CNSP approves new resolution on reinsurance, retrocession, coinsurance, foreign currency transactions, and insurance procurement abroad

The Brazilian Superintendence of Private Insurance (“SUSEP”) has published CNSP Resolution No. 494, which governs reinsurance and retrocession cessions and acceptances and their intermediation, coinsurance operations, foreign currency transactions, and insurance procurement abroad, fully repealing CNSP Resolution No. 451/2022.

The new regulation stems primarily from the need to align the regulatory framework with the changes introduced by Law No. 15,040/2024 (“Insurance Contract Law”) and Complementary Law No. 213/2025, which governs insurance cooperatives and mutual protection associations.

Below are the most relevant aspects of the newly published regulation.

Reinsurer participation in claims adjustment

Confirming the amendment already contemplated in the draft submitted for public consultation, the approved version of the resolution removed the provision contained in Article 12 of CNSP Resolution No. 451/2022, which expressly allowed reinsurer participation in claims adjustment, including through control clauses.

The final version of the resolution introduces Article 14, a new provision that was not included in the public consultation draft and that adopts different wording, establishing the ceding insurer’s full and exclusive responsibility toward insureds, beneficiaries, and third parties for performance of the insurance contract, regardless of the provisions of the reinsurance agreement or any failure by the reinsurer to comply with its obligations.

Paragraph 1 prohibits the transfer to the reinsurer of obligations or decision-making powers inherent to the performance of the insurance contract. Paragraph 2 prohibits the inclusion in reinsurance agreements of any clause that excludes, limits, or conditions the ceding insurer’s liability toward the insured, including with respect to claims adjustment or settlement.

In our view, the new wording – although it no longer expressly reiterates the permissibility of cooperation and control clauses in the relationship between the ceding insurer and the reinsurer – reinforces that the obligations arising under each contract are autonomous and do not directly interfere with the insured. This interpretation must be considered along with Articles 61, 62, paragraph 2, and 76 of the Insurance Contract Law, as well as Article 14 of Complementary Law No. 126/2007.

We understand that there is room for debate as to whether SUSEP has effectively created a prohibition specifically targeting control clauses, as paragraph 1 of Article 14 states that it is prohibited to “transfer obligations or decision-making powers inherent to the performance of the insurance contract to the reinsurer.” Nevertheless, even where a claims adjustment and settlement clause contained in a reinsurance agreement requires the reinsurer’s direct participation in claims handling and coverage decisions, our view is that such arrangements apply only to the relationship between the ceding insurer and the reinsurer, while the insurer remains fully liable to the insured with respect to the claim.

Cooperation clauses, on the other hand, do not appear to fall within this debate, as they do not involve any transfer of obligations from the ceding insurer to the reinsurer.

Despite the new wording of Article 14, it seems to us that in cases involving complex risks and near-total risk cessions, control clauses – which are a well-established practice in the international market, particularly in facultative reinsurance – do not alter the independence of the contractual relationships established through insurance and reinsurance agreements, with the insurer remaining the sole party directly liable to the insured.

Deemed acceptance

The resolution regulates deemed acceptance of reinsurance proposals pursuant to Article 60, paragraph 1, of the Insurance Contract Law. The reinsurance contract is formed immediately upon acceptance or, if the reinsurer remains silent, within 20 days from receipt of the proposal (Article 11). SUSEP may extend this period where a duly substantiated technical need exists (Article 11, paragraph 1), although the regulation does not specify the practical procedure through which such an extension would be granted.

The regulation also provides that SUSEP will establish the minimum requirements applicable to reinsurance proposals (Article 11, paragraph 2), which is expected to occur through a separate regulation. In any event, the resolution already defines a reinsurance proposal as a “document formalizing a ceding insurer’s intention to obtain reinsurance from the reinsurer(s) identified therein and containing information regarding the proposed risk for assessment and acceptance or rejection by such reinsurer(s)” (Article 2, XI).

Contract formation by silence does not apply to endorsements, whose amendments to terms or clauses will continue to require the parties’ express consent (Article 11, paragraph 3).

