Brazil: An update on liberalisation
Law 126/07 liberalising the Brazilian reinsurance market was enacted in January 2007. However, the draft reinsurance regulations are still to be made available (by the (re)insurance regulator - Superintendency of Private Insurance (SUSEP)) for international consultation, before the public hearing which is expected to take place by year end.
In the meantime, provisional regulations have been issued to govern the role of the IRB and foreign reinsurers until such time as the final regulations under Law 126/07 become effective. CNSP Resolution No. 164, issued in July 2007 and effective immediately, provides transitional rules on writing reinsurance business from Brazil.
The new regulation allows Lloyd’s underwriters to accept reinsurance from a Brazilian ceding insurer, if it has first been refused by IRB-Brasil Re. Lloyd’s underwriters proposing to enter into such a contract should satisfy themselves that the IRB has seen the risk and turned it down. However, neither Lloyd’s centrally nor managing agents are required to keep official documentation to demonstrate this, as the onus for showing compliance with the regulation lies with the insurer.
Underwriters writing such risks will be required to provide notarised translations of Lloyd’s rating certificate and financial accounts to ceding Brazilian insurers. The ceding insurer must be prepared to submit to SUSEP such documentation at their request. This documentation is available from Lloyd’s International Trading Advice
(‘LITA’) upon request (Telephone +44(0)20 7327 6677 or Email LITA@lloyds.com).
It is worth mentioning that reinsurance may be placed abroad directly or through a locally registered intermediary. However, please note that binding authorities are not recognised by Brazilian law.
Lloyd’s International Market Access will provide additional information on Regulation No. 164 through a market bulletin shortly.
Is Lloyd’s pioneering placements under the new regulation?
It is understood that Lloyd’s is the first reinsurer to place a risk under the terms of the new regulation. The placement was brought to Lloyd’s through Capital Re – a Correspondent Representative of HSBC Insurance Brokers. Nicolau Daut, of Capital Re, stated that “this placement sets a touchstone in the Brazilian insurance market and nothing is more appropriate than having Lloyd’s, the most traditional insurance market in the world, to lead it.”
Regulatory Discussions
Lloyd’s has had discussions with Brazilian Government Authorities aimed at achieving ‘optimal’ regulations for this market. An official submission has been made to the (re)insurance regulator, SUSEP, in this regard. Further discussions with SUSEP took place in October, during Lloyd’s visit to Brazil.
Lloyd’s visit to Brazil
Lloyd’s Chairman, Lord Levene, together with Jose Ribeiro, Director, International Markets and Business Development, and Sean McGovern, Director and General Counsel, visited Brazil in October. Their programme included insurance industry events in Rio de Janeiro and meetings with business leaders in São Paulo.
Last updated on 29 Nov 2007
