SUSEP wording
Welcome regulatory changes


There is plenty of scope for use of the Ports and Terminals (P&T) insurance product in Brazil. Brazil is a major commodities producing nation, with approximately 5,200 miles of coastline and 13,000 miles of internal waterways. Many P&T risks are still being written on separate property and liability wordings.

There is a government scheme to develop an export route for commodities grown in the centre of Brazil though the Northern Arc – an export gateway between the states of Rondonia in the west and Maranhão in the east – taking some pressure off the Southern Ports. The government is also providing financial incentives to existing and new entrants in the cabotage sector, under the 'BR do Mar' project.

However, until recently, terminal operators and other Brazilian assureds who wished to contract on hybrid property and liability P&T wordings were obliged to use a standard form wording issued by the Brazilian insurance regulator, SUSEP (the SUSEP P&T wording), with very limited scope to deviate from its terms.

SUSEP wording

The SUSEP P&T wording has been at the centre of a number of disputes in Brazil in recent years. It includes two main heads of cover:

  • legal and contractual liability to third parties for loss, damage to third party property which includes vessels and demurrage, cargo, bodily injury and death; and
  • property and handling equipment, including warehouses, gantry cranes and other lifting equipment.

However, the SUSEP P&T wording arguably extends cover automatically to some extensions which are available for separate purchase under other P&T wordings. For example, under the liability section, fire, errors and omissions and wrongful delivery are arguably covered, when these are extensions under the Wavelength and/or Columbus wordings.

In addition, the SUSEP P&T wording provides a form of fidelity cover for unlawful or faulty behaviour, practiced by controlling partners, directors, and legal administrators, excluding gross negligence, which must be established by judicial decision. By contrast, under the Wavelength wording, executive officers, managing employees and directors will only fall within the definition of "assured" if they are acting within the scope of their duties.

Some of the calculation of loss language in the SUSEP P&T wording is confusing, especially in relation to a requirement for the payment of depreciation under the property section in specific circumstances. The limits of the property and liability sections automatically reinstate without additional premium, unless the parties contract out.

The SUSEP P&T wording is unusually prescriptive as it was intended for an earlier period in the evolution of the Brazilian insurance and reinsurance market. The English translations available have only served to create additional uncertainty and confusion.

Welcome regulatory changes

Earlier this year, the National Council of Private Insurance (CNSP) published Resolution 407, which became effective on 1 April 2021. This Resolution releases the parties from an obligation to contract on the prescribed SUSEP P&T wording and allows them to exercise freedom of contract when drafting their wordings.

The Resolution, which also applies to other wordings for "large risks" (as defined in the Resolution), represents an important shift in the Brazilian insurance market and illustrates the widening liberal agenda of the Ministry of the Economy and SUSEP, and their intention to create a regulatory environment with less state intervention and regulatory oversight.

In principle, the increase in flexibility allows the parties to contract on wordings which are commonly used in the London market and to leave behind some of the idiosyncrasies contained in the SUSEP P&T wording. However, caution is needed, since some terms and conditions in London market wordings will need to be amended to reflect the requirements of Brazilian law and practice.

In addition, the parties should focus on issues which have given rise to recent disputes in Brazil, including the following:

  • Brazil is a civil law jurisdiction. Except for limited exceptions, case law is not binding. Aggregation language (eg, event, accident, occurrence, originating cause, etc.) should be carefully defined in the policy, or the parties should include a sole judge clause conferring discretion on one of the parties as to the meaning of aggregation terminology, for the purposes of determining policy deductibles and limits.
  • Where a loss pierces policy limits, Brazilian loss adjusters are applying deductibles from the top down, ie, to the actual incurred loss. Therefore, if the loss exceeds the policy limit by the amount of the deductible, then no deductible is paid at all. This practice, which is alien to the international market, is easily remedied with clear drafting.
  • The quantum of Brazilian losses is usually defined by the accrual of interest and monetary correction. Interest rates for claims in court or arbitration are usually fixed at 1% per month, and separate inflation-linked interest known as monetary correction is also payable. Inflation in Brazil currently stands at 8% per annum and has oscillated between 2% and 10% over the past decade. The parties can set their own rate of interest and agree the inflation index used to calculate monetary correction.
  • It is also possible amend the timeframe for the payment of claims, as prescribed by Regulation, which is currently 30 days from provision of the final document required for the claim adjustment. This timeframe, which is vague and subject to easy manipulation, is usually not appropriate for complex claims, especially under reinsurance policies.


Resolution 407 represents the most interesting regulatory development in the Brazilian P&T market for many years. It is anticipated that there will be a shift from parties contracting on the SUSEP wording to using more user-friendly versions, probably adopting wordings from the London market and making them Brazilian law compliant. The ability of the parties to contract on bespoke terms should lead to less disputes, especially of the type observed over recent years.

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