As already provided for by the Insurance Contract Law, this rule reverses the traditional contracting logic and applies a deemed acceptance regime to reinsurance. The “reinsurance proposal” becomes the reference document both for counting the applicable period and, in the event of silence, for evidencing the agreed coverage itself (Article 12, paragraph 10). Its specific requirements, however, remain subject to further regulation by SUSEP.

The resolution does not address the specific channels through which reinsurers must receive proposals. Nevertheless, it is advisable to review internal procedures and proposal intake channels in order to avoid allegations of deemed acceptance arising from mere requests for quotations or proposals submitted through incorrect channels.

Time limit for formalizing reinsurance agreements: reduced from 180 to 90 days

The resolution reduces the time limit for contractual formalization from 180 days to 90 days from the inception of coverage (Article 12). This represents a significant adjustment compared to the draft submitted for public consultation, which contemplated a 60-day period. The extension reflects market feedback regarding the need for a timeframe compatible with the complexity of negotiations, particularly in facultative placements and large-risk programs. Failure to comply will be subject to sanctions to be established in specific regulations.

Formalization of a reinsurance agreement may occur through issuance of the contract itself or through a signed slip containing the signature, date, and identification of the reinsurer’s legal representative, with remote signatures being expressly permitted. Amendments to contractual clauses require issuance of an endorsement (Article 12, paragraph 2), which must also be formalized within 90 days from the date of risk acceptance or the commencement of coverage, whichever occurs first (Article 12, paragraph 3).

Advance payment of reinsurance recoveries

In line with Article 63 of the Insurance Contract Law, the resolution preserves the possibility of advance payment of reinsurance recoveries to the ceding insurer, provided that where such advance payment is directly related to the performance of the underlying contract, as in facultative reinsurance, the amounts must be immediately applied to payment of the indemnity.

Extraterritoriality: Governing law and arbitration

Two controversial issues concern the scope of Brazilian law over insurance agreements entered into abroad as well as arbitration involving reinsurance and retrocession disputes.

Regarding the first issue, the resolution maintains the provision that Brazilian law applies exclusively to insurance agreements entered into abroad whenever the insured or applicant resides or is domiciled in Brazil, or whenever the insured interests are located in Brazil (Article 39, paragraph 5).

In our view, this provision conflicts with Article 4 of the Insurance Contract Law, which expressly excludes the application of Brazilian law in the situations contemplated by Article 20 of Complementary Law No. 126/2007. This excludes the application of Brazilian law where insurance procurement abroad is legally authorized, even if the policyholder resides in Brazil or the insured interests are located in the country. The introduction of an extraterritorial rule concerning Brazilian law in a regulation issued by SUSEP appears to exceed the agency’s regulatory authority.

Regarding arbitration, the resolution interprets Article 131 of the Insurance Contract Law as requiring reinsurance agreements covering risks located in Brazil to be subject to Brazilian law and jurisdiction, without excluding arbitration. It further provides that court proceedings and arbitrations involving ceding insurers, reinsurers, and retrocessionaires that may directly interfere with the performance of insurance agreements entered into in Brazil must be brought before the courts of the defendant’s domicile (Article 16).

In our view, the Insurance Contract Law does not restrict the parties’ choice of governing law or arbitral seat in reinsurance agreements (restrictions having been established only for insurance agreements pursuant to Articles 4, 129, and 130). Additionally, the sole paragraph of Article 131 concerns territorial jurisdiction, which is inapplicable to arbitration and would only apply if a dispute relating to a reinsurance or retrocession agreement could interfere with the performance of an insurance agreement, which, in principle, should not occur. This is undoubtedly one of the most heavily debated issues in interpreting the new law, and adopting an even more restrictive provision in the resolution on matters involving governing law and jurisdiction appears inappropriate, particularly since such matters fall outside the agency’s authority.

Preferential offer

The resolution maintains the preferential offer requirement applicable to local reinsurers, establishing a minimum preferential placement of 40% of each treaty or facultative reinsurance cession (Article 6), pursuant to Complementary Law No. 126/2007 (Article 11, II).

However, the wording of Article 6 was amended to remove the language requiring that the preferential offer to local reinsurers be made “before negotiations may be conducted with foreign reinsurers.” This change is positive as it preserves the agility of reinsurance placement negotiations, allowing parallel discussions with local and foreign markets while maintaining equal treatment.

