SUSEP Public Consultation Notice No. 30/2021: Amendment to SUSEP’s authorization procedures for operations, commencement of operations in Brazil, exercise of positions in statutory or contractual bodies, payment of capital and transfer of portfolio and corporate control structure.

On September 16, 2021, the Superintendence of Private Insurance (SUSEP) placed for public consultation Notice No. 30/2021, presenting the draft Resolution of the National Private Insurance Council (CNSP), which aims to simplify regulations and align with the objectives regulatory strategies in relation to authorization procedures for operations, the commencement of operations in Brazil, the exercise of positions in statutory or contractual bodies, the payment of capital and transfer of portfolio and conditions of the corporate control structure.

The proposed revision is aimed at modernization in accordance with several legal frameworks that have been established, such as the Law for the Protection and Defense of the Rights of the User of Public Services (Law No. 13.460/2017), the Declaration of Economic Freedom Rights (Law No. 13.874/2019), the regulation of the Regulatory Impact Analysis (Decree No. 10.411/2020), the National Policy for the Modernization of the State (Decree No. 10.609/2021) and the Legal Framework of Startups (LC No. 182/2021), among others. In addition, SUSEP also took advantage of experience gained from the Regulatory Sandbox to analyze and propose more dynamic and simplified control and investment structures, which could provide greater entry of players into the market and attract investors.

The regulator organized the acts subject to SUSEP’s control and monitoring into three groups, separated by the level of aggregate risk and their regulatory importance: (i) those that must be submitted for prior authorization; (ii) those subject to final approval; and (iii) those that should only be communicated to the regulator.

Among the amendments, aiming to apply a more simplified regulation for reinsurance brokers, the regulator separated the rules between those applicable to the supervised entities (insurance companies, capitalization companies, open supplementary pension entities and local reinsurers) and those specifically applicable to reinsurance brokers.

Regarding the OPERATION AUTHORIZATION, the following changes are being proposed:

  • Requirement to carry out a technical presentation of the general aspects of the project before analysis by SUSEP. This requirement will also apply to foreign reinsurers;
  • Permission for new investment compositions, through holding companies and international investment funds, dropping the rule of the requirement for a Brazilian specific purpose holding company(“SPE”);
  • Easing of restrictions on the supervised entities’ corporate purpose, in order for such entities to carry out activities to support their operations. In relation to local reinsurers, the entity can provide technical services associated with reinsurance and retrocession operations, such as consulting. When control is held by a holding company, its corporate purpose may also encompass support activities;
  • Permission for more modern arrangements in control structures, such as pulverized corporate control, applicable to insurance companies, local reinsurers, open supplementary pension entities and reinsurance brokers;
  • Exemption from the presentation of a business plan by reinsurance brokers;
  • Elimination of processes related to the installation and closing of branches of insurance companies;
  • Inclusion of a forecast regarding the demonstration of economic-financial capacity, which starts to be evaluated not only during the authorization process, but also during the first 12 months of operation, in the event that it is not possible to identify the control group. The proposal also encompasses participants of the Regulatory Sandbox;
  • Following a favorable opinion by SUSEP, the deadline for formalizing the acts of constitution/election of directors and members of statutory bodies will be 90 days (reduced from 180 days);
  • Exemption from the obligation that, once activities have started, the entity must provide proof of adaptation of its operations to the business plan during a certain period;
  • Inclusion of a differentiated and simpler procedural rite for converting the temporary authorization of the Sandbox Regulatory into definitive authorization;
  • Equalization of authorization requirements for the start of operations of admitted and occasional foreign reinsurers, when permitted by Complementary Law No. 126/2007;
  • Institution of restrictions to prevent a new application for registration by a foreign reinsurer that has had its registration ex-officio canceled in the last 5 years;
  • Authorization for the outsourcing of the representative office of admitted reinsurers; and prohibition from registration of these companies when headquartered in tax havens. In such case, an admitted reinsurer that is already registered will have a period of 3 years to adapt to the new rule.

As for the SUSPENSION AND CANCELLATION OF THE AUTHORIZATION FOR OPERATION AND REGISTRATION, the following proposals were included: (i) the scenarios of voluntary and ex-officio cancellation; and (ii) the provisions applicable to the Regulatory Sandbox.

Regarding the CORPORATE CONTROL STRUCTURE OF SUPERVISORED ENTITIES AND REINSURANCE BROKERAGE, we highlight the following main proposed changes:

  • Insertion of a compliance mechanism, applied to cases where there is no identification of the control group, which consists of the prohibition of distribution of dividends in the first five fiscal years, counted consecutively from the beginning of the operation;
  • Permission for direct corporate interest in supervised entities by legal entities and investment funds, whose purpose is to hold interest in authorized companies, but without the need to have their exclusive purpose and head office in the country for this activity;
  • Authorization for legal entities and investment funds with direct equity interest to also commercialize activities to support the functioning of the entities;
  • Dispensing of the requirement to set up a holding company headquartered in Brazil only to comply with regulatory requirements, aiming to reduce operating costs;
  • Determining that investment funds must comply with the respective anti-money laundering and combating terrorism policies in accordance with the laws of their country of origin.

In addition, the rules for the EXERCISE OF POSITIONS IN STATUTORY OR CONTRACTUAL BODIES have the following proposed modifications:

  • Exclusion of the maximum period for prior issuance of a statement by SUSEP regarding the fulfillment of conditions and requirements by those appointed to assume and exercise positions in the supervised market, as regulated by SUSEP Ordinance No. 7.677/2020;
  • Change of the period within which the interested party cannot have controlled or managed an entity declared insolvent, or otherwise subject to extrajudicial liquidation, intervention, temporary special administration regime or bankruptcy, which is now 5 years;
  • Provision establishing that the details of the proof of technical training will be handled by SUSEP;
  • Requirement that, for specific functions, interested parties must provide proof of technical certification for the exercise of such functions, as deemed relevant by SUSEP.

The new Resolution repeals: items 2.1, 2.3 to 2.5, 3 to 6, 8.1, 9 and 13 of CNSP Resolution No. 19/1978; articles 3 to 6 of CNSP Resolution No. 168/2007; article 7 and 21 of CNSP Resolution No. 173/2007; Article 3 of CNSP Resolution 418/2021; and CNSP Resolutions No. 1/1980; 1/1981; 15/1991; No. 17/1992; 23/2000; 53/2001; 79/2002; 101/2004; 142/2005; 160/2006; 220/2010; 248/2011; 330/2015; 373/2019; and 387/2020.

The new Resolution is projected to enter into force on January 3, 2022.

The draft of the Resolution´s full text (in Portuguese) can be accessed through this link. Interested parties can send comments or suggestions on the text by electronic message addressed to, until October 18, 2021, using the specific standardized form available on the SUSEP´s website.

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