On April 30, 2019, the President of Brazil signed Provisional Measure No. 881(“PM 881”), popularly known as the “provisional measure of economic freedom”, establishing rules for the protection and guarantee of a free market which will impact several sectors of the Brazilian economy.
Among the amendments proposed by PM 881 is the revocation of items III of Art. 5, and X of Art. 32 of the Brazilian Decree-Law 73/1966, which regulates insurance and reinsurance operations within the country to date. These provisions had established reciprocity in insurance transactions carried out by foreign companies within the country, conditioning their authorization to operate, as well as their business within Brazil, on an equal treatment of Brazilian insurers in their origin country.
Repealing these provisions represents a relaxation of entry requirements for new foreign insurers and reinsurers into the Brazilian market. With the publication of PM 881, a previous discussion of merging the Superintendence of Private Insurance (Susep) and the National Complementary Welfare Superintendence (Previc) returned to the agenda, with the aim of simplifying the administrative structure.
Although PM 881 is already in force, its text has been submitted to the National Congress and must be enacted as a law within 120 days of its enforcement, failing which the proposed amendments will lose effectiveness. However, the provisional measure may be further amended during the legislative procedure.
Our Insurance & Reinsurance team is monitoring PM 881 developments and is available to provide any clarifications regarding its impact on the Brazilian market. As it also impacts other sectors, which will be addressed in further client alerts, all of our lawyers are available for further information or clarification regarding this matter.