BRAZIL Trends and Developments Contributed by: Cassio Gama Amaral, Thomaz Kastrup and Pedro Ricco, Machado Meyer
• the risks and interests excluded from coverage must be clearly described in a manner that leaves no doubt from the insured’s perspective; • if there are any doubts regarding the policy word- ing, or discrepancies between such wording and the standardised terms and conditions submitted by insurance carriers to SUSEP, the wording most favourable to the policyholder/insured will prevail; • insurance carriers must exercise an active educa- tional role in explaining to policyholders the conse- quences of information omissions throughout the underwriting process; • insurance carriers must justify, in writing, all the reasons that led them to refuse underwriting any given risk; and • insurance carriers must provide insureds and beneficiaries with all documents and information produced in the course of a claims-handling pro- ceeding. An insurance proposal may be made in written or non-written form, by either the proponent/potential insured or the insurance carrier. The proposal made by the insurance carrier cannot be conditioned on risk assessment, and it must be clearly accepted by the policyholder. The payment of a premium bundled with the payment of other services (eg, utility bills) does not imply that the individual who took out said services agreed to the insurance proposal. On the other hand, insurance carriers will have a 25-day term in which to confirm whether a proposal will be accepted or rejected. Upon the lapse of such term, if there has been no express denial from the insurance carrier, the relevant risk will be deemed to have been tacitly underwritten by said carrier. Insurance carriers will have a 30-day term in which to handle claims (the claim will become due upon the lapse of such term) and an additional 30-day term to settle and pay the indemnity. For large-risk contracts, both periods may be extended to 120 days each. Claim denials must reflect, in writing, each and every legal and factual ground that led to such denial, since insurance carriers will not be allowed to submit addi- tional arguments and facts (other than those raised in said denial) during the course of any ensuing judicial proceeding.
The proposed regulation is expected to be enacted in the forthcoming months. Another example of an ongoing initiative to adapt current regulation to the Insurance Act is the public consultation regarding portfolio transfers. The draft incorporates the Insurance Act, establishing that an insurance carrier that assigns its portfolio without prior approval from insureds and its known benefi- ciaries or from SUSEP will be held jointly liable with the assignee. Portfolio transfers initiated by insurance carriers remain subject to prior approval from SUSEP. Alter- natively, transfers can be carried out with the consent of both the policyholders and known beneficiaries. This mechanism is particularly attractive for portfolios comprising a small number of large-risk contracts, as it enables insurance carriers to strategically reduce their exposure as allowed by the new law. The Insurance Act also sets forth that if the assignee becomes insolvent, the assignor remains liable to the insured/beneficiary for the term of effectiveness of each insurance policy of the portfolio object of the transaction between assignor and assignee and for two years after the assignment, whichever is shorter. The draft regulation does not replicate this rule, even though SUSEP mentioned it in the public consultation process. In cases involving the transfer of savings-type prod- ucts (such as VGBL and PGBL), SUSEP may, based on a technical assessment, require the assignor to obtain the consent of at least three-quarters of the insured individuals included in the portfolio to be transferred. Although the Insurance Act does not contain a cor- responding provision, SUSEP argues that this require- ment is consistent with the underlying objectives of the new law. The proposed regulation is expected to be enacted in the forthcoming months. In line with the examples above, revised regulations from SUSEP and CNSP are expected in the coming months. These will address the impacts of the Insur- ance Act on specific lines of business and on the core
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