CNSP updates the regulatory framework for reinsurance, retrocession, coinsurance and the placement of insurance abroad

On July 21, 2026, Resolution No. 494 of the Brazilian National Council of Private Insurance (“CNSP”), dated July 17, 2026 (“Resolution 494”), was published. Resolution 494 replaces CNSP Resolution No. 451, dated December 19, 2022 (“Resolution 451”), and updates the rules governing reinsurance, retrocession and coinsurance operations, foreign-currency operations and the placement of insurance abroad. The new rule takes effect on January 2, 2027, and seeks to align the regulation with Law No. 15,040, dated December 9, 2024 (the “Insurance Act”), and to bring insurance cooperatives and administrators of mutual asset-protection operations within the applicable regime.

Although Resolution 494 preserves a significant part of the structure of the prior regulation, some adjustments change established practices regarding the placement and formalization of reinsurance, claims handling, and the determination of the applicable law and jurisdiction. The text was published after review of the market’s contributions, submitted through Public Consultation No. 14/2025, on which we reported previously.

Below, we highlight the main points and aspects that warrant attention:

Preferential offer and treatment of local reinsurers

Resolution 494 reaffirms the statutory obligation to offer local reinsurers, preferentially, at least 40% of each automatic or facultative reinsurance cession (Article 6), while reshaping the previous definition and procedure for the preferential offer. The cedant must submit a reinsurance proposal to local reinsurers before it may place the cession with foreign reinsurers, and must ensure identical information regarding the risk and the terms of the placement, including price, as well as equal treatment of all reinsurers consulted (Article 2, X, and Article 6).

The final wording is more balanced than the draft submitted to public consultation, which could have been read as barring any prior negotiation with the international market. By requiring identity of the information and conditions presented to local and foreign reinsurers, the rule appears to preserve the possibility of establishing market benchmarks, while reinforcing the need for traceability of the process. Cedants and brokers must keep consistent evidence of proposals, versions, prices, information made available and any endorsements, since changes that distort the original placement may amount to misconduct.

There was also a relevant change in the treatment of irregularities: instead of applying the disregard of the contract for prudential purposes provided for under Resolution 451, Resolution 494 subjects the cedant and the broker responsible for the intermediation to the applicable penalties. The adjustment is positive because it allows a regulatory response proportionate to the specific case, without automatically producing prudential effects that may be dissociated from the effective transfer of risk.

High cessions and greater flexibility for retrocession

Resolution 494 no longer imposes a strict 70% cap on retrocession cessions by local reinsurers. From the date the rule takes effect, cessions exceeding 70% of the aggregate premiums written in the calendar year will be permitted, but must be technically justified to the Superintendence of Private Insurance (“Susep”) by March 31 of the following year (Article 8). The same logic remains applicable to cedants that transfer more than 90% of their operations in reinsurance.

Replacing the quantitative limit with a duty to justify brings the rule closer to risk-based supervision and expands flexibility for structures that require greater protection, including in the face of concentrations or catastrophe exposures. On the other hand, the absence of prior authorization shifts greater responsibility to the governance of supervised entities: the justification must be consistent with retention limits, counterparty capacity, the economic substance of the operation and the risk-transfer policy, which must now also address the accumulation of transfers to a single counterparty or to the same economic group (Article 7, § 2, item X). The rule also eliminates the automatic exceptions previously provided for financial, rural and nuclear risks, so that the justification becomes relevant regardless of the line of business.

Formation and formalization of reinsurance contracts

Resolution 494 now expressly governs the formation of the reinsurance contract: the contract is formed by the reinsurer?s acceptance or, absent any manifestation, by tacit acceptance, consisting of silence 20 days after receipt of the proposal (Article 11). Susep may extend this period in cases of proven technical need; it does not, however, expressly define what such cases would be. The tacit acceptance referred to does not apply to endorsements.

Formalization of the contract must occur within 90 days from the inception of coverage, replacing the 180-day period under Resolution 451 (Article 12). The period is longer than the 60 days provided for in the draft submitted to public consultation, but it still requires a review of signature and documentation processes, particularly in complex placements or those involving multiple reinsurers. Non-compliance no longer entails the automatic disregard of coverage for prudential purposes and now subjects those responsible to the applicable penalties.

The regulation draws a clearer distinction between formation, evidence of coverage and formalization. Until the contract or the endorsement is signed, the reinsurer’s acceptance will serve as evidence of coverage; in the case of tacit acceptance, evidence of receipt of the proposal will be required. The cover note issued by the broker will continue not to replace the contract. In practical terms, reinsurance proposals must be sufficiently complete and precise, since they may constitute the main evidence of the contractual content for a significant period.

Claims handling, autonomy and minimum contractual elements

Resolution 451 expressly authorized the reinsurer’s participation in claims handling and the inclusion of claims-control clauses. Resolution 494 does not reproduce that authorization and provides that the cedant bears full and exclusive liability toward insureds, beneficiaries, participants, assisted persons and third parties, prohibiting the transfer to the reinsurer of obligations or decision-making powers inherent in the performance of the insurance contract (Article 14).

