Resolution 407

National Council of Private Insurance (CNSP) Resolution 407/2021 (the Resolution), which was enacted in April 2021, represented a major turning point in the Brazilian insurance market by allowing greater freedom of contract for insurance of large risks – however, it is now the subject of a constitutional challenge.

Resolution 407

The Resolution allows parties to "large risk" insurance policies to contract on bespoke wordings, as opposed to standard Superintendence of Private Insurance wordings. Authority for the enactment of the Resolution is derived in part from the Economic Freedom Act,(1) which added various provisions to the Brazilian Civil Code, including the assumption of parity of arms in commercial contracts and the autonomy of the parties in establishing objective parameters for the interpretation of contractual clauses and the allocation of risk.

The Resolution is now the subject of an adverse development. Under Brazilian law, political parties with representatives in Congress may file actions before the Supreme Court to question the constitutionality of laws and regulations. On 9 February 2022, the Centre-Left Brazilian Workers' Party filed a constitutional challenge against the enactment of the Resolution before the Supreme Court. In its claim submissions, the Workers' Party argued that:

  • the CNSP did not have jurisdiction to implement the changes contained in the Resolution, as some of its provisions, such as the creation of a new category of insurance ("large risks") can only be advanced by an act of Congress;
  • the regulator violated the constitutional principle of the separation of powers. The CNSP is part of the executive branch, which, allegedly, has no jurisdiction to legislate on matters over which the legislative branch has exclusive jurisdiction;
  • the excessive deregulation of the Resolution also poses a threat to the "economic order" that the State must regulate under article 174 of the Constitution; and
  • by establishing that contractual freedom and party autonomy prevails in aeronautical, marine and nuclear contracts (which the Resolution does), the Resolution "places sensitive sectors of all the national economy, and therefore all of Brazilian society, in potential prejudice".

The claim submissions also contained a request for injunctive relief (ie, immediate suspension of the Resolution), until the Supreme Court reaches a final decision on the matter. This request for an injunction is still awaiting a decision and the fact that it has not already been granted bodes well. At this stage, it is unclear when the injunctive relief application will be judged. The same applies regarding judgment in the substantive case, as the Supreme Court has a long list of cases that rank higher in priority for hearing.

The Brazilian Insurance Law Institute (IBDS) has petitioned to join the action as an assistant to the Court. If the Supreme Court accepts IBDS's intervention, the Institute's role will be to provide the Court with impartial technical advice on complex matters of (re)insurance law.

The expectation locally is that IBDS may ratify at least some of the arguments that have been advanced by the Workers' Party.

On 15 February 2022, the regulator was ordered to provide relevant information to clarify the points contained in the claim submissions. The attorney general – representing the federal government – and the federal prosecutor were served to provide their opinions on the matter. It is expected that, after all parties have replied, the Court will decide on the injunctive relief. In its response, the CNSP is anticipated to draw support from the Economic Freedom Act.


As far as international investors are concerned, this is an unwelcome development reminiscent of the uncertainty that characterised the gradual opening of the national (re)insurance market for many years. It has the potential to unwind positive recent progress towards deregulation, greater efficiency and freedom of contract. Even if the regulator does prevail, the likelihood of legislative changes after the election in October 2022 cannot be ruled out – former President Lula of the Workers' Party is currently ahead in the polls.

For further information on this topic please contact Geoffrey Conlin or Bernardo de Senna at CAL - Costa, Albino & Lasalvia Advogados by telephone (+55 11 3179 2900) or email ([email protected] or [email protected]). The CAL - Costa, Albino & Lasalvia Advogados website can be accessed at


(1) Federal Law 13,874/2019.