Brazilian Private Insurance Council (CNSP) issues new resolution on reinsurance rules

Following Public Consultation No. 14/2025/SUSEP, which was covered in a publication on Único in December 2025, and after analyzing the suggestions received from market participants, CNSP Resolution No. 494/2026 was published on July 21, 2026. The new regulation covers reinsurance, retrocession, coinsurance, reinsurance brokerage, foreign currency insurance and insurance taken abroad. It is set to fully replace CNSP Resolution No. 451/2022 and will come into force on January 2, 2027.

The new resolution seeks to bring the regulatory framework into line with the New Brazilian Insurance Law (Law No. 15,040/2024) and Supplementary Law No. 213/2025. The CNSP and the Brazilian Private Insurance Authority (SUSEP) made significant improvements to the text following the public consultation. Nonetheless, the opportunity to clarify certain important points and correct others was missed. We briefly address each of these improvements and missed points below.

Improvements introduced in the final version of the new resolution

Definition of “coinsurance commission” corrected (Article 1, Item III)

The definition of “coinsurance commission” has been revised to eliminate the room for misinterpretation by municipal tax authorities. The previous wording had given rise to unnecessary tax disputes by suggesting it constituted remuneration for services rendered, despite this not being the case. The new resolution now makes clear that the coinsurance commission is a cost-recovery mechanism, finally aligning the regulatory definition with its legal and economic substance and providing greater legal certainty for coinsurance operations in Brazil.

Deadline for formalizing reinsurance contracts reduced from 180 to 90 days (Article 12)

The new resolution shortens the deadline for formalizing reinsurance contracts from 180 days (as provided for in CNSP Resolution No. 451/2022) to 90 days from the inception of coverage. Notably, the draft submitted to public consultation had proposed a shorter deadline of 60 days. Beyond the tighter deadline – which market participants should take note of – the new resolution makes clear that non-compliance will be subject to the general sanction regime. The previous rule, under which non-compliance could result in the reinsurance cession being disregarded for prudential purposes (an extremely harsh penalty for merely failing to formalize an otherwise valid and effective contract), has been eliminated. It should be borne in mind, however, that the current sanction regime is under review as a result of Supplementary Law No. 213/2025, which will, among other changes, increase the applicable monetary penalties.

Claims cooperation and claims control clauses (Article 14)

This was one of the most debated topics during the public consultation phase of the new resolution and concerns the legality of claims cooperation and claims control clauses typically found in reinsurance contracts in light of the New Brazilian Insurance Law. Despite the differing views expressed during SUSEP’s internal (now public) discussions on the matter, the final text provides the legal certainty that the market sought by confirming these clauses to be legal. Ultimately, this reflects a recognition of the detrimental effects that prohibiting the clauses would have caused (as highlighted in the balanced analysis carried out by the regulator’s technical staff), not least because, in essence, there is no reinsurance without cooperation at a minimum.

In line with the characteristic that distinguishes insurance from reinsurance, already recognized by Article 14 of Supplementary Law No. 126/2007, there is no legal relationship between the insured and the reinsurer. SUSEP correctly referred to this as the principle of relativity of contractual effects, that is equivalent to the privity of contract doctrine, according to which the effects of a contract do not extend beyond its parties. Accordingly, regardless of what the reinsurance contract provides, the obligation to adjust the claim and the consequences of such adjustment vis-à-vis the insured will always remain with the insurer, in full accordance with Article 76, Head Paragraph, of the New Brazilian Insurance Law.

Therefore, neither claims cooperation clauses nor claims control clauses remove the insurer’s “full and exclusive responsibility toward the insured” (Article 14, Head Paragraph), transfer to the reinsurer “obligations or decision-making powers inherent to the performance of the insurance contract” (Article 14, Paragraph 1), or exclude, limit, or condition “the cedent’s responsibility toward the insured (…) in connection with claims adjustment or claims settlement” (Article 14, Paragraph 2).

Failure to comply with claims cooperation and claims control clauses may have clear consequences for the cedent but never for the insured, just as failure to comply with the duty of good faith may have consequences regardless of the existence of any contractual provision. Reinsurance has operated this way for centuries and continues to do so. In this respect, the final version of the resolution reflects a prudent move on the part of the regulator.

Reinsurance contracts required to include reinsurance recovery procedures (Article 15, Item V)

The new resolution requires reinsurance contracts to contain a clause specifying the procedures required for reinsurance recovery. The draft submitted to public consultation had also required the inclusion of documents necessary for reinsurance recovery, which, in welcome news, was dropped from the final text. Even so, transposing concepts from insurance to reinsurance typically distorts established market practice and customs, as is the case here. It is uncommon, if not rare, for reinsurance contracts (including facultative ones) to contain such provisions, as they tend to rigidify and bureaucratize a relationship that must remain flexible and dynamic.

