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Insurance Brokerage Will No Longer Be a Regulated Activity in Brazil

14/11/2019
The Federal Government revoked Law No. 4.594/1964 that regulates the insurance brokerage activities in Brazil and removed insurance brokers as one of the players under the oversight of the Superintendence of Private Insurance (SUSEP).
 
The Provisional Measure (MP) No. 905 issued on November 11, 2019 intends to deregulate some labor rules to incentive the hiring of young workers in Brazil. However, the MP also revoked the current legislation regarding insurance brokers. Therefore, insurance brokers will no longer need: (i) licenses to operate; (ii) to communicate SUSEP of any amendment to its registry information (corporate acts, change of address, for instance); (iii) to follow the archive requirements of insurance proposals, agreements etc., among other regulatory obligations. In addition, the referred MP also revoked the mandatory contribution to Insurance Educational Development Fund, managed by the National Insurance School Foundation (FUNENSEG) due when an insurance company makes a direct sale of insurance.
 
The principle behind such change is that insurance brokerage activities should be self-regulated, with indirect oversight by SUSEP. One of the provisions that remained in force is Article 126 of Decree-Law 73/1966, which set forth that insurance brokers are civil liable for fault or willful misconduct in any losses to insured persons or insurance companies caused by: (i) omission; (ii) malpractice; or (iii) negligence.
 
The MP is valid for 60 days and it maybe the extended once for the same period. If it is not converted into law within this timeframe, it will cease to be enforceable and the previous regulations will be restored.
 
We remain at clients’ disposal to discuss and help with the understanding of the ongoing regulatory changes.
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