BRAZIL Law and Practice Contributed by: Thiago Junqueira and Daniel Barreto Gelbecke, Junqueira & Gelbecke Advogados
ther reinforce the insured’s position. In commercial insurance there is greater emphasis on professional negotiation and risk allocation, particularly in large- risk transactions, although the core statutory duties of disclosure, good faith and transparency continue to apply. 6.2 Failure to Comply With Obligations of an Insurance Contract Under Brazilian insurance law, the consequences of a failure to comply with information and disclosure duties during the negotiation of an insurance con- tract depend primarily on the insured’s degree of fault and on the impact of the omitted information on risk assessment and underwriting. If the insured intentionally omits or misrepresents rel- evant information requested by the insurer, coverage may be forfeited, without prejudice to the insurer’s right to retain the premium and recover underwriting expenses. If the failure is unintentional, coverage is generally reduced proportionally to reflect the pre- mium that should have been charged had the correct information been provided. Where the undisclosed information renders the risk technically uninsurable or outside the insurer’s underwriting standards, the contract may be terminated. If the insurer fails to comply with its own informational duties, such as clearly requesting relevant informa- tion or properly disclosing exclusions and limitations, restrictive clauses may be deemed invalid or unen- forceable, and ambiguities will be interpreted in favour of the insured. For further detail, see 6.1 Obligations of the Insured and Insurer . 6.3 Intermediary Involvement in an Insurance Contract Brazilian insurance law distinguishes between differ- ent types of intermediaries, with insurance agents and insurance brokers being the most relevant in practice, each performing distinct legal functions. Insurance Agents Insurance agents act on behalf of the insurer. Under the Brazilian Insurance Contract Act, the acts and
omissions of agents and other representatives – whether permanent, temporary or provisional – are legally attributable to the insurer. Agents are subject to the same duties of loyalty, good faith and informa- tion applicable to insurers, and any breach of these duties produces the same legal consequences as if the insurer itself had failed to comply. Insurance Brokers Insurance brokers, in contrast, act primarily in the interest of the insured or policyholder. They are legally authorised intermediaries responsible for identifying the risk and the insurable interest, recommending appropriate coverage and insurers, assisting in the placement, renewal and maintenance of insurance, and providing support to the insured and beneficiaries throughout the contractual relationship, including dur- ing claims handling and settlement. Brokers are also responsible for the proper and timely transmission of documents and information. All intermediaries involved in the negotiation and per- formance of insurance contracts must act with loy- alty and good faith, providing accurate and complete information. While the insurer is directly bound by the conduct of its agents, insurance brokers may be held civilly liable for losses arising from breaches of their statutory or contractual duties, particularly in cases of inadequate advice, failure to convey relevant infor- mation, or the provision of deficient assistance to the insured. 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract Under Brazilian law, an insurance contract is an agree- ment whereby a duly authorised insurer undertakes to cover a legitimate (insurable) interest of the insured or beneficiary against predetermined risks, in exchange for the payment of a premium. The contract does not need to be in writing to be valid, but it must be evidenced by legally admissible means, and the insurer must deliver a policy or equivalent document. The contract must be written in Portuguese and recorded in a durable medium. Clauses limiting rights or excluding risks must be clear, highlighted and understandable; otherwise, they may be invalid.
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