Cut-through (Article 17, Paragraph 1)

This provision essentially replicates Article 61, Sole Paragraph, of the New Brazilian Insurance Law, which in turn differs from Article 14, Sole Paragraph of Supplementary Law No. 126/2007. Under the New Brazilian Insurance Law, direct payment to the insured, beneficiary, participant, assisted person, or interested third party in the event of the cedent’s insolvency would also be permitted under treaty reinsurance arrangements, even in the absence of an express contractual clause authorizing such payment.

Although this provision was not amended in the final version of the new resolution, the regulator’s internal discussion materials suggest that the New Brazilian Insurance Law broadened the circumstances in which cut-through is permitted, relying on Article 2, Paragraph 1 of the Brazilian Act on the Introduction to the Rules of Brazilian Law (LINDB), under which a later law prevails where it is incompatible with an earlier one.

While the rationale behind the previous rule was to acknowledge the proximity between the reinsurer and the insured in facultative reinsurance – despite the absence of a direct contractual relationship between them –, it appears that the current legislature intended to prioritize the rights of the insured and similar parties over those of the insolvent entity’s other creditors.

Vacatio legis (Articles 45 and 47)

The new resolution will only come into force on January 2, 2027, including with respect to existing contracts. While this is a positive and prudent approach (particularly given that other subordinate regulations, such as SUSEP Circular No. 683/2022, will need to be updated by that date), it bears noting that this does not affect the full effectiveness of the New Brazilian Insurance Law’s provisions where they are already applicable (e.g., tacit acceptance of reinsurance).

Issues that could have been clarified or improved

Reinsurance contract formation resulting from the reinsurer’s silence in regard to a proposal (Article 2, Item XI, and Article 11)

Article 60 of the New Brazilian Insurance Law provides that “[u]nder a reinsurance contract, the reinsurer, in exchange for the corresponding premium, guarantees the insurer’s interest against risks inherent to its activities arising from the execution and performance of insurance contracts”. Although it is well established that a retrocession contract is, by its legal nature, a reinsurance contract, the legislature appears to have deliberately limited Section XI of the New Brazilian Insurance Law to reinsurance contracts, excluding retrocession.

In this regard, just as the regulator appropriately stated in the new resolution that “[t]he rule regarding contract formation through the reinsurer’s silence does not apply to endorsements to reinsurance contracts” (Article 11, Paragraph 3), the text could also have explicitly stated that the rule of tacit acceptance of a reinsurance proposal does not apply to retrocession operations. Notably, Article 6, Paragraph 3, of the new resolution expressly stipulates that the preferential offer does not apply to retrocession. This understanding, however, already follows from the overall framework of Supplementary Law No. 126/2007, since the purpose of the market reservation for local reinsurers is fulfilled once the 40% quota is accepted by, or first offered to, those reinsurers. Imposing the same requirement on retrocession would simply create an inefficient feedback loop.

Automatic ECO and XPL arrangements (Article 3, Head Paragraph)

Much like the issue of contract formation through the reinsurer’s silence, the legislature appears to have limited the effects of Article 64 of the New Brazilian Insurance Law to reinsurance operations, without intending to extend them to retrocession. That said, the new title of Chapter II, as well as the wording of Article 3, Head Paragraph, could have been clearer on this point.

Brazilian jurisdiction and law for risks located in Brazil (Article 16)

Referring to Article 131, Sole Paragraph, of the New Brazilian Insurance Law, the new resolution requires reinsurance contracts covering risks in Brazil to include a clause submitting disputes to Brazilian law and jurisdiction. However, this does not appear to reflect what the New Brazilian Insurance Law had actually intended. First, the legal provision makes no reference to applicable law or its determination in reinsurance contracts. Second, absent a clear provision establishing exclusive Brazilian jurisdiction, the only tenable interpretation of Article 131, Sole Paragraph, of the New Brazilian Insurance Law would be that Brazil-based reinsurers cannot challenge the jurisdiction of Brazilian courts if sued in the country.

Although a similar (but not identical) rule has existed since CNSP Resolution No. 168 was issued in 2007, there is room to question whether regulating this matter falls within SUSEP’s authority or should instead be left to the legislature. That said, in the absence of a legal requirement on the matter, the more appropriate solution might simply have been to replicate the existing rule in CNSP Resolution No. 451/2022, which carves out arbitrations, and with which the market has coexisted since it opened.

Brazilian jurisdiction over risks located in Brazil (Article 16, Sole Paragraph)

Purportedly inspired by Article 131, Sole Paragraph, of the New Brazilian Insurance Law, Article 16, Sole Paragraph, of the new resolution provides that lawsuits and arbitrations among insurers, reinsurers, and retrocessionaires that may directly affect the performance of insurance contracts issued by insurers authorized to operate in Brazil must be filed in Brazil, at the defendant’s domicile, where the insured or prospective insured party resides in Brazil or where the contracts guarantee interests located in Brazil.

Once again, this provision is at odds with the New Brazilian Insurance Law. As noted above, the only tenable interpretation of Article 131, Sole Paragraph, is that a reinsurer domiciled in Brazil cannot challenge Brazilian jurisdiction if sued here. In short, it is a question of “may” rather than “must”, which goes well beyond what is provided for in the law.

