On the same day that it released a report indicating that insurance premiums should experience double-digit growth through 2010, Brazilian insurance regulator SUSEP announced the suspension of 10 of the nation’s 30 reinsurance brokers.
Premium Growth Predicted
SUSEP recently released a report indicating that, although insurance premium growth is expected to slow in the next two years, it should remain over 10% through 2010. In the first nine months of 2008, total premiums and pension contributions reportedly grew by 18.4% to 49.7bn reais (US$21.3bn). SUSEP predicts that premium and contribution growth will total 17.6% for 2008, 16.2% for 2009 and 11.4% for 2010.
Reinsurance Broker Suspensions
SUSEP also announced the suspension of 10 reinsurance broker’s authorization to conduct reinsurance broking business, reportedly because the brokers had failed to satisfy the regulatory requirement of maintaining errors and omissions insurance coverage for their activities. Under Article 7 of Resolution 173 (for a copy, please click here), reinsurance brokers must present evidence of E&O coverage to SUSEP within 30 days of authorization or face suspension. Reports indicate that the brokers’ failures to obtain E&O coverage was due to several factors, including simple inaction, inability to obtain a Brazilian equivalent of their international coverage within the deadline and difficulty with high prices for E&O coverage in Brazil.
The 10 suspended reinsurance brokers are reportedly as follows: Assure Internacional Corretagem de Resseguros Ltda., BSR-Brasil Special Risks Corretora de Resseguros Ltda., Cormatt Corretora de Resseguros Ltda., GRB-Global Risk Brasil Solucoes de Risco Ltda., Inter Aerospace Corretora de Seguros Ltda., LBS Insurance Union Representacao e Corretagem de Seguros S/S Ltda., Miller do Brasil Corretora de Resseguros Ltda., Pecus Corretora de Resseguros Ltda., Securitas Uniao Corretora de Resseguros S/A and UIB RE Brasil Corretora de Resseguros Ltda. The suspension does not apply to these companies’ direct insurance broking businesses because SUSEP does not require E&O coverage for direct insurance brokerage operations.