Public Notice SUSEP No. 16: Provision on rules and criteria for operation of the class auto insurance

On May, 4, 2021, the Superintendence of Private Insurance (SUSEP) placed for public consultation Public Notice No. 16, presenting the Draft Circular that provides for the rules and criteria for the operation of the class auto insurance.

SUSEP’s objectives, in line with the new regulatory framework for Damage Insurance introduced by SUSEP Circular No. 621/2021, are the simplification of regulation in the insurance market in order to encourage the creation of more innovative products and greater dissemination of insurance in the country.

As such, the new Rule open for public consultation includes the following main changes:

• Possibility that hull coverages can offer coverage, either isolated or combined, only for certain events;
• Possibility for auto insurance to be contracted to offer direct guarantee to the Insured, without being linked to a specific vehicle, in which case the criteria for such vehicle’s identification must be established in the contractual conditions;
• Flexibility in the scope of personal passenger accident coverage (APP) that is not linked to a specific vehicle, but rather to the Insured, as a vehicle driver;
• Freedom to offer hull coverages with the referenced market value and/or with the establishment of another objective and transparent criterion for specifying the maximum indemnity limit (limite máximo de indenização – “LMI”) at the time of the accident;
• Express provision that the contract type that considers the referenced value of the vehicle must guarantee the indemnity in accordance with the listed value of the vehicle on the date of the occurrence of the accident;
• Prohibition of deduction of amounts referring to previous damage to the vehicle in the case of full compensation;
• Possibility of structuring a product that can provide for repairs carried out in an auto repair shop that is part of the Insurer’s network of providers and/or, in a combined manner, the free choice of providers by the Insured; and
• Possibility of using used parts in the repair of insured vehicles, respecting the applicable regulations.

In addition, the Rule provides a 180-day period for adapting the clauses in force, in relation to the provisions that it does not foresee in accordance with the new ones available.

The Draft Circular is available for comments and suggestions that can be sent by electronic mail to comas.rj@susep.gov.br until  June, 3, 2021, by filling in the specific standardized form provided at this link.

Demarest’s Insurance and Reinsurance team will monitor the developments of this public consultation up to the publication of the final text, and is available to provide any clarifications on the matter.