SUSEP Circular No. 600/2020: Financial Assistance provided by open entities of supplementary pension funds (EAPCs) and insurance companies acting as financial institutions correspondents

The Superintendence of Private Insurance (SUSEP) Circular No. 600/2020 (“Circular No. 600”), published on April 13, 2020, regulates the provision of financial assistance by EAPCs and insurance companies acting as correspondents of financial institutions and other institutions authorized to operate in the country by the Brazilian Central Bank.

Until the publication of Circular No. 600, this subject was governed by SUSEP Circular No. 320/2006 and amended by SUSEP Circular No. 423/2011. However, the latter Circular did not regulate the subject and so Circular No. 600 resolves such issue.

The aforementioned financial assistance shall only be granted to plan owners of open supplementary pension funds or personal insurance , or for those who are assisted by open supplementary pension funds contracted with the respective entities or companies, being prohibited its granting to exclusive owners of personal insurance plans structured within the financial distribution regime.

I. Financial Assistance Provision

For the provision of financial assistance, Circular No. 600 defines the compulsory formalization of agreement with the owner/beneficiary, binding to the policy or personal insurance certificate or open supplementary pension fund, and that must include various mandatory features, such as amount of credit granted, amount of consideration, policy or certificate registry numbers, list of documents required for advance settlement, among others.

Circular No. 600 also reaffirms the duty of EAPCs and insurance companies to annually inform the owners/beneficiary of the procedures to be observed in the case of advance settlement of assumed debt, in addition to making available such information or any other related information when requested.

In addition, the Circular establishes rules regarding considerations, such as the need to comply with the consignable margin stipulated in the applicable legislation, as well as providing guidance in the case of advance settlement of the financial assistance agreement.

It is important to highlight that Circular No. 600 imposes prohibitions on EAPCs and insurance companies, related to:

i.granting financial assistance from provisions, technical reserves and funds;

ii. assignment or disposal of the financial assistance agreement;

iii. maintaining, simultaneously, more than one financial assistance agreement with the same owner;

requesting any other document from the owner/beneficiary, in the case of advance settlement of the financial assistance agreement, that are not those related to the identification and formalization of the settlement;

charging of any expenses, except those related to costs with interest, fines, monetary adjustment or any taxes related to the financial assistance operation;

vi. charging of late fees for non-payment of installments in excess of 2% of the amount of the installment; and

deducting from the amount granted to the owner/beneficiary, by way of financial assistance, any amounts in favor of third parties.

II. Acting as Correspondents in the Country

Circular No. 600 also maintains authorization for EAPCs and insurance companies to act as correspondents in the country, in compliance with the Brazilian National Monetary Council regulations, for the purposes of exclusively serving the insured/beneficiaries, with the charging of any costs related to this services provision being prohibited.
In turn, the Circular determines that considerations owed by policy holders, when consigned, must be identified by means of a specific registry code in the payroll, in order to be segregated from other debts regarding payment of contributions or premiums.

III. Final Provisions

Finally, Circular No. 600 establishes that the open supplementary pension funds or personal insurance cannot be cancelled if there are unpaid considerations related to the financial assistance or that are bound to them. Although the open supplementary pension fund or life insurance does not serve as debt collateral, there is a clear link between the products and the law, in order to offer indirect protection related to the default.

The Circular also allows for financial assistance operations to be carried out through remote ways, in compliance with the specific regulation. In addition, there is an express provision that any act, omissive or commissive, that contravenes the law or infralegal rules, and is considered harmful to good practices of conduct, may subject the
EAPCs and insurance companies to suspension of financial assistance operations and/or inclusion in the registry of pending matters.

SUSEP’s Circular No. 600/2020 will come into force on August 3, 2020, repealing Circulars No. 320/2006 and 423/2011.

Demarest’s Insurance and Reinsurance team is available for any additional clarification that may be necessary.