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Insurance, Reinsurance, Pension Plans and Supplementary Health Newsletter No. 4 – November 2020 to February 2021
12 de março de 2021
ON THE AGENDA REGULATORY NEWS IN THE MEDIA EVENTS
This is the fourth edition — now, with a new layout — of the Insurance, Reinsurance, Pension Plans and Supplementary Health Newsletter, with a compilation of the main news and innovations in the insurance market.
We remain attentive to the constant legal updates and the main highlights of the Insurance market so that our newsletter is as complete as possible and, above all, easily accessible to all interested parties.
Read now our latest issue, produced by our team with great effort. We are always available to hear your ideas and suggestions on how we can improve our newsletter.
Enjoy your reading!
Demarest Insurance and Reinsurance Team
PIX: NEW PAYMENT METHOD MAY INCREASE RISK FOR COMPANIES
Created by the Brazilian Central Bank, Pix went into effect on November 16, 2020, bringing in its scope the promise of instant bank transfers made using a key, which can be a password or a cell phone number. In the insurance market, this new payment possibility has opened up a new range of possibilities that adds agility, security, and speed to market transactions. On the other hand, it also adds new risks to the companies that use it, increasing the exposure to cyber risks and also adaptation to the Brazilian General Data Protection Law (LGPD).
THE INSURANCE INDUSTRY SHOULD SEE SIGNIFICANT CHANGE WITH THE INNOVATION PROGRAM
Losing your suitcase at the airport and filing an insurance claim can mean having to deal with a long and bureaucratic process to receive compensation. But what if, with one click, the customer could report the claim and receive the amount in his digital wallet within minutes, without having to worry whether it is the weekend or the time that the incident occurred? This is one of the scenarios promised by the new generation of digital insurance companies, the “insurtechs”, that were selected for the “sandbox”, a program promoted by the Superintendence of Private Insurance (Susep).
COMPANY SAYS THAT MORE THAN 100 MILLION BRAZILIANS HAD CELL PHONE DATA EXPOSED
The cybersecurity company Psafe said on Wednesday (Feb. 10, 2021) that data from more than 100 million cell phones of Brazilians were leaked. At first, it was suspected that the data was from two phone companies, but PSafe has not yet been able to confirm. In total, 102,828,814 numbers were leaked, according to the company.
CYBER RISKS DURING PANDEMIC AND LGPD ACCELERATE CYBER INSURANCE AND D&O
The demand for Cyber Insurance has leveraged the taking out of civil liability insurance for executives, D&O. At 3 SEG, a brokerage specialized in the luxury and corporate markets, the volume of policies for Cyber Insurance rose 50% in 2020 and D&O grew 25% over the 12 months of last year. Company partner Alexandre Delgado’s expectation is that demand should double in 2021. “The LGPD creates a significant impact on this movement in the market, especially by B2C companies. But it is far from being the only reason for the growth of our portfolio,” he says.
BLACKOUT IN AMAPÁ: CHECK THE RISK ASSESSMENT FOR THE INSURANCE MARKET
Northern Brazilian state Amapá suffered a blackout on November 3, 2020, due to a fire that hit the state’s main substation. 13 municipalities, including the capital Macapá, were left without power for about 22 days. Due to the repercussions of the case, the Insurance Broker Qualification Center (CQCS) talked to consultant Sergio Ricardo, to understand how insurance could minimize the losses caused by the blackout.
SUSEP APPROVES NEW REGULATION PLAN FOR 2021
Susep approved, through Deliberation 243/20, the regulation plan for 2021. The Rule, already in effect, lists, among other priorities, the establishment of conditions and criteria for defining the cyber security policy of the supervised companies, as well as the standards for contracting data processing and storage services, including in the case of cloud computing.
COVID-19-RELATED FACTORS TOP GLOBAL BUSINESS RISKS
A trio of Covid-19-related risks top the 10th Allianz Risk Barometer 2021, reflecting potential scenarios of disruptions and losses that companies are facing in the wake of the coronavirus pandemic. Lost profits (#1 with 41% responses) and the pandemic outbreak (#2 with 40%) are the biggest risks for businesses this year, with cyber incidents (40%) taking third place. Allianz Global Corporate & Specialty’s (AGCS) annual global business risk survey incorporates the opinions of 2,769 experts in 92 countries, including CEOs, risk managers, brokers and insurance specialists.
