The president of the São Paulo Insurance Law Commission of the São Paulo Chapter of the Brazilian Bar Association (OAB-SP), Debora Schalch, went to Brasília (DF), on April 5, to personally deliver to Senator Armando Monteiro the technical study of the Commission on the Insurance Contract Bill (PLC 29/2017).
At the hearing with the advisors of the bill’s rapporteur in the Federal Senate, the lawyer filed the study and drew attention to the main points of the bill that denote its interventionist nature in the insurance activity and also the negative impacts that some of the provisions may cause to the insurance market.
According to the study, the main points of bill 29/2017 that deserve careful analysis are:
1 - The lack of distinction between small and large insureds.
The bill does not insureds that tale put mass insurances from insureds of large companies, which have high financial capacity and technical expertise. “This lack of distinction between one and the other can lead to distortions and imbalance of mutuality, the basic principle on which all insurance activity is based,” says Debora Schalch.
2 - The inclusion of reinsurance in the Insurance Contract Law.
According to the study, this is an inconsistency, since the laws (Law 126/2007) and the resolutions governing the reinsurance activity are sufficient for the good performance of this market. “A new insurance law, covering reinsurance, will certainly bring legal uncertainty, as the regulator will have to review its rules at a time when, precisely, market development is increasingly dependent on foreign investors interested in organizing their reinsurers in the country”, notes the study.
3 - Error in the application of the “duty of information” and “freedom to contract” to the claim adjustment.
“One cannot forget the existence of claims of great technical complexity, whose adjustment and liquidation can far exceed the period provided for in the bill, precisely because the bill does not bring the necessary differentiation between mass insurance and large insurance risks”, justifies the study.
4 - Arbitration only in the country and with Brazilian laws. The study disputes this change provided in the bill because it diverges from current legislation and creates supposed protectionism for Brazilian companies, thereby alienating foreign investment in the insurance market. In addition to the damages that this provision of Bill 29/2017 can bring to the industry, Debora Schalch warns of the restraint to the parties’ freedom. “The Arbitration Law provides that the parties have the right to elect the place and legislation to be applied. The bill contradicts the essence of freedom of arbitration” she says.
5 - Change in the limitation period. The bill proposes that the limitation period starts from the express and motivated refusal of coverage by the insurer, without computing the period between the date of the claim and the notice of the claim to the insurer. According to the study, it means that the statute of limitations may be extended for many years - that is, until the formalization of the notice claimed -, which would strongly impact the provisioning and reserves of the insurers.
The outcome of the work to follow the proposal over the last eight years, the study of the OAB-SP Commission intends to provide subsidies for technical analysis of the bill within the scope of the Federal Senate. According to Debora Schalch, the assistants to Senator Armando Monteiro were pleased with the collaboration, which brought other points of view on the proposal.
“Until then, they had the view that the Insurance Contract Law was extremely necessary for good development of the industry, but they had not received a study on the possible negative impacts to the business.
The president of the Commission warns of the interventionist nature of the bill in an activity that has shown good performance and increased participation in the GDP. “The bill provides for fines and other penalties that could increase insurers’ costs and possibly burden insurance prices, harming the consumer,” she says. For this, OAB-SP Commission fulfilled its role in contributing to the improvement of the law. “The Commission is at the disposal of the Federal Senate to collaborate and participate in new debates on the bill,” she added.