Does Brazil Need Reforms to its Insurance Sector?


New legislation pending in Brazil’s Congress could lead to several changes in the country’s insurance sector, the London-based International Law Office reported in late March. The measure could mean changes relating to insurance contracts, payment of premiums, co-insurers and reinsurance. Does Brazil need major changes in its insurance laws? If passed, what would be the consequences of the legislation on Brazil’s insurance industry and on consumers? Who will be the main winners and losers if the bill becomes law?

Fabio Ramos, partner at KLA-Koury Lopes Advogados: “Since 2004, when the Brazilian insurance law project was presented to the market, the national debate has been polarized between two groups: one defending that the current legal system doesn’t need changes and saying existing rules ensure the proper interpretation of insurance; and the other arguing that those current rules are out-of-date and unaligned with the new legal order. Therefore, a new insurance law would benefit insureds and mitigate divergences with insurers. We believe the biggest problem is the fragmentation of the insurance rules, requiring an exaggerated systematic interpretation and a dialogue among sources to understand insurance products. In this sense, conceptually speaking, the Brazilian market can benefit from an insurance law that consolidates and presents in a clearer, transparent and linear way the general insurance rules, as long as those rules do not restrict insurers’ creativity and impose an unequal burden upon them. If passed, insurers would need to review and sophisticate their processes, products and personnel in order to comply with clearer rules and to insureds’ needs and demands. Consumers will feel more secure and will…”

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