The exclusion does not necessarily amount to a prohibition of cooperation or claims-control clauses, since such a prohibition is not set out in the Insurance Act, which merely provides that it is for the insurer to decide on coverage and the amount of the indemnity, and does not, in itself, prevent the reinsurer’s technical participation.

Even so, claims cooperation and claims control clauses must be reviewed in order to delimit the scope of action and the obligations of cedants and reinsurers, as well as their effects, which will operate specifically within the relationship established between the parties to the reinsurance contracts.
Resolution 494 also introduces specific rules on the advance of reinsurance recoverables to the cedant (Article 13). The provision affords greater certainty to the financial flow between reinsurer and cedant and, where the advance relates directly to the performance of an underlying contract, the advanced amounts must be immediately applied to the advance or payment of the indemnity to the insured. This treatment is aligned with the regulatory framework of Article 121 of the Insurance Act, which grants the insured or beneficiary the right to demand payment from the reinsurer in the event of the cedant’s insolvency, as also reaffirmed in Article 17, § 1, of Resolution 494.

As regards mandatory provisions, Article 15 of Resolution 494 expands the elements currently set out in Article 13 of Resolution 451 to include (i) the procedures necessary for reinsurance recovery, as well as (ii) a provision on the existence of the cedant?s duty to give judicial or extrajudicial notice to the reinsurer where the cedant is sued for the review or performance of the insurance contract that gave rise to the facultative reinsurance placement.

Although the provisions referred to in item (ii) appear to reflect Article 62 of the Insurance Act, they impose on the parties an obligation not provided for by law. This is because the Insurance Act only requires notice to the reinsurer in the absence of a contractual provision, without requiring the parties to include such a provision in the contract on a mandatory basis.

The Resolution also provides that, unless otherwise agreed, reinsurance covers the entirety of the reinsured interest, including the effects of the cedant’s default, loss-mitigation or salvage expenses, and claims adjustment and settlement costs, up to the contracted limits (Article 3). Contracts intended to exclude or limit these amounts must do so expressly, which recommends a review of coverage, limit and expense clauses.

Governing law, jurisdiction, and arbitration

Reinsurance contracts intended to protect risks situated in Brazil must provide for the submission of disputes to Brazilian law and jurisdiction (Article 16). Unlike Resolution 451, the new rule does not expressly reserve arbitration. In addition, it provides that lawsuits and arbitrations capable of directly interfering with the performance of Brazilian insurance contracts must be brought in Brazil, in the venue of the defendant’s domicile.

The reference to the “venue of the defendant’s domicile” does not sit naturally with arbitration, whose seat and procedural rules derive, in principle, from the arbitration agreement. Moreover, the Insurance Act governs the competent venue, but does not necessarily resolve, in broad terms, the law applicable to reinsurance contracts. The wording may limit party autonomy in international contracts and raise doubts as to the validity of clauses providing for arbitration in Brazil at a seat other than the defendant’s domicile, or as to the adoption of an applicable law other than Brazilian law.

Coinsurance

Regarding coinsurance, Resolution 494 incorporates the logic of the Insurance Act: the lead coinsurer represents the other coinsurers and substitutes for them, whether as claimant or as respondent, in arbitrations and court proceedings (Article 2, item VI); the breach of obligations among coinsurers may not prejudice the insured, the beneficiary or a third party; each participant must effectively assume its share; and there is no joint and several liability among coinsurers, unless otherwise provided by contract (Articles 30 to 34). The possibility of contractual joint and several liability reinforces the importance of reviewing policies, coinsurance agreements and the mandates of the lead coinsurer.

Placement and acceptance of insurance abroad

As to insurance abroad, the statutory grounds for placement remain, but the manner of evidencing the absence of a domestic offer will be defined in a supplementary Susep rule (Article 39). Currently, such evidence is set out in Susep Circular No. 683/2022. Resolution 494 also subjects to Brazilian law contracts entered into abroad where the insured or proponent has residence or domicile in Brazil or where the covered assets are situated in Brazil. The rule may reach international structures with a relevant connection to Brazil and must be taken into account when analyzing global programs and multinational coverages.

Resolution 494 also expressly authorized the acceptance of risks abroad by Brazilian insurers, provided that it is in the same lines of business in which they operate in Brazil.

Applicability in Time

Resolution 494 takes effect on January 2, 2027. Operations whose coverage began before that date must be brought into compliance upon renewal, while contracts entered into after the rule takes effect must already fully observe the new regime (Articles 45 and 47). Despite the preparation period, the breadth of the adjustments recommends an early review of risk-transfer policies, preferential-offer procedures, proposal and contract templates, formalization flows, claims, arbitration, governing-law and jurisdiction clauses, as well as the controls maintained by cedants, reinsurers, and brokers.

Lefosse?s Insurance, Reinsurance, and Private Pension team closely monitors legal and regulatory developments and is prepared to advise on any issues affecting the sector. For further information on this or any other matter of interest, please contact our professionals.

Lefosse’s Insurance, Reinsurance and Private Pensions practice will continue to monitor developments and changes affecting the sector.