Susep publishes public consultations with proposals for regulations that amend Brazilian local rules related to reinsurance, co-insurance, and dispute resolution

On December 8^th, the Superintendence of Private Insurance (“Susep”) published two Public Consultation Notices, No. 13/2025 and 14/2025, proposing relevant changes and innovations. The proposed amendments seek to align the regulatory rules with Law No. 15,040/2024 (the “Insurance Act” or “IA”), which entered into force on December 11th.

Below, we highlight the main aspects that deserve attention:

Public Consultation No. 14/2025: assignment, acceptance of reinsurance and retrocession, coinsurance, and foreign currency transactions

The draft resolution of the Brazilian National Council of Private Insurance (CNSP) (hereinafter “Draft”) aims to revoke and fully replace CNSP Resolution No. 451/2022 (“Resolution 451”), which regulates the acceptance of reinsurance and retrocession and their agreements, coinsurance, transactions involving foreign currency, and insurance contracts abroad. The main changes include:

DEFINITIONS (Article 2):

• Updates the definitions set forth in Resolution 451 to include insurance cooperative entities and/or mutual property protection operation administrators within the concepts of ceding party, facultative contract, coinsurance, and reinsurance;
• Introduces the concepts of “cover note”, “preferential offer”, “capacity offering inquiry”, and “reinsurance proposal” and replaces the concept of “leading insurer” with “leading coinsurer”, as detailed below:

(i) Leading coinsurer: an insurance company or insurance cooperative that leads the coinsurance arrangement, representing the other coinsurers in the formation and execution of the contract, and substituting them, actively or passively, in arbitrations and judicial proceedings.

(ii) Cover note: a statement issued by the reinsurance broker summarizing the coverages and limits contracted and indicating that the placement of the reinsurance has been completed.

(iii) Coinsurance: a transaction in which two or more insurers or insurance cooperatives, by express agreement among themselves and with the insured and the policyholder, guarantee an interest in the same risk, each assuming a quota. In order to encompass the concept outlined in the IA, the absence of joint and several liability is not mentioned, which may now occur by contractual provision (Article 35, paragraph 3).

(iv) Preferential offer: a request for reinsurance coverage submitted by the cedent to local reinsurers, containing all information on the risk and on the intended coverages and limits, for the purpose of complying with the legal obligation to give preference to the local market before risks may be transferred to foreign reinsurers.

(v) Capacity offering inquiry: an inquiry made by cedents regarding the technical feasibility, by local, admitted, and occasional reinsurers, for the purpose of authorizing risk transfers, in reinsurance and retrocession transactions, to entities not authorized to operate in the country.

(vi) Reinsurance proposal: a formal document expressing the intention of cedents to contract reinsurance and containing the information necessary for a reinsurer or the reinsurers of a pool to analyze and decide whether to accept or reject the proposed risk.

CO-INSURANCE

The Draft reproduces the provisions of the Insurance Act regarding coinsurance, emphasizing, for example, that any failure to comply with obligations among coinsurers shall not prejudice the insured, the beneficiary, or third parties, as well as the absence of joint and several liability among coinsurers, pursuant to paragraphs 3 and 4 of Article 35 of the IA.

In addition, the Draft prohibits single insurance cooperatives from accepting risks under coinsurance, while allowing such single cooperatives to cede coinsurance risks to insurance companies, to central insurance cooperatives to which they are affiliated, and to confederations of insurance cooperatives to which their central cooperatives are affiliated.

On the other hand, Central insurance cooperatives and confederations of insurance cooperatives may accept coinsurance risks exclusively from affiliated single cooperatives and from affiliates of their respective central cooperatives (regarding Article 33).

PREFERENTIAL OFFER (Article 6)

Although the Draft defines the preferential offer as the “request for reinsurance coverage submitted by the cedents to local reinsurers, containing all information on the risk and on the intended coverages and limits, for the purpose of complying with the legal obligation to give preference to the local market before risks may be transferred to foreign reinsurers”, Article 6 of the Draft, when addressing the preferential offer, provides that it constitutes an “obligation imposed on cedents to preferentially offer to local reinsurers the risks for which they intend to contract reinsurance, before being allowed to negotiate with foreign reinsurers”.

It should be noted that the provision reinforces that the preferential offer is an obligation incumbent upon ceding companies. However, it seems to modify the procedure currently established by the regulation with respect to the preferential offer procedure.

