On December 11, Decree No. 10.167/2019 (“Decree”) was published, bringing about the following changes in the Brazilian reinsurance legislation:
• Increase in the percentage that can be assigned from insurers to occasional reinsurers to 95% of the total reinsurance premiums, considering the totality of their operations in each calendar year. The previous limit was 10%;
• Increase in the percentage that can be transferred by local reinsurers to occasional reinsurers to 95% of the premiums related to underwritten risks, given the totality of their operations in each calendar year. The previously provided limit was 50%.
The new Decree undoubtedly represents a broader opening of the Brazilian market to occasional reinsurers who, based on the new limits, will have the possibility of a broader assumption of Brazilian risks by means of reinsurance or retrocession.
Demarest’s Insurance and Reinsurance team is available to provide any clarification as well as information on the other impacts of this legislative change.