BRAZIL Law and Practice Contributed by: Thiago Junqueira and Daniel Barreto Gelbecke, Junqueira & Gelbecke Advogados
ticularly relevant for international insurers and reinsur- ers operating in, or seeking access to, the Brazilian market. 2.2 Writing of Insurance and Reinsurance In Brazil, insurance and reinsurance business may only be written by entities authorised by SUSEP. Insurers must be incorporated in Brazil, obtain prior regulatory approval and comply with ongoing require- ments relating to minimum capital, solvency margins, technical provisions, governance and risk manage- ment, as provided mainly in Decree-Law No 73/1966 and in regulations issued by the CNSP and SUSEP. Reinsurance is governed by Complementary Law No 126/2007, which permits risk transfer to local, admit- ted and occasional reinsurers, subject to registration and regulatory conditions. While authorisation requirements are broadly uniform, the regulatory treatment differs according to the type of insurance. Consumer and SME insurance is subject to stricter conduct-of-business rules, greater stand- ardisation, and enhanced transparency and consumer protection. Corporate insurance – particularly large- risk insurance – is regulated in a more flexible manner, allowing wider contractual autonomy and customised policy wording. No specific additional rules apply to the underwrit- ing of excess layers, which follow the same regula- tory framework as primary insurance. Reinsurance contracts, however, are subject to a separate regime, reflecting their professional, B2B character and allow- ing broader contractual freedom than direct insurance. 2.3 Taxation of Premium In Brazil, insurance premiums are subject to a specific tax regime that is currently undergoing a structural transition. Traditionally, insurers have been subject to PIS and COFINS on premium revenues, in addition to corporate income taxes (IRPJ and CSLL). Premiums have also been subject to the Tax on Financial Opera- tions (IOF), levied on the total value of the premium, with rates currently varying according to the line of business:
• 0% for reinsurance, rural insurance, export finance insurance, international cargo transport, aviation insurance and certain airline liability covers; • 0.38% for life insurance, personal accident insur- ance and mandatory personal injury insurance; • 2.38% for private health plans; and • 7.38% for other insurance transactions. Following Constitutional Amendment No 132/2023, the taxation of insurance premiums is being restruc- tured. IOF will cease to apply to insurance operations from 2027, and PIS and COFINS will be replaced by the Contribution on Goods and Services (CBS), together with the Goods and Services Tax (IBS), under a specific regime applicable to financial services, including insurance and reinsurance. The new frame- work introduces non-cumulative taxation and will be implemented gradually during a transition period, with implications for pricing, contractual allocation of tax burdens, and compliance. 3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers Brazil adopts a regulated open market approach to overseas insurers and reinsurers, with strict restric- tions on unlicensed insurance activity and a differenti- ated framework for insurance and reinsurance. Direct Insurance Overseas-based insurers are generally not permit- ted to underwrite insurance directly in Brazil without establishing a locally incorporated insurer and obtain- ing prior authorisation from SUSEP. There is no pass- porting, equivalence or recognition of foreign insur- ance licences. As a rule, risks located in Brazil must be insured locally. Limited exceptions apply where coverage is not available in the domestic market, sub- ject to regulatory conditions. In practice, multinational groups commonly operate through global insurance programmes combined with locally issued policies, in order to comply with Brazilian requirements. Reinsurance Cross-border reinsurance is expressly permitted under Complementary Law No 126/2007, through local,
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