This is because, pursuant to Article 5 of Resolution 451, as well as Article 2 of Susep Circular No. 683/2023 (“Circular 683”), which governs the operational procedures related to compliance with Resolution 451, “the preferential offer consists of the right of preference granted to local reinsurers over other reinsurers for the purpose of accepting a reinsurance contract, whether automatic or facultative, provided that the local reinsurer accepts the respective reinsurance offer under terms identical to those offered and/or accepted by the international market”.

From the interpretation of the currently applicable regulatory framework, it is presumed that a certain degree of “negotiation” between the ceding company and the international market is carried out before the preferential offer, since the aforementioned provision states that the preferential offer must be made under terms identical to those offered and/or accepted by the international market. According to current market practice, only after the international market has been consulted and the reasonable terms for acceptance of the risk have been “negotiated” does the ceding company submit the preferential offer to local reinsurers, offering them the risk to be ceded under reinsurance on identical terms.

Under the wording proposed in the Draft, the preferential offer must include “the information on the risk and on the intended coverages and limits” and must be made before any negotiation with foreign reinsurers. This represents a material change to the current procedure, which presupposes and allows: (i) consultation with the international market for the purpose of defining the terms under which the risk may be accepted and, subsequently, (ii) the offer to local reinsurers under the same terms as those negotiated. The Draft, however, appears to seek to establish that the cedent must first offer the risk to local reinsurers, allowing them to accept it under pricing terms determined at their discretion, and that only in the event of refusal cedents be authorized to negotiate with the international market, an approach that seems to be a significant contradiction and inconsistent with market practice.

In addition, the provision requiring “all information on the risk and on the intended coverages and limits” is generic and does not specify how the offer should be presented, which is expected to be dealt with in a subsequent regulation that will amend Circular 683.

CAPACITY OFFERING (Article 17)

With respect to the capacity offering inquiry, the Draft provides that it consists of an inquiry “regarding the technical feasibility by local, admitted, and occasional reinsurers”, without, however, defining what is meant by the referenced “technical feasibility”.

In any event, the procedures for evidencing insufficient capacity were not amended by the Draft and therefore remain as currently set forth in Resolution 451 and in Circular 683.

PENALTIES FOR MISCONDUCT (Article 6, paragraph 3, and Article 17, paragraph 4)

In the event of misconduct with respect to compliance with the preferential offer and/or the capacity offering inquiry, the Draft proposes the imposition of the applicable sanctions against the cedents, as provided for in regulation, rather than the disallowance of the reinsurance contract for prudential purposes, as is currently provided under Resolution 451. The same treatment would apply in the event of failure to observe the deadline established in the Draft for the formalization of the reinsurance contract, which appears to represent an improvement in the regulatory framework, insofar as it allows the regulator to conduct a case-by-case assessment and to impose sanctions in a proportional and reasonable manner.

REINSURANCE PROPOSAL (Article 11)

About the reinsurance proposal, the Draft proposes its regulation, defining it in Article 2, as mentioned above, and establishing the requirement for it to include the necessary information for risk analysis and acceptance. However, Susep has not yet defined what constitutes the “necessary information”, noting in a comment that this will be addressed in a draft proposal to replace Circular 683.

Furthermore, the Draft provides that the 20-day period for the reinsurer to respond to the proposal, under the threat of tacit acceptance, introduced by the Insurance Act, may be extended through specific regulation to be issued by Susep. This is also expected to be addressed in a draft of a new circular to replace Circular 683. Additionally, tacit acceptance is contingent upon the ceding company providing proof of the actual receipt of the proposal by the reinsurer.

CLAIMS CONTROL AND CLAIMS COOPERATION

The Draft, under the rationale of adapting to Article 76 of the IA, which assigns the adjustment and settlement of claims exclusively to the insurer, proposes the repeal of the current Article 12 of Resolution 451. The current provision allows reinsurance contracts to provide for the reinsurer’s participation in claims adjustment and to include claims control or claims cooperation clauses, without prejudice to the insurer’s liability in relation to the insured.

Through its explanatory memorandum, Susep stated that the understanding of its Board of Directors, allegedly validated by its Federal Attorney’s Office, but a matter of concern to its technical committee, is that claims control and claims cooperation clauses would be incompatible with the IA. Notwithstanding, the Draft does not include a provision expressly prohibiting such clauses.

This understanding reveals a misinterpretation of the Insurance Act. The legislator’s intent was merely to restrict outsourcing or external interference in the final decision regarding coverage and the amount of indemnification, which must remain exclusively with the insurer/cedents. The sole paragraph of Article 76 confirms this interpretation by allowing the insurer to engage adjusters and claims handlers to perform services, provided that it retains the final decision on coverage and the amount to be indemnified.

