On November 16, 2021, the National Council of Private Insurance (CNSP) published its CNSP Resolution No. 431, with new rules applicable to the operations of insurance companies through insurance representatives and consolidated following the public notice issued for Public Consultation No. 33/2021.
The Resolution repeals CNSP Resolutions No. 297/2013, 308/2014 and 314/2014 and introduces the following main changes:
- Formalization that the insurance representative does not have powers to represent the Insured and is considered, for all purposes, as an intermediary for the products;
- Exclusion of the limitation of the insurance lines in which the insurance representative may act;
- Removal of the restriction on the representative to also act as an policy holder (group policy), but is not authorized to be both policy holder and representative in the same insurance policy. The restriction on the insurance broker to act as a representative is maintained;
- Possibility for the representatives to intermediate collective contracts, observing the requirement of a close, clear and unequivocal connection between the contracting policy holder (group policy) and the insured group, maintaining observance of the restriction on retail organizations, which cannot intermediate collective insurance contracts;
- Expansion of the scope of action of the insurance representative, allowing the option to render services, besides the offer and distribution of insurance, that include advisory activities regarding insurance products offered, reception and handling of operational issues, renewal and cancellation, risk underwriting, regulation of claims, and other activities that are not exclusive to insurance companies (assumption of insurable risks), provided they are specified, such as control services and data processing of the operations;
- Obligation of the representative to keep processes, policies, procedures and structures compatible with the complexity of the products of which it is an intermediary, with the nature of the clients and with the scope of its activities;
- Possibility of remuneration of the representative based on the reversal of part of the positive operating result calculated in specific insurance portfolios in which the representative acted, for which the representation contract must provide for the criteria, frequency and form of reversal of the operating result, and such provision must be included in the policy, individual certificate or ticket;
- Possibility of insurance representatives acting in the intermediation of open supplementary pension plan contracts;
- Classification of microinsurance correspondents as insurance representatives, with the formalization of contracts between legal entities as microinsurance correspondents and insurance companies being prohibited; and
- Possibility for SUSEP to determine the interruption of services provided by the insurance representative, in the case that questionable practices that characterize risk of damage to the consumer are found.
Finally, the Resolution grants a period of 180 days, after its entry into force, to adapt the representation contracts that are not in compliance with its provisions, as well as the contracts signed with microinsurance correspondents, promoting their classification as insurance representatives, failing which the applicable penalties will be enforced.
The full text of the Resolution can be accessed through this link, and will come into force on December 1, 2021.
Demarest’s Insurance and Reinsurance team is available to provide any additional clarifications that may be necessary.