New rules applicable to insurance policyholders (collective policies) from March 2022

The Superintendence of Private Insurance (SUSEP) published CNSP Resolution No. 434/2021, which provides for the stipulation of insurance and responsibilities and obligations of master policyholders and insurers in collective policies. The new Resolution repeals CNSP Resolution No. 107/2004.

The draft of the Resolution was placed for public consultation through Notice No. 35/2021, aiming to establish express definitions of specific terms of the matter and present a more precise and detailed regulation regarding the contracting of collective insurance policies.

 

The Resolution introduces the following changes on the matter:

 

EXCLUSIVELY INSURANCE-BASED RELATIONSHIPS
Exclusion of the requirement that the master policyholder must have a prior legal relationship of a non-exclusively insurance-based nature, as well as exclusion of the provision that, in the case of exclusively insurance-based relationships, the policies would be considered individual, regarding the relationship between insured and insurer. However, the new Resolution establishes that, even in the case of a relationship of an exclusively insurance-based nature, the provisions of the Resolution must be applied.

 

MASTER POLICYHOLDER OPERATION SCOPE
Express provision that the master policyholder’s operation must prioritize the interests of the insured group and that its relationship with the insurance company must not constitute a conflict of interest when representing the insured group.

 

PROVISIONS ON THE SUBSIDIARY POLICYHOLDER
Consolidation regarding the application of the rule to the subsidiary policyholder and provision on the possibility of the master policyholder to maintain an indirect link with the insured group through the subsidiary policyholder, observing the operation limits and responsibilities defined in the collective policy.

 

CONTRACTING A COLLECTIVE POLICY
Exclusion of the requirement for an insurance broker to sign the collective policy contract proposal, maintaining only the requirement of the signature to be carried out only by the master policyholder and, if applicable, by the subsidiary policyholder.

 

ABSENCE OF CLASSIFICATION AS A MASTER POLICYHOLDER
Provision for absence of classification as master policyholder of the legal entity that, without having subscribed to the contracting proposal, has its participation restricted to the condition of consignor, responsible, exclusively, for the effectuation of premium discounts on the insured’s payroll and for the transfer to the insurer.

 

INSURANCE PREMIUM
Determination that (i) compensation of the master policyholder or subsidiary policyholder is considered by the insurer as part of the load that makes up the commercial premium charged from the insured, (ii) the insurance company must treat the premium individually, for each insured, even when the premium is paid, in whole or in part, by the master policyholder, except when unfeasible due to the insurance structuring, and (iii) in the case of due payment of other amounts to the master policyholder or the insurer, along with the premium, it is mandatory to highlight the insurance premium amount.

 

REVERSAL OF TECHNICAL SURPLUS
Increased flexibility of the rules referring to reversal of the technical surplus, allowing parties to establish the calculation criteria. The collective agreement must contain all the rules related to the distribution, such as the criteria employed, its frequency, and form of reversal.

 

NONRENEWAL OF THE COLLECTIVE POLICY
In the event of individual certificates whose term exceeds that of the collective policy, inclusion of procedures applicable to cases of nonrenewal of the collective policy and provision for possible need to extend the term of both policy and collective agreement.

 

COLLECTIVE INSURANCE AGREEMENT
Determination that the contract signed between insurer and master policyholder must define the specific operational requirements and obligations of the parties, as well as establish the consequences arising from the termination of the insured’s relationship with the master policyholder and subsidiary policyholder.

 

MODIFICATION OF CURRENT COLLECTIVE POLICY
In the event of any change in a current collective policy that constitutes a burden, duty or loss of rights for the insureds, there is the requirement of prior and express consent of insureds that represent, at least, three quarters of the insured group.

The requirement of this quorum is excluded when the modification does not constitute burden, duty or loss of the insured rights, such that it can only be carried out with the consent of the master policyholder. This rule is applicable to the renewal of the collective policy.

 

OBLIGATIONS OF INSURERS
Inclusion of the insurers’ obligation to notify the insureds in the case that the master policyholder does not transfer the premiums collected within the contractually established period, as well as informing of the consequences of non-transfer, and to provide the master policyholder and the insured group with the information necessary for proper monitoring of the insurance plan.

Exclusion of the obligation to include all the obligations of the master policyholder in the insurance contract.

 

Finally, the Resolution establishes an adaptation period for the insurers and master policyholders of (i) up to 240 days from March 02, 2022; or, for collective policies in force on this date, (ii) at the time of the first renewal carried out after the 240-day period has elapsed.

The new Resolution will come into force on March 02, 2022.

Demarest’s Insurance and Reinsurance team is available to provide more information on this and other related topics.