How Brazil’s Law No. 14,430 impacts the insurance brokerage market

The recently enacted Law No. 14,430/2022 has introduced a series of significant changes to how insurance brokers must operate in Brazil. The main impacts of these changes are outlined below.

Insurance brokers’ duties

Although Brazil has regulated the activities of insurance brokers since 1964 (Law No. 4,594/1964 – Insurance Brokerage Law), Law No. 14,430/2022 expressly provides for insurance brokers’ legal duties.

These duties extend beyond insurance brokers’ mere intermediation of insurance policies, and can be divided into three separate stages:

• Contract inception: Insurance brokers are responsible for identifying the risks and interests to be insured. They also have the duty to recommend necessary measures for obtaining insurance, and the most suitable insurance products and insurance companies for the client’s needs;
• Compliance (during and after the term of the contract): Insurance brokers are responsible for assisting the client with claims adjustment and settlement procedures;
• Contract renewal: Insurance brokers are responsible for assisting clients with insurance policy renewals that ensure the required level of coverage continues.

Insurance Education Development Fund

Law No. 14,430/2022 has revoked an obligation to pay contributions to the Brazilian Insurance School (Funenseg) in the event of direct sales of insurance policies. This change will take effect as of January 1, 2023.

Self-regulatory organizations (SROs)

Amending certain provisions of the Insurance Brokerage Law and Decree-Law No. 73/1966, Law No. 14,430/2022 has also strengthened the role of SROs in the insurance brokerage market. SROs may now register and grant licenses to insurance brokers, serving as an alternative to the Brazilian Private Insurance Authority (Susep). However, the new law expressly determines that an insurance broker’s registration is not conditional upon being associated with an SRO.

Formal warnings as a form of administrative sanction

Law No. 14,430/2022 has also introduced the possibility for authorities to issue formal warnings to insurance brokers that violate applicable regulations. This serves as a more moderate penalty than the ones already provided for in the legislation, which include fines, temporary suspension of brokers’ operations, and canceling brokers’ registrations.

Although it could be argued that this form of sanction still requires the National Council of Private Insurance (CNSP) to update the regulations already in effect, the new law provides for less severe options for penalizing insurance brokers, as is the case with other players in the (re)insurance market.

Law already effective

With one exception, the provisions of Law No. 14,430 became effective on August 4, 2022, when it was published in Brazil’s Federal Official Gazette (DOU). As stated, the provision revoking the obligatory contributions to Funenseg will only become effective as of January 1, 2023.

For further information about these changes and their impacts, please contact Mattos Filho’s Insurance, Reinsurance & Private Pensions practice area.

*With the contribution of Lívia Barbutti Felippe Toledo.