With the aim to develop the Brazilian insurance market, the Brazilian Insurance Regulator "SUSEP" has issued two new resolutions, resolution number 224 and number 225, which have been strongly criticized by the market. On the one hand, Resolution number 224, dated 10 December 2010, provides a new wording stating in its article 14 that the risks undertaken by Brazilian insurers, reinsurers or by retrocessionaires will not be allocated to foreign linked companies or foreign conglomerates. On the other hand, Resolution number 225 replaces the existing article 15 of Resolution number 168 stating that insurance undertakings will allocate to local reinsurers at least 40 percent of each automatic or facultative reinsurance contract they underwrite. These measures are said to provide a competitive advantage to local reinsurers but they may lead to a negative development for global insurers and reinsurers. Indeed, the Risk Management Association of Brazil ("ABGR") has issued a communication requesting their immediate revocation.
Resolutions 224 and 225
10 December 2010