Moreover, allowing the reinsurer to contribute to and provide input on the claims’ adjustment and settlement processes — stages that are essential to determining the existence of coverage and the amount of indemnification, the burden of which may fall upon the reinsurer — enhances the efficiency of reinsurance and upholds the parties’ private autonomy.  

Accordingly, excluding the possibility of establishing claims control and claims cooperation clauses in reinsurance contracts is unreasonable and arbitrary, insofar as the legal justification put forward for such an amendment does not appear to be adequate.

SCOPE OF REINSURANCE COVERAGE (Article 3)

Article 3 of the Draft provides that reinsurance coverage, unless otherwise contractually agreed, shall encompass the entirety of the reinsured interest, including recovery for the effects of default, salvage expenses, and expenses incurred in connection with the adjustment and settlement of claims and covered events, thereby mirroring the provisions of Article 64 of the IA.

Thus, as a general rule, reinsurance coverage shall include the expenses referred to in Article 3, unless the parties agree otherwise, which must be expressly outlined in the reinsurance contract.

RETROCESSION LIMIT APPLICABLE TO LOCAL REINSURERS (Article 8)

The Draft proposes to depart from the general rule currently set forth in Article 6 of Resolution 451, which limits retrocession cessions by local reinsurers to 70% (seventy percent) of the premiums written in each calendar year, to allow retrocession at a higher percentage, provided that such increase is technically justified.

In its explanatory memorandum, Susep argues that this adjustment is intended to align the regulation with Article 2 of Decree No. 10,167/2019, which permits local reinsurers to cede up to 95% (ninety-five percent) of the total amount of premiums written for the risks they have underwritten to occasional reinsurers, calculated based on the entirety of their operations in each calendar year.

In addition, Susep maintains that the extension of the cession limit seeks to foster reinsurance operations and risk management by local reinsurers, moving away from a fixed cap in favor of risk-based supervision and governance.

DEADLINE FOR FORMALIZATION OF THE REINSURANCE CONTRACT (Article 12)

The Draft proposes a substantial reduction in the deadline for formalizing the reinsurance contract from 180 (one hundred and eighty) to 60 (sixty) days as of the commencement of coverage, which must be observed in the negotiation of contracts between ceding companies and reinsurers.

Furthermore, as previously noted, in the event of failure to comply with the 60-day deadline established by the Draft, the reinsurance contract shall not be invalidated; instead, sanctions shall be imposed against the cedents, as provided for in a specific regulation.

IMMEDIATE USE OF ADVANCE PAYMENTS (Article 13)

Once again mirroring the provisions of the IA, Article 13 of the Draft provides that any amounts advanced by the reinsurer must be immediately used by the ceding company to pay  indemnification or of the insured amount to the insured, the beneficiary, or the injured third party, while emphasizing that the provision for advance payments is a matter of the parties’ discretion.

Any advances made by the reinsurer to the ceding company for purposes such as capital relief or portfolio protection, for example, shall not be subject to this rule, which represents progress in the regulatory framework and an appropriate interpretation of the IA.

MANDATORY CLAUSES OF THE REINSURANCE CONTRACT (Article 14)

With respect to mandatory provisions, Article 14 of the Draft expands the elements currently outlined in Article 13 of Resolution 451 to include: (i) the procedures and documents required for reinsurance recoveries, as well as (ii) a provision stablishing the cedents’ duty to effect judicial or extrajudicial notice to the reinsurer when it is sued for the review or performance of the insurance contract that gave rise to the placement of facultative reinsurance.

The provisions referred to in item (ii) — although they appear to reflect the wording of Article 62 of the IA — impose on the parties an obligation not expressly provided for by law. This is because the IA merely requires notification of the reinsurer in the absence of a contractual provision, without mandating that the parties include such a provision in the contract.

In addition, the payment of indemnification directly by the reinsurer to the insured, participant, beneficiary, or assisted party remains restricted to the event of the cedents’ insolvency, with such provision remaining a mandatory clause in reinsurance contracts.

On this matter, the Draft introduces a minor drafting amendment to align the text with the applicable regulatory framework, replacing the expression “decree of liquidation or bankruptcy” with the term “insolvency”, and further adds a caveat to the effect that the requirement for the reinsurance contract to contain a clause allowing for such direct payment does not apply to reinsurance contracts involving exclusively risks accepted abroad.

TAX HAVENS (Article 18, § 1)

The Draft updates the prohibition outlined in Resolution 451 regarding the transfer of risks to reinsurers not authorized to operate in Brazil and domiciled in tax havens. Under the Draft wording, tax havens are now considered those jurisdictions that apply a tax rate lower than 17% (instead of 20%) or whose legislation imposes secrecy on corporate structure or ownership, in accordance with current Federal Revenue regulations.