NEW FORM OF PRODUCT DISTRIBUTION IS APPROVED
An article published in O Globo newspaper on February 14 informed that as of March 1, insurance companies will be able to offer combos to consumers. That is, packages and services with a combination of several types of coverage in a single policy. All products require Susep’s approval, but the government decided to free up the damages market, designed to protect the assets of individuals and companies, such as life, home and auto.
WITH LIFE INSURANCE STARTING AT BRL 9.00, NUBANK REACHES 90 THOUSAND CONTRACTS IN 3 MONTHS
Nubank announced on February 19 that the life insurance policy launched in December last year, Nubank Life, had reached the mark of 90 thousand active insurance policies. In about three months, this amount corresponds to a total value that exceeds 9 billion reais in coverage. Among the fintech’s clients who contracted the product, half stated that it was the first time they had taken out this type of insurance.
INSURANCE AND REINSURANCE
CNSP RESOLUTIONS Nos. 398, 399 AND 400, PUBLISHED ON DECEMBER 29, 2020
The Superintendence of Private Insurance (SUSEP) published on December 29, 2020 CNSP Resolutions Nos. 298, 399 and 400, which establish the new rules applicable to the Insurance for Personal Injury caused by Motor Vehicles (DPVAT) for the year 2021. After a period of uncertainty related to DPVAT insurance, SUSEP revoked several regulations regarding the mandatory insurance and defined new guidelines for its operation, which are already valid as of January 1, 2021.
UNITED KINGDOM’S SUPREME COURT RULES ON INSURANCE COVERAGE FOR LOSS OF PROFIT DUE TO COVID-19
Representing the interests of policyholders, the Financial Conduct Authority (FCA), UK’s financial regulator, filed a lawsuit against eight insurers to provide greater certainty in relation to claims arising from financial losses caused by COVID-19. After a initial decision was rendered in September 2020, the FCA and six insurers filed appeals. The Supreme Court partially granted the FCA’s appeals, extending the policy’s triggering possibilities.
Considering the impact that this understanding may have on the entire insurance segment, Marcia Cicarelli gave an interview to the website “Sonho Seguro” addressing the effects of this decision in the Brazilian market, which can be accessed through this link.
SUSEP CIRCULAR No. 621/2021, PUBLISHED ON FEBRUARY 17, 2021
The Superintendence of Private Insurance (SUSEP) published SUSEP Circular No. 621 on February 17, 2021, which sets forth the new operating rules and criteria for operation of damage insurance coverage. The Circular, besides demonstrating the debureaucratization of damage insurance products, inaugurates a new phase in the Brazilian insurance market, in which SUSEP begins to adopt minimal intervention in the contractual relations of its supervised companies, destining regulation to its primary purpose of encouraging competition and protecting consumers, allowing greater market development. The new Circular will come into force on March 1, 2021, revoking twelve other regulations.
SUSEP NOTICE OF PUBLIC CONSULTATION NO. 04/2021, OF FEBRUARY 23, 2021
The Superintendence of Private Insurance (SUSEP), in seeking regulation proportional to market risks, as well the creation of a sustainable and transparent environment for consumers, has placed under Public Consultation the Public Notice No. 04/2021, presenting a draft of a new CNSP Resolution, which will establish rules on the use of remote means in operations related to insurance and open pension plans and will define the principles to be observed by insurers in the application of digital technologies in their operations. Furthermore, the new Resolution will repeal CNSP Resolutions No. 294/2013 and 359/2017. All suggestions may be sent to SUSEP until March 25th, 2021.
CNSP RESOLUTION No. 393/2020, PUBLISHED ON NOVEMBER 4, 2020
The Superintendence of Private Insurance published, on November 4, 2020, CNSP Resolution No. 393/2020, regarding administrative sanctions in the scope of the supervised entities and SUSEP and self-regulatory entities of the brokerage market administrative sanctioning process, which demonstrates SUSEP’s intention to unify the rules regarding administrative sanctions applied to violations, including those related to the acts of the supervised entities that characterize money laundering violation. The Resolution has been effective since January 4, 2021 and provides that the administrative sanctioning proceedings already in progress will be affected by its procedural rules as of the beginning of their effectiveness.
