SUSEP Circular No. 605/2020 Regulates the deadline for custody and storage of documents of insurance operations

On May 29, 2020, the Superintendence of Private Insurance (SUSEP) published Circular No. 605/2020 (“Circular”), which regulates the new term for custody and storage of documents related to insurance, co-insurance, reinsurance, capitalization, retrocession, private pensions and intermediation operations.

The new Circular repeals SUSEP Circular No. 74/1999, which used to regulate the subject, and establishes several changes, among which we highlight the main ones in the comparative table below:

 

SUSEP’s Circular No. 74/1999SUSEP’s Circular No. 605/2020
Establishes rules for insurance and capitalization companies, open private pension entities and insurance brokers.It is more comprehensive, since, in addition to all the parties contained in Circular No. 74/1999, it also includes local reinsurers, representative offices of admitted reinsurers, policyholders and intermediaries, so-defined as those responsible for raising, promoting, intermediating or distributing insurance, reinsurance, capitalization or private pensions, such as brokers, representatives, among others.
Presents, in Article 2, items I, II and III, separately, the list of documents related to capitalization bonds, insurance and private pension contracts, respectively.Presents a single and broader list, valid for all operations, without the subdivision previously presented.
Establishes, in Articles 3 to 7, specific minimum terms for keeping documents, including 5 years for property insurance policies and 20 years for capitalization bonds, life insurance and private pension contracts. Validity of the terms is suspended in case of filing an administrative or judicial proceeding.Establishes, in Articles 3 and 4, a minimum period of 5 years common to all operations for keeping documents, regardless of their nature or form (digital or physical), being suspended in the event of an extrajudicial liquidation of any of the concerned parties or in the case of filing of an administrative or judicial proceeding.
Silent on the elimination of documents and establishes that the documents must be kept in original or microfilmed copies, with electronic or magnetic recording of the documents being provided.Allows the permanent elimination of physical documents that are digitized or microfilmed, as well as that digital documents must be stored in any record that allows confirmation of authenticity, with no need for printing.
Silent on the requirement for document control and governance procedures.Provides for control and governance procedures, specifically for scanned documents, which must have backup copies stored in a different location, with traceable and controllable access, as well as an audit trail. In addition, the Circular establishes that the company’s internal audit must periodically ensure that the custody procedures are being complied with. Lastly, the Circular establishes that digitization service contracts with third parties must contain permission for SUSEP to access all documentation.

 

One of the main changes provided for by the new Circular refers to the establishment of the minimum and common term of 5 (five) years for custody of documents related to all operations supervised by SUSEP.

This change directly impacts companies operating in the life insurance segment and those that sell capitalization bonds and private pensions, given the significant reduction in the term provided for in the repealed Circular (20 years).

In our view, the reduction of this term is positive, since the previous one (of 20 years) was excessively long and burdened companies with the obligation to keep documents for many years beyond what is necessary, if the applicable statutes of limitations are observed.

In fact, with the new regulation, the statute of limitations becomes a focal point for companies supervised by SUSEP. This is because, for regulatory purposes, the custody of documents for 5 years is sufficient and meets the determination of the autonomous body.

However, in certain situations, the statute of limitations of the insured or third party’s claim against the insured may extend the insurer’s obligation of keeping documents beyond this period.

This is the case, for example, of the life insurance beneficiary, whose statute of limitations period is of 3 years, and the claim of a third party against the insured of a civil liability policy, which can vary from 3 to 10 years. Such limitation period, in turn, can be interrupted through a judicial notification (Article 202 of the Brazilian Civil Code) and be reset. Thus, the claim against the insurer can certainly be initiated after the five years during which there was an obligation to keep the documents related to insurance operations.

Also, the Brazilian Superior Court of Justice has already ruled that the statute of limitations of the beneficiary of mortgage insurance is of 10 years, based on Article 205 of the Civil Code. In this case, the statute of limitations also exceeds the regulatory period for keeping documents.

Thus, although compliance with the 5-year term established by the new Circular No. 605/2020 for keeping documents is sufficient in the regulatory scope, it is our understanding that there are situations in which the insurer must have access to the documents of its operations for a longer period for the purposes of discussing coverage, and, therefore, must adopt procedures for digitization and control of documents in order to protect themselves for a longer period.

Demarest’s Insurance and Reinsurance team is available to assist you in implementing procedures related to the changes brought about by Circular No. 605/2020, as well as to provide any additional clarifications that may be necessary.