding to the exact proportion of premiums already paid (Article 63).

In this regard, when addressing the “exact proportion of premiums,” it is possible to question whether the regulation intends to prohibit the use of the “short-rate table,” which is widely adopted in the market and whose ratio between premiums and coverage period is not exact. In our view, the new Insurance Contract Law does not prohibit the use of the short-rate table.

• The notification to the insured must include information on the end date of the coverage period corresponding to the proportion of premiums already paid (Article 63, sole paragraph).
• Claim:
• The contractual conditions may establish that the insurer is liable for losses arising from a claim occurring prior to the start of the policy term, provided that such coverage is compatible with the nature of the risk and the insured was unaware of the claim at the time of contracting the insurance (Article 65, paragraph 2). In our view, this provision applies to claims-made policies with a retroactive period and reinforces the requirement that the insured/policyholder must be unaware of the claim.
• The contractual conditions must specify, for each coverage, the event that triggers a claim, in accordance with the nature and characteristics of the risk (Article 66).
• The contractual conditions must also establish, considering the nature of the risk, the objective situations that characterize the imminence of a claim, which must be communicated by the insured (Article 67, paragraph 1). In our view, the new Insurance Contract Law does not require contractual provisions defining situations that characterize the “imminence of a claim.” Therefore, this requirement seems excessive, given the wide range of events that may lead to a covered loss under different types of property and casualty insurance.
• The insured, beneficiary, and injured third party are expressly provided for as the interested parties in the claim (Article 72, sole paragraph).
• Denial of coverage:

In cases where coverage is refused due to a latent and undeclared defect at the time the insurance was contracted, the insurer must prove both the existence of the defect and its causal link to the loss (Article 75, paragraph 2).

• Suspension of the adjustment and settlement period:

The suspension period may occur twice, except for insurance contracts with a maximum coverage limit of less than 500 times the prevailing minimum wage (calculated on the contracting date) and for automobile group insurance, where the suspension may occur only once (Article 78, paragraph 2).

• Insurer’s default:

The draft resolution provides that when the indemnity is not paid in cash, the penalties (2% fine, interest, and adjustment for inflation) must be paid in cash and calculated on the total amount of the repair, replacement, or service provided (Article 79, sole paragraph).

 Request for documents for claim adjustment or settlement directly by the insurer

Article 78 of the draft states that the insurer may request additional documents in cases of well-founded and reasonable doubt. SUSEP has explained that the adjuster and the settler have full discretion to require additional documents, provided there is justification and the documents can be produced.
However, such requests must be made exclusively through the insurer, without direct contact between the adjuster and the insured party. In our view, there is no legal basis for including this provision in SUSEP’s draft circular, given that the new Insurance Contract Law expressly states that “the adjuster and the settler act on behalf of the insurer” (Article 79), and are therefore accountable for their actions.
Moreover, this procedure contradicts market practice and undermines the speed of adjustment and settlement processes, which is the very objective of the new law. For these reasons, we believe SUSEP should amend this point in the draft.

• Adjustment and settlement report:

The draft resolution establishes the minimum items that must be included in the report (Article 83):

1. Coverage affected by the claim and its respective limits;
2. Chronology of events, dates of complaint, start and end of regulation and settlement, payment of indemnity, and any suspension periods due to requests for supplementary documents;
3. Contractual deadlines for adjustment and settlement of the claim;
4. Calculation report of the indemnity per coverage, including the calculation and details of deductibles, apportionment, fines, interest, and adjustment for inflation potentially applied;
5. Documents evidencing individualized costs incurred, with descriptions of items and parts used in replacement, repair, or service provision, when indemnity is provided through these means;
6. In case of coverage denial, a detailed rationale, including factual, contractual, and legal grounds;
7. Rationale for the impossibility of carrying out the adjustment and settlement jointly, when applicable (Article 81, paragraph 2).

Additionally, the insurer has 10 days to submit the report upon the insured’s request (Article 83, paragraph 2). This provision clarifies that the report must only be presented upon the insured’s request, and not necessarily on a voluntary basis when the coverage position is communicated.

• Repair of the insured object:

The deadline for claim settlement and completion of the corresponding repair may be extended, but under no circumstances may the total period exceed 60 days. If the repair cannot be completed within this extended timeframe, the indemnity must be paid in cash (Article 88, paragraphs 4 and 5). We believe this point warrants further discussion with SUSEP, considering that repair may constitute the form of guarantee requested by the insured, even if the timeframe exceeds 60 days, given that this period can be affected by factors such as the availability of parts and the necessary labor.

• Indemnification through the provision of services:

• The criteria for selecting service providers must be clearly stated. Such criteria may allow the insured to choose freely, use a network of providers designated by the insurer, or both, as outlined in the contractual provisions.

Article 89 of the draft establishes specific conditions applicable to the use of a designated network. These include the obligation to ensure service availability throughout the contractual term, notify the insured of any changes to the network, and allow the insured to choose from multiple providers in cases where the designated network is unable to provide service.

• Aggravation of the risk:

• Article 94 of the draft states that the insured will lose the right to coverage if they intentionally aggravate the risk covered by the insurance. SUSEP has clarified that this provision encompasses both continuous and isolated aggravation, which are also subject to loss of coverage.

• Article 95, in turn, provides for the possibility of restricting coverage and charging an additional premium by mutual agreement when the continuation of coverage occurs at the insurer’s discretion. This rule applies to both unintentional and intentional aggravation of risk.
• Risk reduction:
• The draft resolution complements the law by defining relevant risk reduction as a change “that leads to a significant and continuous decrease in the probability of occurrence of the risk described in the risk assessment questionnaire or the severity of its consequences” (Article 97, paragraph 1).
• The insurer has 15 days to express its opinion on the assessment and premium reduction (Article 97, paragraph 2).

If the insurer concludes that there has been no relevant risk reduction, the insured may terminate the contract, subject to the insurer’s right to recover contracting expenses (Article 97, 3).

Once the final wording of the resolution is concluded, insurance plans registered prior to its effective date must be adapted within 180 days; non-compliant products will be subject to cancellation.

The documents related to the public consultation are available in full (in Brazilian Portuguese only) on SUSEP’s website.

Demarest’s Insurance, Reinsurance, Health and Private Pension team will monitor the public consultation and will remain available to provide any further clarification that may be necessary.

[¹] Comment included in the Comparative Table made available by SUSEP.