SUSEP CIRCULAR No. 619, PUBLISHED ON DECEMBER 4, 2020
In compliance with the personal data protection guidelines provided for through the effectiveness of Law No. 13,709 of August 14, 2018 (Brazilian General Data Protection Law), the Superintendence of Private Insurance (SUSEP) published, on December 4, 2020, SUSEP Circular No. 619, which provides for the policy of security and confidentiality of data and information of accredited registration entities to provide the service of registration of insurance, open pension fund, capitalization, and reinsurance operations. The Circular consolidates the minimum rules that must be adopted by accredited registering entities in relation to the data security and confidentiality policy, prohibiting the practice of certain conducts related to the processing of personal data, as well as allowing for the possibility of the registering entities to be held liable for any damages caused as a result of improper processing of data and information.
SUSEP CIRULAR No. 620/2020, PUBLISHED ON DECEMBER 29, 2020
The Superintendence of Private Insurance (SUSEP) published on December 29, 2020, Circular No. 620, which simplifies the regulation regarding rules and criteria for the operation of property group insurance. The Circular revises and consolidates SUSEP Circulars that regulate insurance plans for the property group, which are considered massified, such as: (i) comprehensive insurance; (ii) loss of profit insurance; (iii) engineering risk insurance; and (iv) miscellaneous risk insurance. The extended warranty insurance is explicitly excluded from this list, since it has its own specific regulation.
SUSEP CIRCULAR ESTABLISHES NEW RULES FOR INSURANCE
The insurance of Civil Liability of Road Carriers on International Rides for Cargo Damage has new general conditions, established by Susep’s Circular 617/20, published in the Federal Official Gazette on Tuesday (11/24). The circular, which went into effect on December 1, makes it mandatory for Brazilian insurers to send all information relating to agreements made with foreign companies for the operation of this insurance.
HEALTH AND PENSION PLAN
ANS PUBLIC CONSULTATION NO. 83 OF JANUARY 27, 2021
The National Health Agency (“ANS”) has placed a Resolution under Public Consultation seeking market subsidies for the modification of the rules that define the model for calculating the regulatory capital of health care plan operators and benefit administrators. The intention is to continue the gradual implementation of the capital model based on risks in complementary health and propose that the risk capital be constituted based on credit, legal and operational risks, as well as underwriting risks. The norm also proposes the inclusion of additional deduction of goodwill values from direct or indirect participations for the definition of adjusted net worth. All suggestions may be sent to the ANS until March 21, 2021.
PREVIC NORMATIVE INSTRUCTION NO. 35, OF NOVEMBER 11, 2020
On November 16, 2020, the National Superintendence of Complementary Pension Funds (“PREVIC”) published Normative Instruction No. 35, of November 11, 2020, providing for the operationalization of the procedures provided for in the National Monetary Council Resolution that, in turn, deals with the guidelines for the application of the resources guaranteeing the plans managed by closed complementary pension funds (“EFPCs”) and on how to comply with the obligations regarding investments to Previc. Among other determinations, the new rule establishes the minimum information that must be contained in the EFPC’s investment policy plan and lists the information and documents that must be periodically submitted to Previc.
The Instruction came into force on January 1, 2021.
ANS PUBLIC CONSULTATION NO. 82 OF JANUARY 14, 2021
The National Health Agency (“ANS”) has placed a Resolution under Public Consultation establishing the criteria for changes in the hospital care network. The purpose of the Public Consultation is to allow market stakeholders to contribute to the improvement of the criterion that will be used in requests for alterations to the hospital care network, with regard to the replacement of a hospital entity and the downsizing of the network, in accordance with ANS’ Regulatory Agenda for 2019 to 2021.
All suggestions may be sent to ANS until October 3, 2021.
PREVIC ORDINANCE NO. 835, OF DECEMBER 1st, 2020
In accordance with Previc Normative Instruction No. 33 of October 23, 2020, a new Ordinance was published by the National Superintendence of Complementary Pension Funds (“Previc”), providing for the requirements and procedures that must be adopted by closed complementary pension funds (“EFPCs”) in order to conduct actuarial adjustment studies and to obtain authorization to use the actual annual interest rate. The new rule also determines that the EFPCs must start using the regulator’s own electronic system to calculate the duration of the liability and the pricing adjustment.
