BRAZIL Law and Practice Contributed by: Thiago Junqueira and Daniel Barreto Gelbecke, Junqueira & Gelbecke Advogados
6.6 Consumer Contracts or Reinsurance Contracts Given their different contractual characteristics, the interpretation and practical application of insurance rules vary between consumer insurance contracts and reinsurance contracts. In consumer insurance, contracts are generally inter- preted with heightened attention to the insured’s rela- tively weaker position. Duties of good faith, transpar- ency and information are applied more strictly, and protective standards play a central role in evaluating the insurer’s conduct. In reinsurance, the relationship is treated as a pro- fessional and highly technical arrangement between regulated market participants. As a result, contractual autonomy is broader, and the interpretation of rein- surance contracts often takes international market practices and recognised reinsurance usages into account, in addition to Brazilian law. Consumer-orient- ed protective standards tend to have limited relevance in this context. 7. Alternative Risk Transfer (ART) 7.1 ART Transactions ART-type structures are used in Brazil mainly through the statutory insurance-linked securities (ILS) frame- work established by Law No 14,430/2022, which introduced the Sociedade Seguradora de Propósito Específico (SSPE) and the Letra de Risco de Seguro (LRS). This framework is already operational. On 30 May 2025, Andrina SSPE (a wholly owned subsidiary of IRB(Re)) issued the first LRS in the Brazilian market, a BRL33.7 million transaction securitising surety ( seg - uro garantia ) risks, structured with Itaú and registered with B3. Within this structure, regulators recognise the opera- tion as an economic risk-transfer mechanism, through which the financial consequences of insured losses are transferred to the SSPE and, ultimately, to capital markets investors via the LRS. The SSPE is super- vised by SUSEP as an insurance entity, while the issu-
A legitimate insurable interest is essential. If the inter- est is impossible or does not exist, the contract is null. If it arises at a later stage, the contract becomes effec- tive from that moment. Extinction or reduction of the interest leads to termination or proportional premium adjustment. In insurance on the life or personal safety of a third party, the applicant must have and declare a legitimate interest, subject to statutory presumptions. The covered risks and exclusions must be clearly defined. Insurance may not validly cover: • impossible risks; • risks that have already occurred; • criminal fines or penalties; or • losses arising from wilful misconduct. Payment of the premium is a core element. Non-pay- ment of the first instalment may terminate the con- tract, while non-payment of subsequent instalments generally suspends coverage after due notice. At a minimum, the policy must identify the insurer, insured, beneficiary (if any), policyholder, term, insured amount, covered and excluded risks, premium struc- ture and intermediary involvement. Insurance con- tracts are construed in good faith, and ambiguities are interpreted in favour of the insured. 6.5 Multiple Insured or Potential Beneficiaries Brazilian insurance law permits third parties who are not named insureds to benefit from insurance cover- age, depending on the structure of the policy and the line of insurance involved. In general, the insured or policyholder must hold a legitimate insurable interest, while beneficiaries must be identified or at least deter- minable under the contract. As a matter of market practice, beneficiaries are typically designated at the time the contract is entered into, although changes may be allowed in accordance with the applicable rules of the relevant insurance line. Disclosure duties at contract formation are linked primarily to risk assessment and rest with the party negotiating the policy. The involvement of third-party beneficiaries does not, by itself, expand those duties.
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