Brazil has enacted a new Insurance Act, Law No. 15,040/2024, that substantially reshapes regulatory requirements for insurance and reinsurance operations.

The law introduces new obligations for insurers and policyholders, changes key claims-handling deadlines, and clarifies (or expands) several duties within reinsurance relationships. Companies with exposures in Brazil should take note of the operational, contractual, and compliance impacts that will follow from this reform.

1. Insurance Placement: New Obligations for Insurers

Mandatory Questionnaires and Proposals

Insurers must now provide clear disclosure of all information requested in risk assessment questionnaires and insurance proposals. These documents must be completed and signed by the insured.

Extended Risk Acceptance Deadline

The insurer’s risk‑acceptance window has been extended to 25 days, with interruptions allowed when additional documents are requested in a justified manner.

Stricter Requirements for Risk Refusal

If an insurer declines a risk, it must issue a clear and fully reasoned and justified refusal. Failure to do so prevents the insurer from subsequently rejecting the risk.

Policy Conditions Must Be Provided Before Signing

Insurers must deliver the full policy wording before the insured signs the proposal. The insured must confirm receipt within the proposal itself.

Separate Limits for Defence Costs

All policies must allocate a standalone limit for defence costs, distinct from the indemnity limit. Where no allocation is requested, insurers may assign the limit at their discretion in their quotation.

Mitigation Expenses: Segregated Limits and Broader Coverage

Mitigation (salvage or containment) expenses must now be subject to a separate policy limit. These expenses do not reduce the insurance coverage and remain payable even when the loss amount falls within the deductible. If the policy does not specify a particular limit for mitigation expenses, they are subject to a default limit of 20% of the applicable coverage. Moreover, if the insurer expressly recommends the mitigation measures, it must cover such expenses in full, even when they exceed the stated policy limit.

Claims Handling: New Statutory Deadlines and Penalties

Insurers have 30 days from receipt of all required documentation to issue their coverage determination, and this period constitutes a statutory deadline—once it lapses, the insurer loses the right to deny coverage. For complex claims, SUSEP may extend this period to up to 120 days; however, it remains unclear how SUSEP intends to define or apply a differentiated claims‑adjustment deadline for complex lines of business, as the regulator has not yet issued guidance on this point. In addition, the adjustment deadline may be suspended up to two times upon justified requests for additional documentation, although, for auto and life insurance, suspension is permitted only once.

Settlement Deadline

Where immediate settlement is not feasible, insurers have an additional 30 or up to 120 days after the coverage decision to pay indemnity. The settlement deadline may also be suspended up to two times upon justified requests for additional documentation, although, for auto and life insurance, suspension is permitted only once

Mandatory Partial Payments

When partial indemnities are identified during adjustment or settlement, they must be paid to the insured within 30 days, increasing cash‑call frequency for reinsurers.

Penalties for Delay

Failure by the insurer to comply with the claims‑adjustment or settlement deadlines results in the application of statutory penalties, including monetary correction of the indemnity amount, a fine equal to 2% of the corrected value, and, where applicable, the imposition of additional damages. Insurer’s delay in determining coverage will result in loss of the right to deny coverage.

Disclosure and Liability

In cases where coverage is totally or partially denied, or whenever insureds or beneficiaries request, insurers are required to provide the insured with full access to all claims‑adjustment documentation, subject only to applicable legal confidentiality restrictions. In addition, claims’ adjusters and liquidators now share joint liability with insurers for any delays that occur in the adjustment and/or settlement process.

2. Additional Market Impacts

Coinsurance

In the context of coinsurance, the lead insurer is authorized to represent all coinsurers both administratively and in judicial proceedings, and any court decision rendered against the lead insurer is automatically binding on the remaining coinsurers, although they do not assume joint and several liability.

Aggravation of Risk

With respect to aggravation of risk, only material aggravations must be reported by the insured. Upon receiving such notice, the insurer has 20 days to assess the change and may terminate the policy if the risk becomes uninsurable. If the aggravation results in a premium increase exceeding 10%, the insured may refuse the adjustment and elect to cancel the policy.

A risk aggravation will be deemed material where it results in a significant and sustained increase either in the likelihood of occurrence of the risk described in the risk‑assessment questionnaire referenced in Article 44 of the Act or in the severity of the consequences arising from such occurrence.

3. Reinsurance: Tacit Acceptance and Expanded Scope of Coverage

20‑Day Tacit Acceptance Rule

Under the new 20‑day tacit‑acceptance rule, reinsurers must expressly decline a reinsurance proposal within 20 days of receipt; otherwise, acceptance is presumed. This rule does not apply to retrocession. Because the legislation does not define what constitutes a “reinsurance proposal,” market practice has coalesced around treating the firm order as the operative triggering event for tacit acceptance, pending the regulator’s recognition of this concept.

Undefined “Reinsured Interest”

In addition, where the slip does not specify the scope of the reinsured interest, the law now provides that coverage will automatically extend beyond the underlying risk itself to include delay‑related financial consequences payable to the insured, mitigation expenses, and loss‑adjustment and settlement expenses. This broadened default coverage may have direct implications for the interpretation and operation of various contractual provisions, including Follow‑the‑Fortunes and Follow-the-Settlement clauses, ECO and XPL extensions, and Claims Control provisions.

Interim Reinsurance Payments

Cedants must immediately use interim reinsurance recoveries to pay insureds/beneficiaries.
This has raised practical questions, particularly regarding whether cedants must wait for all reinsurers to pay their share. Updated slip wording generally ties the “immediate use” requirement to amounts corresponding to payments due under the original policy.

New One‑Year Statute of Limitations for Reinsurance

Reinsurance and retrocession disputes are now subject to a one‑year statute of limitations.
Reinsurance accounts must therefore be settled within one year of maturity, after which challenges and claims might become time‑barred.

Ongoing Reinsurance Discussions with SUSEP (the Brazilian Regulator)

Market participants are actively engaging with SUSEP on several regulatory issues arising from the implementation of the new Insurance Act. Discussions currently focus on establishing minimum content requirements for cover notes; defining, for purposes of the 20‑day tacit‑acceptance rule, what constitutes a “reinsurance proposal” that triggers the countdown (with many stakeholders advocating that the firm order should serve as the operative trigger); and securing confirmation more generally that, absent a statutory definition, the term “reinsurance proposal” should be interpreted as the firm order. The market is also addressing SUSEP’s intention to reduce the deadline for formalizing reinsurance contracts from 180 to 60 days, while requesting a two‑year transition period to allow participants to adapt their operational processes to the shortened timeframe.

Stakeholders are further seeking clarification that endorsement requests should not fall within the scope of the 20‑day tacit‑acceptance rule, as the law applies the rule exclusively to risk acceptance and reinsurance contract formation. In addition, SUSEP is being asked to provide clearer guidance on the timing and mechanics of remitting interim payments to cedants, particularly when payments from multiple reinsurers are outstanding. Finally, the market continues to advocate for SUSEP’s explicit recognition that reinsurers may continue to participate in claims adjustment activities, noting that the new law does not prohibit such participation and that reinsurer involvement remains essential for complex risks.

Key Takeaways

• Insurers face expanded documentation, disclosure, and timing obligations.
• Claims deadlines are now strict statutory limits, with significant penalties.
• Reinsurers must adjust procedures to comply with tacit acceptance and interim‑payment rules.
• Policies and reinsurance contracts should be reviewed promptly to ensure compliance with the new Act.