In addition, Previc Ordinances No. 30 of January 21, 2016 and No. 86 of February 1, 2019 were repealed. The new Ordinance came into force on January 1, 2021.
SUSEP PLACES FOR PUBLIC CONSULTATION A DRAFT RESOLUTION RELATING TO THE OPERATION OF MICROINSURANCE
The Superintendence of Private Insurance (SUSEP), through Public Notice 05/2021, placed under Public Consultation a draft Resolution which provides for the principles and general characteristics of microinsurance.
According to the draft Resolution, microinsurance is a classification of insurance operations aimed especially at the low-income population and/or individual microentrepreneurs not supported by traditional insurance protection systems.
NEW OFFSHORE PROJECTS WILL INCREASE DEMAND FOR OIL INSURANCE
The oil and gas sector comprises activities that involve different risks, such as operational and regulatory. Since there are complex operations with high-cost structures involved, oil insurance functions as a guarantee for the operators of this sector. With the new auctions that will take place in Brazil, the pre-salt assets will demand new companies operating equipment, all of which will need to contract insurance.
Marcia Cicarelli, partner on the Insurance and Reinsurance team of Demarest Advogados, stresses the importance of taking out such Insurance to avoid operational and regulatory losses for the companies involved in this activity, failing which there may be penalties imposed and even the termination of the contract.
PARTNER MARCIA CICARELLI DISCUSSES CYBER RISK INSURANCE ON THE RADIO PROGRAM “THE GREAT JOURNEY THROUGH THE WORLD OF INSURANCE”
In this radio program, broadcasted on March 1, 2021, our partner Marcia Cicarelli discussed the main aspects of cyber risk insurance, a product that is currently the fastest growing in this market.
The program explores the main types of cyber attacks carried out and their drastic rise due to the increasing use of technology during the pandemic.
Within this context, the importance of cyber risk insurance was pointed out as a way to protect corporations against financial losses arising from these virtual attacks.
INSURANCE AND REINSURANCE PROFESSIONALS ARE RECOGNIZED IN RENOWNED NATIONAL AND INTERNATIONAL LEGAL PUBLICATIONS
Chambers & Partners, the main international legal directory, released on February 18 the results of Chambers Global 2021, a survey that ranks cross-border activities in several areas. Our Insurance and Reinsurance practice and partner Márcia Cicarelli are part of this ranking. See more details here.
In the first week of March, the results of Leaders League 2021 were released in the Dispute Resolution category. We had eight areas of Litigation ranked, among which is our Insurance and Reinsurance practice, with mention to the partners Márcia Cicarelli, Luciana Prado and André Alarcon. Read more here.
On March 11, the first edition of Análise Advocacia Mulher ranking was released. The most important Brazilian legal publication highlighted the performance of female partners and lawyers from offices across the country in various practice areas and economic segments. Among the recognized professionals are our partners Márcia Cicarelli and Luciana Prado. Check out more information here.
WEBINAR ON POST-PANDEMIC ARBITRATION
On November 11, 2020, Marcia Cicarelli participated in a webinar hosted in partnership with CAMESC (Chamber of Arbitration and Mediation) and legal media platform Migalhas on the topic of post-pandemic Arbitration.
Our partner addressed the general impacts that the pandemic brought through the dramatic increase of the use of information technology in the judicial and arbitral sectors. She also analyzed the main consequences of the use of virtual means in Arbitration, considering the differences regarding Arbitration Law vs. Information Security Laws, as well as the distinction between the issues of Confidentiality and Privacy.
LAURA PELEGRINI WILL TEACH SPECIALIZATION COURSE PROVIDED BY ESA-OAB
Laura Pelegrini, senior lawyer of Demarest’s Insurance and Reinsurance team, will teach the course “Claim Adjustments and Intervention of the Law Operator” between April and June of 2021 in the Specialization Course in Insurance Law in the Post-Modern Contractual Panorama provided by OAB-SP’s Escola Superior de Advocacia Law School (ESA-OAB).
For further information, click here.
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