INSURANCE CONTRACTING ABROAD (Article 38)

The contracting of insurance abroad remains restricted to the situations provided for in Art. 20 of Complementary Law No. 126/2007, as reiterated by Art. 33 of Resolution 451 (and by Art. 38 of the Draft).

However, for contracts relating to risks for which coverage has not been obtained in Brazil, the Draft introduces a fundamental change regarding evidence of non-acceptance of the risk, by stipulating that the inquiry directed to the local market must be addressed to “all” insurers operating in the line of business in which the risk falls.

Under the current rule, set forth in item I of Art. 10 of Circular 683, the inquiry must be directed to at least five (5) insurance companies authorized to operate in Brazil in the relevant line of business, with consultation of all insurers required only if fewer than five (5) operate in that line.

If the proposed change in the Draft prevails, it will increase bureaucracy and further restrict the contracting of insurance abroad. This would apply the same rule to insurance contracting that is currently applicable to reinsurance contracting, which requires proof of lack of capacity through inquiries to all local reinsurers, including admitted and occasional.

APPLICABLE LAW AND JURISDICTION (arts. 15 and 38, § 6)

The Draft states that reinsurance contracts must include a clause submitting disputes to Brazilian law and jurisdiction, as already provided in Resolution 451, without, however, exempting cases where there is an arbitration clause. Although Susep mentioned the sole paragraph of Art. 131 of the Insurance Act to justify this provision, that article only determines the applicable forum, not the applicable law.

Thus, by interpreting the provision, the parties could freely establish the law applicable to the reinsurance contract, since Art. 4 of the Insurance Act, which addresses the application of law, only mentions insurance contracts and not reinsurance contracts, subject to the rules applicable to international contracts (when applicable) and the provisions of the Law of Introduction to Brazilian Legal Norms.

As for insurance contracts executed abroad, the Draft replicates Art. 4, § 1 of the Insurance Act, stating that when the insured or applicant resides in Brazil, or when the assets on which the guaranteed interests fall are located in Brazil, Brazilian law shall apply exclusively.

Regarding jurisdiction, Susep replicated Art. 131 of the Insurance Act but added points it claimed were based on the Code of Civil Procedure (“CPC”). Lawsuits and arbitrations between insurers, reinsurers, and retrocessionaires that may interfere with the performance of insurance contracts executed by insurers authorized to operate in Brazil, where the insured or applicant resides or is domiciled in Brazil or where interests located in Brazil are guaranteed, must be filed in Brazil at the defendant’s domicile. In our view, the IA does not impose the choice of the defendant’s domicile, and in the case of arbitrations, the agreement between the parties and the Arbitration Law should prevail, not necessarily the CPC provisions.

The Draft amending Resolution 451 is open for comments and suggestions until December 29, 2025.

Public Consultation No. 13/2025: Dispute Resolution

This public consultation proposes the issuance of a resolution defining relevant aspects of dispute resolution, to regulate the obligation included in Article 129 of the Insurance Act, namely:

• The obligation to disclose information applies to parties that resolve insurance contract disputes through mediation, arbitration, or other dispute resolution methods linked to institutional bodies or conducted by independent professionals (Art. 1, sole paragraph);
• The arbitration clause of such resolution must include the obligation to disclose information related to the dispute (Art. 2);
• The competent chamber for the resolution process shall be responsible for sending the information to Susep for subsequent disclosure, within 30 (thirty) days after the dispute resolution, through the External User module of the Electronic Information System (SEI) (Art. 3);
• Susep shall disclose the information within 30 (thirty) days after receipt, in a repository available on Susep’s website (Art. 3, § 3);
• The Annex, which includes the mandatory information to be sent to Susep, mentions: (i) identification of the responsible chamber; (ii) insurance group and line; (iii) resolution method; (iv) claims of the party; (v) claims of the counterparty; (vi) evidence produced; (vii) summary of the decision or agreement. However, the parties involved cannot be identified, nor may confidential or sensitive data be included (Art. 4);
• The insurer, co-insurers, and cooperatives related to the insurance contract must monitor compliance with the submission obligation (Art. 5), and failure to comply will subject the responsible individuals and entities to sanctions provided in the regulation (Art. 6).

The draft resolution on disclosure of dispute resolution is open for contributions until December 24, 2025.

Comments and suggestions on the drafts discussed herein must be submitted through Susep’s Public Consultation System, duly identified and substantiated.

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.