Brazilian law applied to insurance taken abroad (Article 39, Paragraph 5)

The new resolution provides that insurance contracts entered into abroad are exclusively subject to Brazilian law whenever the insured or prospective insured is resident or domiciled in Brazil, or whenever the assets underlying the insured interests are located in Brazil.

It is possible, however, to take a different view of the exception introduced by the New Brazilian Insurance Law in relation to Article 20 of Supplementary Law No. 126/2007, particularly because these provisions address different matters. While Article 4, Paragraph 1, Items II and III, of the New Brazilian Insurance Law sought to prevent an insurance contract entered into by a resident of Brazil with a Brazilian insurer from being governed by foreign law, Article 20 of Supplementary Law No. 126/2007 was intended to facilitate access to insurance products that are not locally available.

There is, therefore, a real possibility that imposing the application of Brazilian law may undermine precisely what Article 20 of Supplementary Law No. 126/2007 sought to make possible, which would be a contradiction. In this respect, the regulation appears to have gone beyond what is provided for in the New Brazilian Insurance Law, to the detriment of policyholders’ interests.

The qualifier “without prejudice” (sem prejuízo) could potentially have had such an effect had it been included in Article 20 of Supplementary Law No. 126/2007 with reference to Article 4, Paragraph 1, Items II and III, of the New Brazilian Insurance Law, but not the other way around – as the New Brazilian Insurance Law currently provides for.

Other items worth highlighting

“Formal consultation” replaced with “reinsurance proposal” in the context of preferential offers (Article 6, Head Paragraph)

With the enactment of the New Brazilian Insurance Law, the framework applicable to ceding insurers for purposes of complying with the preferential offer to local reinsurers became inconsistent with that applicable to the newly created reinsurance proposal. Although both systems could have remained in operation simultaneously, the Brazilian regulator opted to require compliance with the preferential offer through a reinsurance proposal.

While the specific elements that characterize a reinsurance proposal and the other rules applicable to it remain unknown in detail, as such elements remain subject to future regulation (Article 11, Paragraph 2), it is already clear that local reinsurers will need to implement effective internal controls to avoid unintentionally accepting risks. This is because, unlike the formal consultation regime under which a local reinsurer’s failure to respond results in its rejection, the opposite effect applies under the new reinsurance proposal framework. In addition, in the case of facultative reinsurance, the response period has been increased from five business days to 20 calendar days, which may be challenging considering the dynamics of this business. As indicated by the regulator, SUSEP Circular No. 683/2022 is expected to undergo a review process by January 2, 2027.

Consequences of failing to ensure equal treatment both in the preferential offer (Article 6, Paragraph 1) and in demonstrating insufficient offer capacity (Article 18, Paragraph 4)

Reinsurance brokers are now expressly named as parties subject to the general sanction regime in the event of violations of these rules.

Greater flexibility regarding the 70% retrocession limit for local reinsurers (Article 8, Item II)

In line with the draft submitted to public consultation, the new resolution replaces an absolute prohibition on retrocession above 70% (as set out in Article 6, Paragraph 3, of CNSP Resolution No. 451/2022) with a mechanism requiring justification to be presented to SUSEP. Local reinsurers that exceed this threshold must submit a technical justification by March 31 of the following calendar year, taking into account their operations as a whole. As the new resolution does not provide for exceptions (unlike the previous rule), local reinsurers operating in niche markets should pay particular attention to this requirement.

Advancing reinsurance recovery payments (Article 13)

The new resolution now expressly permits cash calls and advances on reinsurance recoveries. In line with Article 63 of the New Brazilian Insurance Law, it clarifies that only advances directly related to complying with the underlying insurance contract are subject to immediate transfer to the insured, beneficiary, participant, assisted person, or interested third party.

Other rules applicable to reinsurance brokers’ operations (Article 27, Item II and Sole Paragraph)

In addition to becoming subject to certain penalties, the deadline for delivering cover notes to cedents will now run “from the date of the cedent’s request, provided that the risk has been accepted” (Article 27, Item II), rather than “from the date of acceptance” as provided in the draft. Furthermore, Article 27, Sole Paragraph, now requires reinsurance brokers to not only transfer premiums, recoveries, and other amounts, but also “documents and information relating to claims and covered events” in connection with the contracts they intermediate. This transfer must take place within a “deadline agreed between the parties”, allowing contractual flexibility – unlike the statutory treatment afforded to insurance brokers under Article 39 of the New Brazilian Insurance Law.

Rules applicable to coinsurance operations (Articles 31, 32 and 34)

The new resolution rightly provides that breaches of obligations among coinsurers must not prejudice the insured, beneficiary, or third parties. It also correctly prohibits coinsurance without risk retention, and subjects coinsurance operations involving cooperative insurance companies to the general rules applicable to such operations.

For more information on this topic, please contact Mattos Filho’s Insurance, Reinsurance & Private Pensions practice area.