New business models created by technology start-ups (so-called 'insurtech' companies) may revolutionise the sale and marketing of insurance in the Brazilian market in the coming years.
These companies have had a significant impact on the market, including:
- through the creation of online platforms which ensure efficient purchasing of insurance policies and loss adjustment proceedings, when necessary;
- by monitoring clients' behaviour to help in the development of new products; and
- by monitoring clients already insured to improve risk management.
In light of this, start-up acceleration programmes have become increasingly common in order to establish partnerships between insurers and technology companies. That said, there are still significant challenges in this regard and further development is needed from a legal and regulatory standpoint.
The Civil Code and rules issued by the Superintendency of Private Insurance (SUSEP) still require insurance contract proposals to be made in writing. This requirement is outdated and no longer consistent with the existing reality or various forms of insurance contract that exist and may exist in light of the increased use of online platforms. In this context, in practice, written proposals are becoming obsolete and no longer being requested. It is increasingly common for insurance to be taken out without a written form – in particular, in relation to affinity insurance, which is often purchased online or over the phone.
In order to keep up with the shifting landscape, National Council on Private Insurance Resolution 294/13 was introduced to regulate the sale of insurance products online. Under this resolution, to ensure the insured's identity and the authenticity, confidentiality and integrity of the insured's data, insurance contracts must be formalised by entering log in details and a password or through a digital certificate that has been pre-registered by the applicant or a legal representative in a safe environment.
Unfortunately, the resolution fails to ensure that insureds' receive the full benefit of the new technology being introduced by insurtech companies, which can be difficult to take advantage of in certain circumstances.
While no legislative changes have come into force, new business models brought by insurtech companies should be structured to avoid potential questioning by SUSEP. In addition, insurers must guarantee that consumers receive all necessary information, as the Consumer Protection Code requires consumers to have full knowledge of purchased insurance products.
Equally challenging is the constant search for a secure virtual environment which includes parameters to avoid cyber attacks and other related risks. In this context, a policy to cover cyber risks (something which is becoming increasingly common worldwide, but little used in Brazil) is paramount, especially with regard to monitoring potential clients' behaviour and the digital platform in which insurance will be offered.
Other challenges exist with regard to the new insurance coverage introduced by insurtech companies – in particular, in relation to the approval of products, as SUSEP maintains a rigid approval and registration structure for products which often stalls the development of the market (eg, due to the standardisation of wording and delays in the approval of new wording).
The Brazilian market is anticipating a change in the way insurance is traditionally marketed. In addition to this shift, the aforementioned technical advancements should serve as a legal basis for modifying certain rules in this regard.
For further information on this topic please contact Marta Viegas or Barbara Bassani de Souza at TozziniFreire Advogados by telephone (+55 11 50 86 50 00) or email ([email protected] or [email protected]). The TozziniFreire Advogados website can be accessed atwww.tozzinifreire.com.br.