In this regard, the regulation reinforces that the offer must ensure equal treatment for local and foreign reinsurers, including identical information regarding the risk, placement terms, and pricing. Under the new resolution, the broker responsible for the placement may be held jointly liable with the ceding insurer for applicable sanctions in cases of misconduct in connection with compliance with the preferential offer requirement (Article 6, paragraphs 1 and 2).

Cession limits

The resolution deepens regulatory oversight of risk transfer transactions by maintaining the requirement for a technical justification whenever reinsurance cessions exceed 90%. It also innovates by requiring technical justification for retrocession cessions by local reinsurers exceeding 70%, based on the aggregate volume of transactions during the calendar year. Such justification must be submitted by March 31 of the following year (Article 8). Failure to submit the required technical justification, or submission of an incomplete justification, will subject the ceding insurer to the applicable sanctions.

Risk transfer to persons domiciled in tax havens

The resolution maintains the prohibition on transferring risks to persons domiciled in tax havens, but no longer specifies the applicable tax rate directly in the regulation. While the draft submitted for public consultation referred to a tax rate below 17%, the final version refers to the rules issued by the Brazilian Federal Revenue Service, thereby providing greater flexibility for future updates (Article 19, paragraph 1).

Expansion of the regulation’s scope to cooperatives and mutual entities

One of the most significant changes introduced by the resolution is the expansion of the categories of entities subject to the reinsurance and retrocession framework. In addition to insurers, insurance cooperatives and managers of mutual property protection operations that procure reinsurance may now fall within the definition of “ceding insurer” (Article 2, II), reflecting the amendments introduced by Complementary Law No. 213/2025.

Conversely, the resolution expressly prohibits insurers, insurance cooperatives, and managers of mutual property protection operations, as well as equivalent entities, from accepting reinsurance (Article 5, paragraph 3). It also prohibits insurance cooperatives and managers of mutual property protection operations, as well as equivalent entities, from accepting retrocessions (Article 5, paragraph 4, a new provision not contained in the draft). This distinction preserves the Brazilian market segmentation model but will require adjustments to the risk transfer programs and governance structures of such entities.

Coinsurance

The resolution consolidates coinsurance rules consistent with the Insurance Contract Law. In this regard, it provides that:

• Coinsurance may be documented through instruments issued by each coinsurer containing identical terms;
• Default by one coinsurer does not prejudice the insured, beneficiary, or third party;
• Coinsurance arrangements without assumption of liability are prohibited;
• Coinsurers are not jointly and severally liable unless otherwise contractually agreed; and
• Coinsurance transactions involving insurance cooperatives must additionally comply with the general rules applicable to such entities, particularly those established in CNSP Resolution No. 492/2026 (Article 34).

Strengthening governance and concentration controls

Risk transfer policy assumes an even more central role under the new framework, which details the minimum requirements to be observed by insurers, cooperatives, pension entities (“EAPCs”), managers of mutual property protection operations, and local reinsurers in structuring their risk transfer programs (Article 7). The regulation reinforces the obligation to monitor concentrations involving counterparties and economic groups, manage risk accumulation by product, line of business, region, and insured, and control intragroup transfers, now with express attention to contagion risk (Article 7, paragraph 2, X), signaling enhanced prudential scrutiny by SUSEP regarding the financial resilience of ceding entities.

Insurance procurement abroad

The resolution maintains the circumstances under which insurance may be procured abroad, under the same framework established by CNSP Resolution No. 451/2022 and in line with Complementary Law No. 126/2007.

Evidence of the absence of available coverage in Brazil will remain subject to the procedure established by a separate regulation – currently SUSEP Circular No. 683/2022, which has not yet been amended.

Effective date and transitional application

CNSP Resolution No. 494/2026 will enter into force on January 2, 2027. The resolution expressly provides that reinsurance and retrocession transactions, as well as insurance procurements abroad, that became effective prior to such date will only be required to comply with the new framework upon renewal. Article 45 further reinforces the principle of non-retroactivity and confirms the validity of the transactions carried out under the previous regime established by CNSP Resolution No. 451/2022, now repealed.

Demarest’s Insurance, Reinsurance, Health and Private Pension team remains available to provide any clarifications regarding the new regulation and related legislation.