Highlights of new rule

The Brazilian market has been awaiting changes to the directors' and officers' (D&O) insurance regulation since 2014, when the Superintendence of Private Insurance (SUSEP) stated that there would be a public consultation for a new rule.

Highlights of new rule

SUSEP Circular 541/2016 establishes general guidelines applicable to D&O insurance policies in relation to:

  • the creation of a list of defined terms for policies such as:
    • defence costs;
    • bodily harm;
    • physical damage to the person;
    • material damage;
    • pain and suffering;
    • claims;
    • insureds; and
    • society;
  • the insurer's right to make direct payments to a third party instead of reimbursing the insured;
  • defence cost coverage, which can be offered only as specific additional coverage;
  • fines and contractual and administrative penalties, which can now be imposed on insured persons when exercising their functions;
  • coverage for executives – in line with governance practices, insurers are prohibited from insuring their own executives, as well as executives from their subsidiaries and affiliates; and
  • environmental damages and exclusions therein.

In addition, the regulation established deadlines for the adaption of existing products.


Although the new rule is an improvement on the previous regulation as it provides guidelines for penalties, a topic which was previously subject to much discussion, it still needs some work.

For example, the excess of defined terms has generated a lack of flexibility for policies, and therefore somewhat limits what can be insured. In addition, the rule limits coverage that was previously widely offered, such as the defence cost for environmental damages.

In this context, the new rule has been much criticised by the insurance market and there has been a recent plea to SUSEP to suspend the rule's effects.

For further information on this topic please contact Marcio Mello Silva Baptista 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 at www.tozzinifreire.com.br.